Steamboat Resort started making snow today!  That’s a sign of imminent good days coming.  The upper runs have been snow-covered for a couple of weeks, but the lower valley temperatures didn’t get cold enough to make snow consistently until this week.  Arapahoe Basin is open and I hope to make it there in the next week or so.

It’s been a little while since I wrote a market report.  Today, I ran into an article that spoke about the pat answer I give when people ask about when the market is going to change.  Often, persons are asking about when they will be able to buy a house or land at a discount.  That day isn’t coming except for individual properties that happen to be honey holes.  As a whole, the market is going to remain the same for a while.

When someone asks when the market is going to change, I reply that there are four factors that I believe will make the price of real estate lower:

1. War- historically, war causes prices to go down.
2. Increase in housing supply- when supply meets or exceeds demand.
3. Long term job losses-  without jobs, and well paying jobs, there are no buyers.
4. When interest rates rise.

In headlines and articles I’ve been reading, long-term job losses are being talked about.  When housing costs rise above a reasonable living value, people do not buy and often move to places that are more affordable.  This includes rents as well.  In Steamboat Springs, I have often seen families move out of town because rents are too high.  These families chose between a lower rent town nearby or moving away altogether.

But this isn’t affecting our market that much.  Zillow, Fannie Mae, and others have all predicted large increases in home values for 2022.  If you’ve been reading these blog articles for a while, you may remember me saying that the market would slow down this fall.  And it has.  I loosely mentioned that more slowing will happen when interest rates rise.  Now having met their goal, the Federal Reserve has slowed down their bond-buying program and is about to raise interest rates in the near term.

What fascinated me by this article was the perspective of the Mortgage Bankers Association.  They see the market continuing to be strong until interest rates rising start to kick in.  They think there will be 4 quarter-point raises in the next year, starting at the end of 2021, plus more in 2023.  Most of us have purchased a home and understand what a quarter-point rise can do to purchase power.

So, in the end, there will be fewer buyers in the market.  Someone who could afford a home at 3% cannot afford it at 3.25%, let alone more.  The Mortgage Bankers Association thinks home prices will end down by the end of 2022.  Of course, I agree with them.  This will affect everyone, except those who can afford 4% interest or more.

And having lived through times of 8-10% interest, I’m not intimidated.  

Going back to job losses- with the push of employees asking for better wages and working conditions, this rise in interest rates may not affect the price of homes initially because more wages can mean more buying power.  Over 2022 and definitely 2023, prices are going to adjust some, but nothing like 2008.  That was a once-in-a-lifetime event.

On Saturday, we climbed aboard the Durango and Silverton Narrow Gauge Railroad train.  We were taking the longest trip that was offered- a 3 1/2 hour ride to Silverton, CO.  

Silverton is an old mining town that boomed in the late 1800s.  Extracting mostly silver, the town was a bustling area for a long time.  The train was important to get imports into this remote town, and of course, to send out the goods extracted from the surrounding hills.  When walking the town, history is everywhere from architecture, the old jail, and more.  Tales of the wild west are prevalent.  Me?  I stuck to finding cool rocks, good beer, and some pizza.  

The train ride was very fascinating.  The steam engine traveled about 12 miles an hour, leaving plenty of time for seeing the sights of snow-topped mountains, rushing green waters of the upper Animas River, and the hillsides of fall colors.  Some of the best scenery was traveling through narrow rock cuts, where if I were to put my hand out the window, I would be touching green lichen-covered granite.

Other interesting pieces to the ride were observing old train stops, where either coal or water was added to the engine area.  Large water towers, about the size of a really large apple tree, were placed strategically along the route.  We would stop and refill water, which took less than 10 minutes.  Other stops were remote towns.  What industry kept these residents alive and well in their homes eludes me.  Having that remote area to live in would be incredible, especially with the Colorado scenery and quiet that comes with it.

The train itself is restored classic stuff.  The passenger cars are wood interior with refurbished leather seats.  Only 48 people to a car.  The train had a total of about 8 cars, plus a concessions car that served popcorn, burritos, coffee, and bar service.  

When we got to Silverton, everyone came off the train with smiles!  Photos were snapped.  Greetings exchanged.  And we all headed into town for lunch.  The restaurants were waiting for us and we all had a great blue sky day!

This past weekend was peak colors for the Steamboat Springs area.  The multitude of colors on aspen alone was dramatic enough to catch anyone’s breath.  To add the reds of oaks and yellow of cottonwoods made things even more amazing.

On Wednesday, I knew that the peak was near, if not happening now.  K and I were working on what fun thing we might do on the weekend.  Many ideas came to mind, including a quick shopping trip.  I brought up going to north Routt County to the Hahn’s Peak area and check out the trees.  Nothing more was said.

On Friday, we made the decision to leave later in the morning and travel up to see what we could see.

Once we were heading up north on Elk River Road, K got pessimistic about the leaves.  The area we were going through was dull and many leaves had fallen already.  I wasn’t deterred.  I figured this area got an early frost.  My optimism was based on the colors I could see on the tops of the Zirkels near town.

The drive along Elk River did get better.  Many people were already out hiking and fishing.  And once we got to Clark, the hills lit up!

We turned left on County Road 60, just north of the Clark Store.  This road winds around the west side of Steamboat Lake and eventually turns east on the north side.  The neighborhoods here are small and large ranches, many of which are set in epic Colorado scenes.  All along the way, it was bright sunny rays of light on fall colors, leaves moving gently in the late morning breeze.

Hahn’s Peak Roadhouse is a favorite stop for us.  By now, after stopping at the beach for a walk and checking out the marina, it was time to eat.

Hahn’s Peak Roadhouse is a fantastic western stop commonly visited by cowboys, hunters, and tourists.  It isn’t super-special.  It’s just really darn cool!  We sat outside to get more views.  We could see mountains all around us in various stages of Autumn color.  Big slopes of gold aspen next to slopes of evergreens kept us entertained through our meal.

Being time to head back home, we started south and decided to take a quick detour to see Pearl Lake.

Pearl Lake is a bit bigger than I expect every time I visit it.  It has a beautiful landscape of evergreens and aspen.  Its shoreline is an easy walk and makes for a great moment to catch a breeze while enjoying persons on paddleboards glide out and about on the blue water.

Satiated with beautiful nature, we drove back home the way we came- south on Elk River Road.  We waved at the Clark Store and enjoyed watching fishermen along the way.  It was a perfect Colorado day and we are glad we didn’t miss it!

Autumn colors are in full swing in many alpine areas around Steamboat.  We have great colors now- reds, golds, oranges.  The full color of fall is very close, probably less than two weeks away.  The days are warm and the nights on the verge of cold enough for a quilt.  It’s a great time to be in Steamboat!

This link is a video of bears that have made someone’s porch their lounge area.

In the market, not much has changed since I last wrote about it.  Rentals are hard to find for renters.  Houses, condos, and townhomes sell quickly (though instead of selling in one day, it might take a few).  And land purchases have begun to slow down.  Noticeable differences are the number of homes going back on the market as well as those with price decreases. These both have become more active.

Here is the current chart of daily activity:

For the Stagecoach area, land purchases seem to be consistent.  There are many for sale, and several sell each week.  For Steamboat, land parcels are not selling as quickly as I saw in Spring.  There have been sales where the parcels did not reach the asking price.  

Oak Creek has had a few fixer-upper houses on the market for more than a couple of months.  This surprises me.  There are several people looking for projects to make a buck on, but these have been sitting.  In reality, this says the market thinks they cost too much.  For me, they seem reasonable in today’s market.  

Hayden has stayed a consistent market. Houses stay on the market a little longer in Hayden, however, more and more investors are finding this Steamboat bedroom community a place to put their money. New construction is consistent and lots are selling in the same way.

The big conversation that is in the headlines I’m reading is the mortgage forbearance program from the pandemic is ending September 30th.  Many pundits consider the new inventory coming on the market to be problematic.  Overall, the number of households who will sell their homes is small compared to the overall market, which is holding or slowing down.

For giggles, I researched what this means to Colorado.  I found this article and was amazed that less than 4500+ homes statewide would be on the market over the next year or so.  To me, that is a low number.  As well, most of these households are on the Front Range.  In all, this conversation doesn’t mean much to me when looking at both the large and small markets.

And for lumber prices, I went to the building supply store for a couple of 2 x 4’s and a 4 x 4 for a small landscape project.  Granted I haven’t shopped for wood like this in a while, but $41 for a 4 x 4 and $10 each for 6 foot 2 x 4’s seemed steep to me, even with Steamboat pricing.  With this experience, I think that building prices in alpine areas are going to be a bigger factor in housing supply than anything else.  The news on lumber prices indicates significant price drops.  Hopefully, this is seen locally soon.

And a local conversation that is impacting some of my clients and the Steamboat community as a whole is the local government conversation on short-term rentals.

Most ski towns in Colorado have short-term rental programs for their real estate owners.  In Steamboat, the effects of short-term rentals have really begun to be seen.  No one seems to mind them on Mountainside, but in downtown and other residential areas, the effects are seen as changing the community.  

Where a family used to live, now is an empty house that occasionally has someone renting.  These renters do not often cause a problem but are also unattached that they have long-term residents nearby.  This changes many things for persons who live in these areas.  

And advocates for short-term rentals see the government being heavy-handed.  In my experience, I’ve seen the government give and take away a number of times.  

If a search is done on local news across the state on short-term rentals, many articles will come up.  Breckenridge has just changed their policy and limited the number of rentals for the long term.  Vail has had many struggles.  Steamboat Springs is another town navigating its way through making things work while understanding you can’t please everyone.

Here is an on this subject:

Steamboat Planning Commission Discussion

The weather is clearly changing in Steamboat.  Temperatures are cooler.  We are experiencing more rain.  Along the riverway, some cottonwoods have begun to change color.  And the number of tourists visiting has dropped off.  This all adds up to the Fall Shoulder Season beginning.

In the Steamboat market, we are seeing some slowing, but not anything of significance.  Properties are still getting multiple offers.  Some properties are staying on the market a little longer before having an accepted offer.  And persons who need to use a loan to purchase are finding more opportunities.

As I said in my last market report, buyers are changing.  Similar to national trends, buyers are stepping back from properties that are likely overvalued, priced too high.  Often, someone will purchase the property, but it might take much longer and include a price concession.

To me, the amazing part of the Steamboat market is the sale of .25 acre lots for $925,000-$1,250,000.  These lots are downtown and often in or near a commercial area.  It would be good to hear from a buyer of these lots to find out what their plan is for the land.  Hold for years?  Scrape and build?  What makes a property like this a good investment?

For Stagecoach, builders are making moves.  This week a spec house came on the market at $915,000.  The contemporary western construction was surprising, as well as the solid sentiment that it could be sold.  Having seen the market in Steamboat for the past year, it didn’t seem out of line, just not common.  At about the same time, a newer log home came on the market at $925,000 and quickly went under contract.  

Hayden has been the talk about town over the past month.  This article came out, and then about a week later this article came out.  This is very positive for Hayden.  Hayden, which is a major bedroom community for Steamboat Springs, is seeing growth from Steamboat’s job market and now it is generating its own job market.  For buying a home in Hayden, the pattern of slow to sell is still true, taking several days to a few weeks to get an offer.  Home prices have risen as well.  It is very difficult to find a home in Hayden for under $350,000.

The overall Steamboat Springs trends remain positive even though a leveling off of activity is occurring.  It is subtle and is following the national trend.  In my opinion, we are few months behind Denver and the nation.  The market will remain strong and values will hold, we just are not going to see the appreciation rate of 2020.

Over the seasons, it’s easy to get caught up in activities, vacations, and people visiting.  The sun is out, the sky is blue (or snowing), and the days are filled with things to do and smiles. And me, I’ve got a bit of farmer deep inside and watching the seasons has become second nature.

Summertime is the easiest, in my opinion, to get distracted.  The sun is up forever every day.  It’s warm out. And the waterways call our names for swimming and fishing.  Summer has many more things to do as well.  Being outside for Summer is much different than Winter.  In Summer, there is golfing, hiking, and more.  In Winter, most activities are short.

In any season, it’s good to watch for changes.  This Summer has been a good example.  In June, temperatures soared into the 90’s, before Summer Solstice.  Then fires started.  This weather lasted for a few weeks, then, winds came along and temperatures lowered- monsoon rains started a week later.  This weather has lasted July and August, much to our pleasure.  We were anticipating brown hillsides and received a consistent green.  (Though, now later in Summer, most of these plants have lived out their lives and are now browning.)

The farmer in me gave notice this week- a much anticipated cooling off is about to occur.  Since June, we have not seen many days over 90 degrees.  Now, the weather is shifting to be in the mid-70’s to the mid-80’s.  Over the past week, things have been shifting.  Clouds are moving differently.  California smoke is not as prevalent.  And nights have been getting cooler.  The forecast for this week has proven my instincts correct- cooler weather is expected as well as rain. 

This cooler weather is different than just cool weather moving in.  This is a clear shift from Summer to Autumn.  The hot days of Summer are about to conclude and the brisk, fresh air of Fall is beginning.  I realize that Autumn starts next month, but nature doesn’t always pay attention.  Plus, living in an alpine area, cooler weather is more expected than not.

Farmers locally are putting away the last of their hay.  Many folks have been gathering firewood for a month now.  Winter is on the way!  But first, we get to enjoy the changing of Summer to Fall and all the the colors this brings to Colorado!

I don’t think there is a spot in America where Summertime hasn’t taken over.  Summer is a great season, except maybe in the northwest.  The fires that have occurred nearby have been small, and even luckier, mostly contained from monsoon rains.  The forecast looks like it’s going to be sunny, warm, and rainy in the afternoons.

Over the last 15 years, my family and I have dealt with many fires, including being evacuated from three weeks from a fire burning a half-mile from my home.  The evacuation order comes quickly and there is little time to gather things up, let alone find someplace to go.  The Muddy Creek Fire up Seedhouse Road was evacuated recently and help poured in for the residents there.  Like many weather calamities, the community comes together and those evacuated received help.

On to the market-  here’s the stats for today.

This picture doesn’t show several things.  Over the past month, buyers have become hesitant to purchase.  To me, this is fairly new.  There is a trend of buyers not buying because prices have gotten too much for them.  But those with hesitancy are looking to what is going to happen in the next several months.  In the past two run-ups in Steamboat values, both of these trends happened and I started to think we might be at a plateau soon.

This graph also does not show that properties are staying on the market longer.  Yes, there are many that sell within a few days of going on the market.  And some are not, taking up to two months to see an offer. Also, more properties are not completing a sale and are being returned to the market.

As I’ve said in the past, watching Denver trends shines a light on our market.  Over the past several weeks, news articles have been published highlighting a similar trend in Denver.  The first ones came out two months ago.  I didn’t give them much credit because the articles seemed to be written from grandstanding brokers getting inches in the paper.  And they continued, coming from places like Inman and Denver big papers, not just online tabloids.

This confirmed to me something was changing.  

Most recently, I ran into an article (that I can’t remember who wrote/published or I would have a link here- sorry!) from a big paper that spoke about these trends happening across America.  Here is one I found on the slowing market.

Don’t think that the sky is about to fall or that Armageddon is imminent.  This is a pullback from the market surge.  Remember, about a year ago no one knew what was going to happen in all markets.  And no one knew what real estate was going to do.

An interesting trend I’ve seen in Stagecoach land purchases is that there is little speculative buying.  Persons purchasing have specific reasons for buying Stagecoach land, not commonly as an investment.  More so, to build on when they are ready, builders and retirees especially.

I’m looking forward to the next few months.  Business for us all should remain brisk, more like going from a market where hair is on fire to a market where we don’t need to carry a fire extinguisher everywhere we go.

We can definitely feel Summer in Steamboat!  Blue skies and warm temps have made us all a bit giddy.  The river has peaked and folks are enjoying kayaking and paddle boarding.  Bike trails have opened up.  The only thing that slows us down is occasional rain, which we really want!

The market is mostly unchanged from previous articles I’ve posted.  I say mostly because there are days when I can observe changing trends.  I’ve found some buyers pulling back from purchasing, not trusting the real estate market overall.  I still see many landlords selling their properties.  And those who pursue purchasing, do so with fervor.

Here’s the stats:

What is most significant in this chart is the number of listings that have a Price Decrease.  This number is increasing.

Many of the news outlets I read, and those I talk real estate shop with, agree that a stabilizing of the market is close.  It might take until Autumn, but the trends of the past year are beginning to subside.  

For Steamboat, I don’t expect to see much of this until the new apartments being built in town start to fill.  (Approximately 350 units for upper lower and middle income families are being built now.)  This may not put much pressure on landlords overall.  The rental market here is strong.  What I am interested in seeing is the short term rental market.  Many buyers of the past year are looking to manage their Steamboat purchase with rental income.  That being said, there were many buyers and there are many still waiting to get a Steamboat retreat to rent.

Stagecoach

For the past few months, I have spent time in Stagecoach learning the market and area more in depth.  Some of it has been fascinating, such as listening to the reasons persons are purchasing land in this area.  And some of it has been typical, such as persons seeing this area as a place that would make an affordable investment.  

What I have seen in the big picture is people still want a place to get away from home/city/hectic life.  When I talk about the challenges of Stagecoach building, most still desire a place like this.

The Stagecoach HOA board is making progress on old issues.  They recently changed their regulations to allow homes as small as 500 square feet.  This allows for a person to build a tiny home.  And as homeowners bring personal projects to the board, the board works to find a way to make the project happen.  This is really good news. I don’t know how long this trend will last. Overall, long-term residents of Stagecoach are struggling with the number of new families moving in. There is a recent article in the newspaper where the County Commissioners approved a sketch of a project and rezoning even after many residents disproved of it.

The market for lots in Stagecoach is stronger than it has been several years.  Some lots still have yet to reach their 2007 value, and many owners are fine with selling at a loss, especially in a time when they know the lot will see sooner than later.  Some lots are selling quickly and some languish on the market. 

Steamboat Springs in Spring is an excellent season!  Flowers are up and things are getting green.  We have just had several fronts move through that made sure that we remembered that this is still ‘Mud Season’.  Today, the skies are blue and it’s 68 degrees.

Here’s the current Daily Occupancy Report:

It’s a bit boring.  It reflects our shoulder season well.  Being a forecast, I find that it has represented the past weekends well enough.  Many residents can tell that there are more visitors than usual right now.  I don’t know if this is a COVID related trend or the way tourism is going to be from now on.  Next Spring, and even this Fall, will give us more data to work from to understand further.

Land

Many of the customers I am working with right now are buying land.  This is a newer trend.  I suspect this comes from much of the same drive for purchasing second homes and sometimes relocation.  

There are persons who are looking for a place to escape to and a remote location is often top of mind for some folks.  In the Stagecoach area there are lots of locations that provide seclusion and beauty as well as land that is smaller and affordable.  Having up to a few acres provides space and a place to escape to.

That being said, Steamboat has very few lots available.  Builders struggle to find places to build homes.  Hayden has some lots, and those are being purchased at a higher rate than anyone expected.  In Oak Creek/Stagecoach, parcels with utilities are hot right now.  Persons are able to get out to see these lots and decide if they are fit for their new home.  Builders are flocking to this area too.  Availability is good and there are many near the lake that are easier to build on than others located towards Lynx Pass.

Interestingly enough, Stagecoach HOA is in the process of changing their covenants to allow ‘tiny homes’.  The current regulations require a minimum house size of 1000 square feet.  The new criteria would allow homes of 500 square feet.  There are both persons and builders looking forward to this change because it fits what they like to do.

What’s up with the market?

Nothing has changed since I last wrote.  The biggest difference now is that sales continue to be strong through what is typically a slow time of year.  Inventory is maintaining a historic low in all price ranges.  Trying to find a place to buy or rent now is very frustrating.

The Summer doesn’t look much different than today.  Without more building or higher interest rates, housing will continue current trends.

What will happen at the end of COVID?  That’s a good question.  With the amount of money the government is investing into the country, the increase in wages persons are getting from workforce shortages, and the great savings families have from not spending for a year, the US economy looks great.  When we all get back to the new normal, maybe this Fall, that’s when we will see some changes in spending patterns.