As second home buyers flock to Colorado resort areas like Vail Valley and Breckenridge for idyllic summer temps, mountain charm, and favorable housing options, one thing often remains a mystery – who is buying and why?
The latest reports from Land Title Guarantee Co. reveal 42 percent of all transactions in Summit County (Breckenridge, Keystone, Copper) year-to-date (YTD) were purchased by residents from the Front Range (Denver Metro). The close proximity of Breckenridge to Denver provides residents a higher quality of life, just one-hour from mountain activities like skiing, snowshoeing, hiking, and fly-fishing.
In Eagle County (Edwards, Vail, Beaver Creek), approximately 17 percent of property sales YTD came from the Front Range, while nearly 30 percent came from out-of-state, including traditional Colorado feeder markets like Texas, California, Florida, and Illinois. With the charm of a European-inspired town, Vail attracts buyers from all over seeking exquisite mountain views and Colorado’s quintessential active lifestyle.
Experts say “a wealth surge” is responsible for boosting the second home market noting “many well-off Americans have been getting wealthier.” In fact, the United States added more than one million new millionaires in 2017 as stock prices rose, per the Global Wealth Report published in December 2017 by Credit Suisse.
According to Realtor.com, Hawaii and Colorado posted the nation’s fastest luxury price growth, beating out traditional luxury hubs like New York and San Francisco. Luxury home prices increased in Maui by nearly 33 percent, while Eagle County Colorado rose by 31.5 percent.
In 2017, the National Association of REALTORS® (NAR) Investment & Vacation Home Buyer’s Survey indicated buyer confidence reporting, “more than 80 percent of vacation buyers think now is a good time to purchase real estate.” Additionally, 23 percent of vacation buyers stated they are likely to purchase an investment property, while 21 percent are very likely to purchase another vacation property in the next two years.
What does all this mean? Vacation properties in resort areas like Colorado are on the rise. The NAR report indicates that resort and rural areas make up for 50 percent of the vacation home market, with 14 percent of buyers specifying the mountains as their vacation homebuying area of choice.
For those weighing their options, it’s important to ask yourself how you plan to use your vacation home – for enjoyment, for income, as an investment, or all three? There are several key factors to consider, including lifestyle and location, accessibility, current low mortgage rates which are expected to rise, tax laws, plus maintenance costs vs. supplemental income.
According to the Sotheby’s International Realty Global Luxury Residential Real Estate Report, ultra-high-net-worth (UHNW) demand for residential property is growing fast with 79 percent of the world’s UHNW population owning two or more residences. Of that percentage, secondary residences are 45 percent more valuable and twice as large. Key findings from the report indicate that purchasing decisions are driven by emotional value, practical value, and business value, and considering that seven percent of the world’s UHNW fortunes are made through real estate, it’s tough for second home buyers to simply sit on the sidelines.
Top features for renters and second home buyers in Colorado go beyond the typical ski-in/ski-out chalet. People want square-footage, luxurious guest quarters, and room to accommodate family and friends. Swimming pools, hot tubs, fire pits, and wine cellars top the list of must-haves, as well as kid-friendly amenities, parking, and a deck or terrace to take in the majestic mountain views. Resort buyers aren’t willing to sacrifice on location either. In Colorado, they want easy access to the slopes, as well as proximity to nightlife and entertainment, like Vail’s acclaimed foodie scene and upscale boutiques, or Breckenridge’s quaint bars and shops.
As year-round outdoor recreation opportunities take precedent, traditional ski towns are starting to take note, with areas like Aspen, Telluride, Breckenridge, and Vail catering to year-round events and entertainment.
So far this year, market data collected by LIV Sotheby’s International Realty demonstrates continued growth in the resort region, with an increase in average home prices and fewer days on market for both Eagle and Summit Counties. Additionally, Land Title Guarantee Co.’s reporting shows international buyers from Sweden, United Kingdom, New Zealand, Canada, Australia, Mexico, and Grand Cayman purchased property in Colorado in 2018.
With fewer days on market and increased demand, sellers and renters in resort markets are seeing a healthy return on investment, while buyers across the Front Range and the globe are finding the perfect spot to park their cash – secluded retreats in the Rocky Mountains.