One of the questions I’ve been asked most frequently lately is “What is the Crested Butte real estate market going to do in 2021?” After all, the second half of 2020 has been record breaking, with increasing prices and falling inventory levels. So the natural question is how long that will last…
I should start off by saying that I certainly don’t have a crystal ball- I unquestionably wouldn’t have guessed what 2020 would turn out to be at this time last year. But I do spend a lot of time looking at what’s happening in the Gunnison and Crested Butte real estate market. And I was a total Economics nerd in college (it was my minor), so much so that I was in some Econ honor society/ fraternity thing that I don’t remember a whole lot about. So with that said, let’s look at what’s been happening in 2020, and whether or not that is likely to continue in to 2021.
- Inventory levels: Inventory levels have been some of the lowest we’ve ever seen in Crested Butte, and elsewhere across the country. There are many reasons for that. Many homeowners are happy with what they have, and therefore have no plans to sell anytime soon. Other property owners would like to upgrade, but they can’t find anything that they would like to upgrade to, so they aren’t selling either. Meanwhile, what about new housing? In the ten year prior to the 2008 market crash, there were a number of large projects in the area- Prospect, West Wall, Mountaineer Square, Black Bear, Pitchfork, Buckhorn Ranch, Larkspur, and even the Verzuh Ranch annexation in downtown Crested Butte. In the past 10 years, we simply haven’t seen development on that scale- Timbers and Aperture are really the only ones that quickly come to mind. Without some sort of increase in supply, and in the absence of decreased buyer demand, prices will continue to rise.
- Mortgage Rates: Mortgage rates have been at record lows for these past few months. The Federal Reserve has indicated that they would like to keep interest rates near zero until 2023. While there is a lot of uncertainty about interest rates, I would expect that rates will stay low for the next several months, if not the entirety of 2021. Low interest rates fuel buyer demand, so at least on that metric, we should still see plenty of eager buyers in Crested Butte.
- Work From Home: We have seen a number of buyers that are now able to work from home either permanently, or at least for extended periods of time. For these buyers, having a place to come to, or even to relocate to, seems preferable to working from home in Texas or the front range of Colorado. I believe that this segment of buyers will start to slow down, as we gradually (hopefully!) get back to normal in 2021 thanks to the vaccines that are now available. But I do think that the pandemic showed that workplaces may look different in the future, with less of a reliance on traditional office spaces.
- Bigger is Better: Prior to the pandemic, we didn’t see a strong buyer sentiment for large homes. But these days, homes with a home office, home gym, and mother-in-law suite suddenly became much more appealing. Homes that had been sitting on the market, off and on, since the beginning of my career seven years ago, were finally selling. In the short term, I believe that those features will continue to be sought after, especially when it comes to the hoe office (see bullet point above).
- Foreclosures?: You may have seen a clickbait style headline proclaiming a rash of foreclosures on the way in 2021, like we saw in 2008. unlike the time frame leading up to 2008, however, lending standards remain tight, and we aren’t seeing a lot of property owners taking out huge home equity loans like they were back then. The majority of property owners have a lot of equity in their home, so rather than be foreclosed upon, they will likely be able to sell their home and at the very least break even, or even make quite a bit of money. As unfortunate as that decision might be for anyone with financial distress, at least the equity situation is a good one. So I would not expect to see many foreclosures in 2021.
- Land Sales: Land sales picked up during the second half of 2020, and I expect to see that trend continue into 2021. Despite high building costs, many buyers are choosing to buy land and build, due the lack of housing inventory.
2021 Crested Butte Real Estate Outlook Conclusion
Add up all the bullet points above, and it seems clear that from a macroeconomic level, we shouldn’t expect to see a drastic increase in supply, or a drastic decrease in demand. That would lead me to think that 2021 should turn out very similarly to the second half of 2020. Questions? Shoot me an email or give me a call–