by steamboatsir | Aug 29, 2022
A conversation with Managing Broker, Jill Limberg
There’s no sugar-coating the fact that the real estate market has experienced a few waves of uncertainty in recent months as financial indicators have brought a dose of reality to the post-pandemic boom. The good news is that the market here in Steamboat is as robust as ever; it’s just not as gangbusters as it was a few months ago. “In the peak of the craziness of the market, multiple offers were the norm. In some cases, I heard of 20 offers at the same property at the same time,” says Jill Limberg, Managing Broker, Steamboat Sotheby’s International Realty. “We’re still seeing multiple offers on some properties in certain sectors of the market, but more like 3 instead of 20.”
At the same time, a return to relative normalcy means price reductions have come to the fore as aggressively priced properties aren’t selling at crazy prices right out of the gate. “There are situations I’m aware of where buyers are getting some decent discounts on properties, so the actual list to sell ratio is changing a little bit,” Limberg says.
During the peak of the market, the average list-to-sell ratio was 100%. In the last couple of weeks, Limberg says it’s come down to 99.29%. “While it’s not a significant drop, it’s definitely an indicator that things are changing a little bit.”
Still, the market remains strong with average prices that are still going up, though “that may change,” warns Limberg. The average price of a single-family home in Steamboat held steady at $1.6 million for the last several weeks and then popped up to $1.7 million. And condos are still garnering 102% of the asking price.
One marked change is the short-term rental ordinance that was approved by Steamboat City Council in early June that implements restrictions in specific zones close to the ski resort and in downtown. “With the new STR ordinance, we’re starting to see a preference for properties in the green zone that have no restrictions on short-term rentals. On those properties, we’re seeing multiple offers. In the red zones where there are restrictions in place, we’re seeing properties that sit on the market and require price reductions. That was one of the issues the Board of Realtors warned City Council about.” (For a map of STR zones, click here). Single-family homes have held their value despite the new restrictions, which are also happening in resort towns across Colorado.
Regardless of the new legislation, change is coming. “It is a known fact that when the market starts changing, clients don’t realize it’s changing until it’s already happened,” Limberg says. “I see lots of sellers list their homes for these crazy prices trying to jump on the bandwagon, but they kind of missed the parade.” Limberg advises sellers to be patient. “Buyers have gotten smarter, and they are not buying because they think the prices have gotten too high, and that’s why we’re starting to see price reductions in our market, and we are seeing properties sitting longer.”
There’s no question that sellers will have to be more realistic about pricing. “Honestly, the market speaks for itself. If you price right, there are enough buyers waiting, and you will still have multiple offers on those properties.”
For buyers, the good news is that the feeding frenzy is over. “It was a circus for sure. Buyers knew it was a competitive situation and were pulling out all the stops to sweeten the pot, and there were so many crazy things that happened,” Limberg says. “There are still people who are willing to up the ante by paying more, but the days of craziness are past us, and people are able to catch their breath.” Higher than normal sale prices combined with rising interest rates are causing buyers to take a pause. The absorption rate is slowly going up, from 1 month at its lowest to 3 months currently. “Statistically speaking, when the absorption rate gets to six months, then it’s considered a balanced market,” Limberg says.
Inventory is on the rise, a good sign for buyers. In January 2022, there were 234 listings in Routt County, and at the lowest point, that number reached 231. It’s currently at 443. “There’s definitely been an increase in the number of listings on the market, and that’s going to start balancing things out.”
The high-end luxury market remains unaffected by change due to cash buyers and a fluctuating stock market. “There are a lot of people who are hedging their bets on real estate, and the high-end market continues on. CaSh buyers are still king, and there are still big-number properties that are flying off the shelves.”
The market has slowed nationally and is expected to drop 16.8% over the next year, according to the National Association of Realtors. “That might sound like a lot, but considering how high prices were, it’s merely a correction. It’s key that people understand that,” Limberg says. “After the feeding frenzy we’ve had over the last two and a half years, this is a return to normalcy.”