Guest Commentary: Stuck in the middle
There’s a new phenomenon occurring in the midvalley these days; a new normal that’s taken hold largely as a result of the record-breaking housing market here.
Call it a side effect of a trend in which sales volume has been climbing along with prices for the better part of two to three years. And it’s all due to market forces that benefit some and can handicap others — conditions for which we have little control related to the laws of supply and demand, the job market, the national and global economy and consumer confidence in general.
If you’ve tried to find a rental in Basalt or Carbondale recently, you likely found there’s not only little to choose from, but prices are hovering in and above the proverbial stratosphere. If you’re in the market to buy, you better be ready to shell out the dough. Homes between $600,000 and $800,000 are in particularly high demand and, if in good shape and in the right location, sell quickly — even ones that, frankly, are way overpriced. Not since before the Great Recession have we seen the mid-valley rental and sales market this tight and expensive.
Case in point, the owner of a four-bedroom home in Willits with an additional attached one-bedroom apartment is getting $5,200 a month. That’s significantly higher than what the typical mortgage payment would be if you were able to buy the house! Further, single-family homes offered for rent around the $3,000 mark often see a parade of applicants and frequent bidding wars. With more people headed to the Roaring Fork Valley for all the reasons the rest of us are already here, and fewer housing options, something’s got to give.
The past few months, I’ve been working with a local couple. Both have solid jobs and are highly qualified. We’ve been looking for a three-bedroom townhome or condo within biking distance to Carbondale for $450,000 or less. Eventually we found one and wrote it up. Unfortunately, a full price offer came in about the same time we submitted and the seller went with the higher number. Since then, we’ve looked for other options, but they simply aren’t there. A recent MLS inquiry of homes under $500,000 yields 10 offerings, and two of those are under contract.
Obviously, it’s a very frustrating situation for those on the hunt; but at the same time, a windfall for those looking for cash flow or to cash out. But how long might this dichotomy endure? Some think the market will continue to throttle up. But after nearly eight years of record area activity and sales the past two years, local experts think the latter might be a stretch as indications are a slowdown (a correction not a collapse) may be around the corner. There’s simply a limit to what people will pay for homes and rentals, and those in search of one or the other are literally stuck in the middle.
However, with this year’s valley-wide real estate market poised to exceed the $2 billion mark, it’s hard to fathom the party might be coming to an end. Some would argue there’s lots more action to come thanks to the sky-high stocks, wealthy baby-boomers and never-ending demand for our irreplaceable mountain lifestyle. Willits is booming, friends in construction and architecture have plenty of projects, brokers have had a very busy fall. There are certainly more people in the valley than I’ve seen in my 15 years here. Even big money from Aspen is making its way down.
But national stats and facts tell us the percentage of Americans who own their own home is down, wages related to cost of living are not what they used to be, interest rates and inflation could rise again, and now we hear the bureaucrats in Washington are considering reducing or even eliminating tax breaks designed to encourage home ownership and individual real estate investment. So, it’s hard to say, which scenario we’ll see unfold in the next year or two.
What I do know is my young buyers looking to spend half a million dollars on their first home here in the valley remain on the sidelines. For now, they are happy to rent and can afford to do so. But it pains me to realize they could be enjoying the pride of ownership, contributing to the local tax base, building equity and taking advantage of substantial tax deductions. And of some concern to me, I don’t get paid until they drop the cash and take the keys.
With all that said, we’re certainly in a dynamic market down-valley these days. There’s opportunity for every time and market, and at times like these, watching the horizon for the weather ahead is key. For real estate pros, it means making sure sellers are priced appropriately so as not to repel the buyers they are looking to attract. On the other side, brokers should be working to find their buyers options that might not be on the market or yet to be listed. Having a tough, confident negotiator can prove valuable now, too.
It’s an exciting, active and opportune time now. Take advantage of it, but proceed diligently with a knowledgably expert at your side.
Scott Bayens is a real estate agent with Aspen Snowmass Sotheby’s International Real Estate with more than a decade of experience with buyers and sellers. He’s been a renter, landlord, investor and homeowner through every kind of market. Scott can be reached at email@example.com.