SUMMER 2020 SETS AN ALL TIME RECORD
![](http://dev.vailpropertybrokerage.com/wp-content/uploads/2015/05/2560-Hero-Pics-830x323.jpeg)
Let’s start with the biggest story of 2020. Four hundred thirty (430) families purchased 1.2 billion dollars of real estate last summer at an average selling price of $2.7 million. This surge in demand was completely unexpected after COVID-19 shut down the country with Vail Resorts closing all 34 ski areas mid- March with less than 48 hour notice. Air travel came to an abrupt stop with TSA reporting less than 4% passenger traffic passing through airport security. Travel and Leisure is heavily dependent on destination guests which led us to believe that resort real estate was dead in the water, because what family is going to buy a seven digit occasional use home without seeing it in person? The pandemic immediately forced us to prepare for another economic disruption which came on the heels of the Great Financial Crisis ten years later. Based on experience we knew what could happen making us think here we go again but with the hope of a much quicker recovery.
Those very dark days began to see twinkles of light in May when another completely unexpected trend began to emerge. The phone started ringing with buyers calling about Vail Valley real estate but for two very different reasons. Fear of the virus in larger cities made social distancing intimidating and in combination with business America embracing remote working, our modern world is now forever changed. Buyers who had traditionally been interested in spending 2-4 weeks a year in our jewel of the Rockies began thinking about spending months which was unusual. This early adopter movement convinced many families that they could spend more time away from congested places in favor of better quality of life locations which unleashed a frenzy of activity that culminated in an all-time sales record for ski proximate homes in the Upper Valley and Beaver Creek adjacent neighborhoods. This newly discovered flexibility as to how people work and where they can live will be a game changer that has only just begun. Demand for best of the best places near beaches, deserts, golf, islands or mountains is going to explode as families with more money than time seek lifestyle enhancement and portfolio diversification while remaining connected to the office.
Our predictions are speculative, but based upon data analyses and leading indicators the summer of 2020 pushed Eagle County volume to over three billion dollars for the first time ever convincing us that this was not an outlier event but rather a paradigm shift which by definition is rare and seldom occurs in one’s lifetime. Having been born in 1952 I have only seen three: 1) women working, 2) blue to white collar employment, and 3) technology which includes the internet with increased connectivity around the world. Paradigm shifts change the human experience with the pandemic’s most lasting impact being lifestyle and locational mobility. The Vail Valley is already a winner in this race for higher quality living with our piece of paradise being the right place, at the right time, with the right environment that will let people live longer and better provided they have the financial wherewithal to be here.
As for 2021, increased pricing is almost a certainty as supported by data analytics, some of which can be found on page 2 of this newsletter or at www.vailpropertybrokerage.com which has just been updated with additional Financial Performance projections. Next summer’s story will be the lack of inventory because 430 families buying 1.2 billion dollars of ski proximate homes left us with almost nothing on the market and fewer sellers willing to part with their beloved family legacy homes. Having had more than a hundred phone conversations over the past six months most of these inquiries were curious and favored a wait and see attitude which at the time made complete sense. These “on the fence” families chose to postpone any decisions until such time as the risk profile lessened but are now thinking about moving forward on the idea of a second home which differs from a vacation home with length of stay being the difference. If in fact demand transitions from days to weeks or months, then size and privacy will become more important than proximity to the ski villages in smaller cramped spaces. While this cautious approach made complete sense at the time, we worry that it will have been a drastic mistake. Demand is going to soar over the next 3-5 years as remote working increases flexibility allowing affluent families the privilege of seeking out best of the best quality of life communities which will intensify competition where the only the wealthiest will prevail. Stock market performance which has been driven by low interest rates and TINA (there is no alternative) in conjunction with the US Treasury printing $4 trillion of stimulus money with more on the way, makes capital market investing a gamble leaving world class resort real estate a smart portfolio hedge and lifestyle enhancement alternative. Vail’s long term appreciation will continue based upon baby boomer demographics, US household formations, and a growing inequality wealth gap as the rich get richer, along with massive inter-generational transfers of wealth leaving us with a “have or have not” society.
All of this is a much longer story but regardless of timing and magnitude Vail Valley real estate seems to have almost no downside and is an idea worthy of serious consideration. Vaccines are being distributed, the new administration is committed to additional supports, and the FED is focused on liquidity and record low interest rates. While these elements will all contribute towards an improving economy, they could become genies that escape from their lamps driving inflation and the national debt to unmanageable levels.
As to the summer of 2021 we are expecting burst pricing of 10%-20% and are recommending buyers prioritize this issue before the next surge of demand arrives next summer. Casual interest is just not going to make a Top 10% property purchase happen with lack of inventory being the real challenge; so buckle up because it’s going to be a bumpy ride.
Should any of this ignite your interest to learn more about our very expensive and hard to understand marketplace, give us a call or send questions that will be answered based upon 27 years of Vail Valley experience, proprietary analytics, and a fiduciary commitment to your best interests with no hidden agendas or undisclosed conflicts of interest.
Greg Strahan Connie Kincaid-Strahan