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Tight supply and record demand seen valley-wide
When Vail Resorts purchased Crested Butte Mountain Resort in 2018, it was widely anticipated the move would heat up the real estate market in the Gunnison Valley. Since then, the twin accelerants of a pandemic-inspired exodus from cities and historically low interest rates have combined to create price and sale volume levels that are approaching incandescence.
According to figures provided by Gunnison County Assessor’s Office Communications Manager William Spicer, since 2018 the total estimated value of residential real estate in the county rose by $1.4 billion — from $5.3 billion then to a projected $6.7 billion in the 2020 appraisal year. That’s an increase of 26% — an upward trend that has only steepened in the first five months of 2021.
In the period from May 2020-April 2021, there were 874 sales of residential property in the county — rising more than 30% over the same period in the previous year.
Median sale prices followed the same upward trajectory, rising from $335,000 to $442,000.
Among contributing factors, local real estate professionals are nearly unanimous in pointing to one thing in particular: a shortage of housing inventory.
Kelly McKinnis, owner of Gunnison Real Estate and Rentals, was a member of the Gunnison Valley Regional Housing Authority board for 18 years.
“It’s going to take a lot for us to catch up,” McKinnis said. “Until we can provide more inventory, which is another problem in itself with the lack of construction workers and the cost of materials that has gone through the roof, I don’t see this changing for a while.”
Property values are notoriously prone to cyclical boom and bust fluctuations, so predicting where any given market is on the curve is critically important to real estate professionals, policy makers and consumers. The problem they all face is that answers are rooted as much in human behavior as hard data.
“I look at this market and I see what low inventory can do,” said Berkshire Hathaway’s Teresa Anderson. “We have such low inventory and such a high volume of buyers trying to get into our area, that until we get more housing I think it’s going to keep our prices up and our market moving forward. Honestly it feels more stable than anything I’ve seen in the economy or housing market in the 29 years I’ve lived in Gunnison.”
But not all real estate professionals are ready to relax. Ryan Jordi of TAVA Real Estate remembers the last time boom turned to bust.
“2008 wasn’t that long ago,” he said. “Up until that point I remember that sort of euphoria when the ski area sold to the Muellers and everything was going to turn to gold, and then it just crashed. I was justifying it to myself at that time by saying, ‘Of course, everybody wants to live in the most beautiful, desirable place,’ and we all know what happened.”
Spicer picked up that thread. “It collapsed, but along about 2012 it kind of got back to where that trend line would have taken you if there hadn’t been this boom-bust thing going on. What has happened since then far exceeds that old-style, organic growth we’d been seeing for probably decades.”
That still does not answer the question: is the current market sustainable, or a bubble waiting to pop?
Spicer continued, “That’s where the discussion should go is to ask, what are the drivers of this kind of behavior? And where does it fit in an underlying economic model? And what does that tell you about whether it is stable or not?”
Delaney Keating is executive director of Startup Colorado, a state non-profit devoted to promoting rural economic development.
“There was already a bit of a migration from urban to rural because of things like remote working opportunities, or people just looking to move to places like this because of quality of life,” she said. “(The growth) is also very pandemic related, and we don’t understand the longevity of that. Are these people who will stay, or do they go back? There are theories in both directions.”
Whatever the answer turns out to be, the bottleneck in lack of housing inventory will likely persist.
“We paid for a needs assessment back in 2017 that cost $90,000, and we had strategic planning sessions for three days in Crested Butte to discuss a plan,” McKinnis said. “We haven’t really done much in four years, and look where we’re at.”
“That part of the market under $500,000, I hate to say it, but I’m worried for my friends and neighbors because there’s just not much available,” Anderson said. “When property comes on the market at that price, that doesn’t feel like local housing to me.”
McKinnis agrees. “It’s gotten worse, and it’s scary worse. We truly have a housing crisis right now.”
(Alan Wartes can be contacted at alan@alanwartesmedia. com.)
