Colorado has five counties where more than half of the homes are vacation properties, and the state’s vacation homes, those near ski resorts, are among the most expensive in the country, according to a new study from the National Association of Realtors.
But when it comes to home price appreciation, the biggest gains the past five years have come in the state’s most “affordable” vacation home havens, those without any ski resorts.
More than half of the housing stock in Pitkin, Jackson, Summit, Grand and Eagle counties are vacation properties, according to the NAR.
Only three other counties are more concentrated when it comes to vacation properties than those five — Nantucket and Dukes counties in Massachusetts and Cape May County in New Jersey.
“Every individual has a different financial picture they are dealing with,” said Mike Budd, a broker at Berkshire Hathaway HomeServices in Edwards, about vacation homeowners.
Wealthy buyers from Texas, Florida, Illinois, New York and California still dominate in traditional ski resort counties like Pitkin, Eagle, San Miguel and Routt.
Newly affluent buyers from the Front Range tend to land in Grand and Summit counties, which require a shorter drive to hit the slopes.
And a different group of buyers, who can live without powder runs, are snapping up homes in more affordable vacation counties like Lake, Park, Chaffee, Fremont, Huerfano and Custer counties. Those areas have enjoyed double-digit price gains since 2013, beating the brand name ski counties and ranking in the top 25 nationally.
Two trends have combined to drive demand up for vacation homes, said Lawrence Yun, chief economist at the NAR, in the report.
Household net worth has doubled the past 10 years, reaching a record high of $100.3 trillion in 2018. And mortgage rates are at historic lows, which lowers borrowing costs.
“Some of this tremendous build-up in wealth, although concentrated, has been channeled to increased demand for vacation homes,” Yun said.
NAR defined a vacation-home county as one where 20% or more of the homes are used primarily for seasonal, recreational or occasional use. About 206 out of the nation’s 3,141 counties fit that bill in 2017.
In many states, places like Wisconsin and Michigan, vacation homes are a fairly affordable getaway that won’t break the bank. But that isn’t the case in Colorado, home to six of the top 10 counties for the most expensive vacation homes, as measured by the median price of a home sold, according to the NAR study.
The priciest nationally was Nantucket County in Massachusetts at $1 million, followed by Pitkin County at $710,443, Eagle County at $636,525, and Summit County at $577,663;
Grand, Chaffee and Park counties also made the top 10.
Despite the expense of the typical Colorado vacation home, many buyers don’t require a mortgage to purchase them.
“Believe it or not, there are $20 million cash buyers,” Budd said.
If home price appreciation can beat a money market or Treasury yield, that often is enough for wealthy buyers. They aren’t necessarily chasing the highest return possible.
There are two notable exceptions when it comes to eschewing mortgages. In Grand County, 60.5% of mortgages are for second homes, the third-highest ratio in the country. And in Summit County, 51.4% of purchases involve a second-home mortgage.
Those two counties are also ones where vacation home transactions have surpassed the old highs set last decade, Budd said. That isn’t the case in most of Colorado’s resort areas.
