In 2018, the Steamboat Springs real estate market saw its first annual decline in total transactions in a decade. Why, you ask? Global trade tensions, stock market volatility and a government shutdown are definitely contributing factors to the nationwide industry trend, but these factors don’t make up the entire picture. 

“When people hear that real estate sales have been dropping, they might assume that it means the market is in bad shape,” shares Steve Goldman, CEO for Colorado Group Realty. “In reality, the market is just not growing at the rapid pace that we’ve grown accustomed to. While transactions were down in 2018, total dollar volume and median home prices were both up.” 

Since the economic downturn, mortgage rates have been close to historical lows, helped by quantitative easing by the Federal Reserve. The government’s strategy encouraged investment and lending by purchasing mortgage bonds and keeping the rate at which banks borrow money low. In 2018, the Federal Funds Rate was raised four times causing 30-year mortgage rates to increase to near 5%. However, rates have since dipped back down to around 4.25%, leading to an uptick in nationwide pending home sales. 

The Steamboat real estate market is hugely competitive, especially at the entry level where demand greatly outweighs inventory supply. As more millennials become home buyers, demand will likely continue to grow. Steamboat isn’t the only place with an affordable housing issue. Across the country, lower cost housing supply is massively constrained; rising population, job growth and limited residential development are having an impact. The construction industry suffered a huge hit during the economic downturn and left behind a depleted workforce. Increasing land and building material costs are also having a detrimental effect on new developments. 

“Private developers just aren’t building affordable housing because the economics don’t make sense. It’s hard to make enough profit given rising building costs, so the public needs to participate in developing their communities to ensure growth and diversity,” commented Goldman. Many cities are moving toward public/private partnerships to build affordable housing as evidenced by Steamboat’s 2017 passage of Referendum 5A to provide funds for affordable housing projects.