2022 has been a stellar year for the Steamboat Springs real estate market with price growth, strong sales, and legislative changes that drive demand. Here’s a look back at the housing market’s performance in 2022 thus far.
Located in scenic Yampa Valley, Steamboat Springs is renowned for luxury travel with its powdery slopes and snow-capped mountains. Home to the Steamboat Ski Resort and Howelsen Hill, it has earned the nickname “Ski Town USA” from vacationers and professional skiers from around the world. In fact, Steamboat has more Olympians than any other place in the United States, including World Champion and six-time Olympian Todd Lodwick.
But the city is quite diverse – no advanced skiing skills required – and offers an array of real estate options for buyers and investors who’ve been captivated by this historic town in the Rockies.
Latest news and updates on Steamboat Springs real estate
Despite uncertainty in the economy and higher inflation and interest rates, Steamboat Springs real estate market has been well-positioned due to market resiliency, high equity, low supply, and the long-term appeal and desirability of owning a ski property in the area. Most importantly, Steamboat property owners are not distressed, which makes for a stable community and a thriving real estate market.
Prevailing trends in the past three quarters of 2022
Q1 2022: A return to normalcy
The first quarter of 2022 has seen buyers and sellers return to a semblance of normalcy as the U.S. emerges from the coronavirus pandemic. This meant more balanced and level-headed negotiations of sales terms, prices, and closing dates as the market became more moderate compared to the real estate frenzy of 2021.
With higher levels of vaccination and an easing of restrictions, buyers could take their time in viewing properties. For the first time since the pandemic started, local agents saw the possibility of returning to a more traditional workflow after having to turn over properties at breakneck speed for more than a year. At the peak real estate activity in 2020-21, agents could be flooded with offers after listing a home. In Q3 2022, more agents went back to the regular process of listing and showing homes with offers coming in several days afterwards.
Although sales volume was down 9% for residential properties in Q1-Q3 2022 compared to the same period in 2021, sales volume was 66% higher than pre-pandemic levels in 2019 despite having just a third of housing inventory from that year.
Steamboat Springs resumed many in-person events this year, drawing more visitors, including potential buyers, to town. With the tourism and business sectors fully reopened, it was clear that Steamboat Springs was still an amazing place to live.
Q2 2022: New regulations on short-term rentals
In June, the City Council approved an ordinance concerning short-term rentals in Steamboat Springs. The ordinance includes provisions on licensing requirements, which will vary depending on the rental property’s location within an overlay zone map.
- Homeowners who want to rent out residential property for less than 30 days will need to secure a short-term rental license every 12 months.
- The licensing process requires homeowners to comply with regulations, such as ensuring adequate parking for tenants, promptly responding to noise complaints from the neighbors, and so on.
The overlay zone map indicates limitations on the number of STR licenses that can be issued within yellow zones on the map whereas licenses may not be issued for any residential properties that fall within the red zones.
There will be no restrictions for green zones – these zones include areas that have been zoned for commercial use, such as downtown Steamboat Springs along Lincoln Avenue as well as the areas near the Steamboat Resort. Property owners whose homes fall within these green zones only need to secure an STR license.
Property owners who have been legally operating STRs within the last 12 months can apply for legal non-conforming status and demonstrate that they have rented out their property for a certain time in order to secure an STR license. The decision to grant non-conforming status is part of the City Council’s strategy to phase out STRs in primarily residential neighborhoods.
The ordinance is meant to create designations for residential areas with permanent homes and commercialized areas with more foot traffic and a higher concentration of rentals. Local agents believe that it has created a shift in the Steamboat Springs real estate market with property investors turning their attention to areas in the overlay map that allow for nightly rentals with as few restrictions as possible. It has also opened more opportunities for negotiation in neighborhoods where properties can’t be rented out on a short-term basis.
Likewise, buyers who want to buy a permanent residence or vacation home in a more quiet part of town, and have no intentions of renting out the property, will know where to look in the overlay map. Over time, the ordinance will make Steamboat’s residential pockets more desirable to buyers who want to enjoy community living in a quiet and less crowded section of town.
The pandemic brought an influx of buyers to Steamboat Springs. At the height of the homebuying frenzy, it was common for sellers to receive floods of offers within the first 48 hours of listing a well-priced property. Local agents also observed a good number of cash buyers in the market. High demand and low interest rates pushed home prices upwards.
However, local agents believe that the market is starting to stabilize. The number of median days on the market has crept up to 13 days, according to Redfin data – the highest since January of this year.
This does not mean that the market has slowed down. Steamboat Springs real estate continues to be in high demand and home prices are still robust. This only means that the frenzy has died down and there was more moderation in the market in Q3 2022. Although the city is still a seller’s market, buyers are in a better position to put contingencies and inspection clauses in their offers.
Q3 2022: Robust home sales
Real estate sales across Routt County – where Steamboat Springs is located – totaled $27.3 million in early Q3 2022.
Average home prices have increased in most segments compared to a year ago even as the market moderates. Housing inventory remains low, which indicates that homeowners value having a place in the city and that they are well-qualified to keep their homes long-term. Despite uncertainty in the economy, homeowners are in a very different place than 2008 where there was more risk and speculation.
Local agents have also noted an increase in the average sales price in Q3 2022 due to shifts in the number of entry-level and luxury homes that were sold during this period. Although there were an estimated 25% fewer sales of homes that cost under $650,000, there were about 83% more sales of luxury homes worth more than $3 million.
The middle of the market, which includes homes within the $1 million to $3 million range, remained steady year-over-year in Q3 2022. About 48% of homes sold in Q3 2022 were valued between $1 million and $2 million compared to 44% during the same quarter in 2021.
Possible additional tax on short-term rentals
To address the issue of housing scarcity, Steamboat Springs is adding new housing stock with Brown Ranch, a self-contained community that will include single-family homes, apartments, parks, shops, medical offices, parks, and eventually, its own school. With estimated building costs of about $400 million, the City Council will finance the development through a combination of federal and state aid, grants, and revenue from a tax levy that was passed in November 2022. The City Council will impose an additional 9% tax on short-term rental stays. Most of the revenue will go towards Brown Ranch and affordable housing.
Factors that are affecting Steamboat Springs real estate in 2022
Some of the biggest changes in the Steamboat Springs real estate market this year have to do with short-term rentals and how the overlay zone map and the proposed levy can potentially affect the city’s STR market. If you’re a property investor, you can work with local experts in order to better manage your existing real estate portfolio as well as locate your next investment in the overlay zone map.
However, these changes will be confined to STRs and are not expected to have a major spillover effect on regular home sales with buyers who intend to use their properties as primary residences. The proposed blueprint for Brown Ranch is also expected to add new housing stock, giving buyers more options in the future.
Home selling tips for sellers thinking to sell before the year ends
- Although there is steady demand for Steamboat Springs real estate, you’ll still need to make preparations for the sale in order to attract qualified buyers and prevent delays. Working with a real estate agent will help you determine how to stage your property and attract the best offers in the coming months.
- Be ready to entertain any questions about upcoming STR regulations and any new taxes that may come into play, especially for buyers who plan to rent out the home for a portion of the year.
Home buying tips for buyers planning to purchase before the year ends
- As the market normalizes, you might have more space to include contingencies and inspection clauses in your offers.
- Steamboat Springs still skews towards a seller’s market, which means that you’ll need to come prepared. Be ready to make quick decisions, especially for the most desirable properties in the area.
- If you’re buying property with plans of renting it out in the future, find out how the overlay zone map and possible 9% tax can affect your decisions.
- Stay up to date with new developments on STR regulations and taxation if potential rental income plays an important role in your decision to buy a home.
- Ski season typically runs from late November to April. Expect larger crowds towards the end of year. Many out-of-towners view properties during this time so you could possibly be dealing with other interested buyers. If the property of your choice has multiple bidders, you’ll need to come up with a strategy to secure the deal.
- To avoid large crowds, try to schedule your visit after the holidays. The Steamboat Resort area is usually not as busy during this time.
Work with The Paoli Group today
For more detailed information on the Steamboat Springs real estate market, message us here to sign up for The Paoli Group newsletter.