How have STR regulations affected Steamboat’s real estate market?
Even though regulations on short-term rentals in Steamboat Springs are still new, having just passed in June, local realtors have already noticed some effects on buyers’ preference for homes.
Jill Limberg, managing broker at Steamboat Sotheby’s International Realty, described a real estate climate in which properties listed in the areas where short-term rentals are restricted or not allowed aren’t receiving as many offers as the ones where short-term rentals are allowed without restrictions.
Limberg compiles weekly real estate reports, but stats comparing real estate listings in different zones of the new short-term rental overlay map aren’t yet being recorded. The overlay map put limits on the number of short-term rental licenses issued within certain areas of the city.
Even though Limberg doesn’t yet have concrete stats, she said she has seen firsthand how the overlay zones are altering the market.
“The properties that are in the section of the overlay map that don’t allow nightly rentals that don’t have the potential to be grandfathered in, those properties are sitting on the market,” Limberg said. “Because they’re sitting on the market, we’re starting to see some price reductions with those properties.”
Properties that were operated legally as short-term rentals during the year prior to the overlay zone’s passage can apply for legal nonconforming status.
“The market used to be segmented,” Wade said. “Properties south of Walton Creek didn’t short-term rent very well. When Airbnb and VRBO came into existence, a well-staged property with the right characteristics south of the creek without amenities all of a sudden started renting really well.”
While he said it’s likely the overlay zone is having some effect on the real estate market, he believes it’ll take several more months or even years to get an accurate picture.
“Before, you had to be north of Walton Creek with amenities,” Wade said. “So it’s almost like we’re going back to that time in some ways, with exceptions for the units that are grandfathered.”
Limberg and Wade agreed that a variety of factors including rising interest rates, inflation, an unsteady stock market and the uncertainty surrounding the war in Ukraine have been slowing down the real estate market nationwide and in Routt County.
The housing market in Steamboat, in particular, has been cooling off for several months after a two-year stretch during which real estate boomed more than it ever has, according to Wade and Limberg.
“Since COVID hit, we all were worried that there was going to be no market,” Limberg said. “It ended up being insane.”
After the influx of buyers who come to Steamboat during the pandemic, Limberg explained, it became routine to receive floods of offers within 24-48 hours of listing a property.
“While this market was going bonkers during the feeding frenzy, realtors would go to meet with sellers to list their houses, and the seller would hear that their neighbor’s house had been put on the market for this astronomical price and sold really fast,” Limberg said.
The sale-to-list price, which measures the average sale price compared to the property’s listed price, was 98.4% in August, according to Redfin.com. August was the first month since December 2021 with a sale-to-list price below 100%, meaning August was the first month of 2022 where, on average, properties sold for less than their listed prices.
“There was really no rhyme or reason to why people were pricing their houses where they were,” Limberg said. “They were totally taking advantage of the market because they could, and there were enough cash buyers in the market. When somebody pays cash, it doesn’t matter if that house appraises or not because they’re paying cash. They don’t need to have an appraisal.”
But Limberg says those days seem to be in the rearview mirror as properties are receiving fewer offers and buyers have more leverage.
According to data compiled by Redfin.com, the median days on market, which identifies the typical amount of time properties take to sell, was 13 for the month of August in Steamboat —the highest Steamboat’s market has seen since January.
“People have time to make decisions,” Limberg said. “Buyers have the opportunity to put in inspection clauses, which they weren’t able to do before because you wanted to make your offer as good as you potentially could.”
Both Limberg and Wade said buyers have more leverage now than they did at the beginning of the year, as buyers are more capable of putting contingencies in their contracts and demand inspections.
“The moderation needs to happen at some point,” Wade said. “Right now, we’re seeing healthy moderation. That could change at some point, but so far, it’s been encouraging and we’re remarkably resilient.”
Both Limberg and Wade said they expect local real estate agents to get back into a traditional workflow after more than a year of turning over properties at such a quick pace.
“You’d get a listing and have all these offers to deal with,” Limberg said. “Now you put a property on the market and you get showings. Then you get offers several days later. You can actually go through the process like normal.”
To reach Spencer Powell, call 970-871-4229 or email him at spowell@SteamboatPilot.com
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