Tourist centres hit hard by COVID-19 shutdowns are reviving as frustrated urbanites seek to escape their homes for the first time in months – and the benefits are flowing to mortgage originators.
One such tourist mecca, Colorado ski town Breckenridge, is witnessing an uptick in summer rentals that more than compensates for the loss of the latter part of the ski season, says Don Reynolds, owner at Apex Mortgage Brokers. It’s a development that has coincided with a wave of refinances to lock in low rates.
Breckenridge is known primarily for its skiing, so the summer influx has taken Reynolds by surprise.
“There’s been a boom in summer rentals starting in July and August. We’d have tourists in that period [pre-COVID] but it wouldn’t be substantial. Now, one property management company is at 87% capacity for the month of July – that’s unheard of.”
Reynolds explains that many of the homes in Breckenridge would be considered second homes. The owners, who refinanced their properties at lower rates and are now earning unexpected rental income, are doing well.
Apprehension that the town would be vulnerable to a severe downturn because of lingering restrictions on travel have proved to be overblown.
“We overestimated the effects of investment properties not being able to make income,” he says. “We anticipated that some people counting on that income from tourism might be in a situation of having to sell off the property. We lost the last week of Spring Break and overestimated the effect of that, frankly [given that Spring Breakers tend to be on a tighter budget]. And now rental income lost in the ski season is being made up for in the summer.”
Lockdown might be the secret to the alpine town’s success given that the summer visitors seem to be fired up by the last three months of confinement to their homes.
“We’re seeing a wave of people coming up from Denver because they have cabin fever and they want to get out,” Reynolds says. “Fathers’ Day weekend, the freeways were packed, traffic was gridlocked. People were cycling, fly-fishing, hiking up the mountain trails. People are trying to get back to normal.”
Maria Teodoru, real estate broker associate with ski country specialists Slifer, Smith, Frampton Real Estate, echoes Reynolds’ perception of a thriving market, noting that while a 25% year-to-date drop in closed transactions had been recorded compared to 2019, “the great news is that from June 1 to June 15 the median sales price is up 29 percent.”
Teodoru says the average sales price in the area was $758,000 in June of 2019. A year later, it was $857,000.
“That’s a 14% increase,” she says. “The average sales price
Powering that spike is a resurgent luxury market.
“Ten of the 45 closings in June are on properties that went for a million dollars or more – that’s a 22% increase in sales over a million,” she says. “Three of those were of properties worth more than $2.5 million, and the highest went for $3.125 million.”
The drive to own in the picturesque mountain town is evident at all levels: Teodoru says that between June 1 and 15, 170 residential listings were bought to market. As of June 24, 43 of them were already under contract.