In second-home markets both in the U.S. and abroad, the coronavirus pandemic has led to skyrocketing activity from buyers seeking comfort and space in the midst of an ongoing crisis. With pent-up demand from the initial shutdowns and many families still working and schooling from home, the pandemic has also upended traditional selling seasons and created a seemingly never-ending stream of potential takers for properties in desirable locales.
“Almost no matter where you are, you’re looking at less competition [from other sellers], faster selling homes and higher prices,” said Danielle Hale, chief economist for realtor.com. “We’ve seen a huge surge in buyers, a lack of sellers, and therefore homes are selling quickly and prices are rising.”
Areas like the Hamptons on New York’s Long Island saw blockbuster sales in the summer months, and as the weather turns, winter resort markets from tropical islands to high-end mountain towns are seeing the same effect, even in months that might traditionally serve as the market’s slow season.
“Once the leaves completely fall off the trees, the town really would shut down,” said Colter Smith of Christie’s International Real Estate in Aspen, Colorado. “Right now, that’s not really the case. I’m still showing properties every week. People are still looking and are trying to get in before the winter season and lock their place down. It’s a seller’s market.”
All of which means that for sellers who may have been on the fence in recent years, or are sitting on large or outdated properties that may have previously had a limited audience on the market, this is an unambiguously opportune moment to list.
“The market is strong, inventory is down, and demand does not seem to be going anywhere,” said Jason Cole, vice president of operations for Slifer Smith and Frampton Real Estate/Luxury Portfolio International in Aspen and Vail.
Buyers are eager to close, extending stays and obliterating the ‘off-season’
Besides an eagerness to secure properties before any potential future shutdowns, part of what’s driving activity is a change in overall buyer habits, with many owners in resort markets now staying in properties for months at a time rather than weeks.
“There are some companies that have committed to remote work indefinitely,” Ms. Hale said. “Especially for areas that cater to [employees of] tech companies, those companies have become more permissive and granted longer-term flexibility. That enables people to make decisions like relocating to a ski town in Colorado.”
In some cases, this dovetails with the pre-existing trend of shorter off-seasons, as rising temperatures change the calculus in cold-weather markets.
“Nobody likes to talk about climate change, but the weather is more pleasant in the spring and fall than it used to be,” said Rob DesLauriers of Sotheby’s International Realty in Jackson Hole, Wyoming. “We used to close our hotels for six weeks in the spring and fall, then it was four weeks, then it was two weeks.”
Similarly, the busy September buying season has extended into October and beyond, Mr. DesLauriers said.
Even in island markets, some of which have experienced ongoing shutdowns and travel restrictions, buyer activity hasn’t necessarily slowed.
“In the second quarter, when Covid was at its height, and we were on a closed island with a closed airport, sales increased 5.8% year-over-year,” said Robert Greenwood of Regency Realty LTD, an Affiliate of Christie’s International Real Estate in the Turks and Caicos. “We’ve got certain cities that are feeder markets for us, from Chicago to Boston, Miami, Atlanta, New York. I’ve got more New Yorkers buying than I can shake a stick at. They’re wanting to get out.”
The lengthening of seasons applies to both the sales market and the actual amount of time buyers spend in their properties.
“We have become more year-round markets, not just for sales activity but for the visit, people are spending a lot more time here,” Mr. Cole said. “We’ve always heard that people come here for an escape, to be outside, to create family memories. That’s always why people were buying, it’s just more important now, and what we went through from March through May really accelerated that buying process for people.”
Mr. Cole added, “Buyers are coming here for the same reasons, but they want to come here for longer, and it’s sped up that [buying] timetable. People aren’t waiting because they don’t know what tomorrow will bring.”
Low inventory is pushing up prices and speeding up sales
Just as buyers have hit the gas on their searches in the pandemic, many sellers have balked, either out of fear of market uncertainty, or an unwillingness to part with a well-situated escape as cases of the virus continue to rise.
As a result, inventory is at chronic lows.
“It’s painful to have so many buyers and you can’t find anything for them to buy,” Mr. DesLauriers said. “You see people paying new highs for not the best inventory because they’re just not making any more land. Supply is at an all time low.”
This also creates a catch-22 for would-be sellers, making it difficult to upgrade or find new properties within tight markets.
“Part of the issue for sellers is sort of the irreplaceable nature of what they’re contemplating selling,” Mr. DesLauriers added. “I have a number of people who have thought in the past about selling and upgrading within the market, but that is very complicated to do right now. If they sell, they’re probably going to leave the market.”
Recent sales and inventory numbers bear this out. According to single-family home sale data provided by realtor.com, in Eagle County, Colorado (home to Vail), active listings for September were down 49.2% year-over-year, while median listing prices were up 11.1%. In Teton County, Wyoming (home to Jackson Hole), active listings were down 54.5% and median prices up 19.2%. The effect was slightly less dramatic in Pitkin County, Colorado (home to Aspen), where active listings were up by 2%, and median listing prices up by 11.1%.
“Our team has switched from buyers to sellers because of that inventory issue,” Mr. Cole said. “In some areas, there’s nothing on the market within a certain subtype. There’s an opportunity if you’ve been wanting to sell. Now’s the time, mainly because inventory levels are so low.”
Time on the market for many properties is down to about half its usual levels, said Garrett Reuss of Aspen Snowmass Sotheby’s Realty, and for large multi-million dollar plots of land that might have been slow to move in previous years, “The buyer base is much broader.”
This doesn’t mean that sellers can attach outlandish price tags to properties, but it does leave room to push prices upward. “People trying to take advantage and listing 15% or 20% over market value, buyers aren’t willing to pay that unless it’s a truly unique property,” Mr. Reuss said. “But if [the seller] is trying to outpace the market’s last sale by single digits, then they’re typically successful.”
Updated properties command a premium
While truly eager buyers will take on a property in need of updates, most are looking for immediate-term safe havens rather than a renovation project, and will pay the biggest premium for new or recently updated homes.
“If properties are updated and kind of ready for move-in and they’re priced well, they’re going under contract in a few weeks,” Mr. Smith said.
In markets that have remained under lockdown, strategic sellers are using the current moment to update their homes for a prime position on the market.
“We have more engaged sellers who are wanting to spend money to prepare for the season, to stand out,” said Lucienne Smith, director and head of residential at Smiths Gore/Luxury Portfolio International in the British Virgin Islands. “They’ve had more time at home, and I’d say a lot of the properties have had some level of renovation.”
But with a market this brisk, sellers shouldn’t feel obligated to overhaul properties where a few speedy updates might do instead, Mr. Smith said.
“It depends on the situation. If it’s a two-month renovation to help increase price, I’d say let’s do it,” Mr. Smith said. “But a lot of this older stuff [that takes more time], I would actually suggest sellers just get it on the market and try to sell it now, because it’s a hot market.”
“Our market tends to flatline for months or years at a time, and then it spikes. We’re in a spike period right now,” Mr. Reuss added. “Whether it can continue to spike, who knows. Taking advantage of fewer days on market and a bigger buyer base is definitely beneficial.”
More broadly, Ms. Hale said, “Our expectation is that it will still be a good time to sell next year. But if you want to lock in the fact that your home price is high right now, you can certainly sell quickly, there are ample buyers in the market.”