An advertisement for vacant land hangs in the window of a real estate business on Main Street in Frisco, Wednesday, July 31, 2024. Sales of vacant land have surged in Summit County during the first year of the pandemic.
Robert Tan/Summit Daily News
Buying a home in Summit County has never been more expensive.
According to data from the Colorado Association of Realtors, the median price of a single-family home will rise to $2.4 million in the first half of 2024, up nearly 40% from the same period last year. If the upward trend continues, 2024 is on track to be the most expensive year on record for single-family homes.
Industry experts say the surge is mainly due to a surge in home sales during the first few days of the pandemic, when homebuyers fled cities and flocked to mountain regions with cash in hand. But other factors may also be driving the rise in home prices, especially at the luxury end of the market.
Data shows that vacant land sales surged in 2020 and are on track to hit a five-year high between 2018 and 2023. Many of these parcels have become the sites for custom homes that are now entering the housing market.
“These properties are in high demand and were recently built, which is driving up the average sales price,” said Dishon Latz, former president of the Summit Association of Realtors (now Altitude Real Estate).
Prior to the pandemic, residential landscaping in Summit County, including new home construction, was somewhat stagnant.
“Typically, most of the homes being built to sell in this market are traditional mountain architecture,” says Steve Fisher, Summit County Realtor and president-elect of Altitude MLS.
“Recently, there has been a growing demand for aesthetics in mountain markets, and I believe Summit County has lagged behind Aspen and Vail in terms of architectural style,” Fisher continued.
But that began to change as buyers took advantage of the 2020 economic downturn and began purchasing vacant land with the intent of building their own homes. The number of vacant land transactions in Summit nearly doubled from 120 to 225 between 2019 and 2020, according to real estate agent data.
“People went crazy buying land and buildings as a hedge against inflation,” Fisher said. “What we’re saying is that there was a big increase in land buying and building because the profit margins on building are much lower than they are today.”
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Land sales have fallen sharply since 2020, with the data showing just 72 transactions in 2023. Land transactions in the first half of 2024 (Jan. 1 to June 30) were down 19% compared to the same period last year, according to Latz.
At the same time, vacant land inventory is at its highest since 2020.
“We’ve been experiencing a very steep increase for a very long time, so we’re hopeful that we’re starting to plateau,” Latz said.
The reasons are manifold, but are likely related to rising new build costs due to inflation and supply chain issues, and the decision to buy land remains a complex and potentially risky venture.
“The first thing that comes to mind is there’s a lack of land to build on in Summit County,” Latz said.
About 80 percent of Summit County’s land is federal public land under the White River National Forest, according to county statistics. Towns such as Blue River and Breckenridge are nearly fully developed, with residential development capacity at 91 percent and 93 percent, respectively.
Land is further limited when considering which parcels can support the infrastructure needed for housing, such as sewer and water lines, the ability to support the home’s foundation, etc. While some parcels may already include essential infrastructure such as a well, many do not.
Latz said it’s important for potential buyers to understand the true cost of land if they intend to use it for new construction. The average sales price for vacant land in Summit County is just over $635,000, according to June data reported by the Land Title Insurer.
When it comes to building a home, costs can add up quickly, which is why for many buyers, buying vacant land is less about cost-effectiveness and more about “building what I want, where I want,” Latz said.
From an investment perspective, buying land and leaving it vacant also comes with challenges: While the purchase price may be much less than the price of a home, property taxes on vacant land are roughly four times higher than residential property.
“It’s hard for people to offset that cost,” Latz said.
This is why research is paramount for anyone interested in the vacant land market.
“What’s really most important is that consumers and customers understand what due diligence is all about,” Fisher said. “A lot of people have dreams of owning land in Colorado, but they don’t understand all the things that go along with actually building a home there.”
