Where have all the entry-level homes gone in Eagle County?

It’s well-known that entry-level homes have almost vanished from the local real estate market. But that vanishing act came quickly.

According to data from Land Title Guarantee Company, as recently as 2015, homes priced at $500,000 or less made up 43.5% of the real estate transactions in Eagle County, with 712 sales out of 1,634 homes sold. By 2020, that number had dropped to 451 sales out of 2,109 transactions, just 21%.

The number has fallen even faster this decade.

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By 2023, just 40 homes priced at $500,000 or less were sold in the county. Through Nov. 30 of this year, just 25 homes priced at $500,000 or less have been sold.

So what happened?

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There are a lot of reasons for the decline in sales of entry-level homes.

Longtime local Realtor Joan Harned of Team Black Bear, a division of Keller Williams Mountain Properties, said much of the problem comes down to simple economics.

“It’s hard now to get land, build a house and make profit,” Harned said. “Even if you find your own lot, you just can’t do it.”

Scooter Slaughter of Berkshire Hathaway HomeServices Colorado Properties, another longtime local Realtor, noted that several people moved to the valley during the COVID-19 pandemic, exhausting much of the valley’s home inventory, which wasn’t replaced.

And, he added, construction costs skyrocketed during that period, adding that even prices in Two Rivers Village have largely crested the $500,000 mark. The final phase in that development, expected this winter, will offer duplex units on property with 99-year land leases. Those units are expected to start in the low $300,000 range.

Slaughter noted that this isn’t the only market where prices have increased. But, he added, “Our area has (increased) at an accelerated rate.”

Mark Gordon of Christiania Realty in Vail is a member of the residential real estate council of the National Association of Realtors. Gordon said the story in the Vail Valley isn’t unique.

“It’s not just a (Vail Valley) issue,” Gordon said. While price points may be different, “It’s the same story in every market.”

Gordon noted that home building slowed to a crawl during and after the national recession that started in roughly 2008. That helped fuel a severe nationwide housing shortage.

With the onset of COVID-19 and a nation suddenly flush with cash from stimulus payments, inflation pushed up prices and drove demand for consumer goods, especially homes, especially those in desirable locations.

Gordon said another factor is empty nesters and others who might want to move but can’t afford to because of the current capital gains tax code, among other reasons.

Slaughter noted that others may want to move, but are currently in mortgages with very low interest rates. Any move they might make would put them into homes with higher mortgage rates.

While mortgage rates aren’t likely to move much in the coming year, Gordon said the National Association of Realtors is working on changes in the capital gains tax code, which hasn’t been changed in years.

Of course, resort areas are a little different.

“It’s always been hard near premier destinations,” Gordon said.

Harned, who came to Eagle County in the 1970s, agreed, adding that it’s more difficult today.

“The amount of land you can build on is getting smaller,” she said. “There’s not a real easy solution at the moment.”