the_bridge_to_nowhere_by_urcanA sea change is underway in the leadership of our county and town. Two of the sitting members of the Board of County Commissioners are likely to be gone after the November election. Both Commissioner Lucero and Wadley voted in favor of building a new Justice Center along county owned property on Hot Springs Blvd. at the special meeting on September 19th. The preliminary cost estimates for a facility at that location are reported to be $28 million. Michael Whiting was the only County Commissioner to raise a concern about cost and how the local tax payers could be expected to vote in favor of such a huge expense. What economic reality were Commissioners Lucero and Wadley operating from? With the deteriorating county roads, future needs of the schools and many other financial priorities it is hard to understand the vote that took place. I expect the new Board of County Commissioners will be more responsive to the taxpayers and develop more creative and sensible solutions to the need for improved facilities for the county.

In the last forty five days, three new Town Council Members have been appointed. Matt deGraaf, Rebecca Anderson and Nicole DeMarco each bring a new and refreshing perspective to Town Council Meetings and governance. They take their positions seriously; they study the agenda packets, they ask intelligent questions and they look at the issues from more than one perspective.

The Town Council has many issues and tasks ahead of it. One of the topics sure to resurface soon is the Mayor’s plan to build a $7 million bridge to the Dawson and Mees undeveloped 27 acre parcel. This  controversial proposal has been put on the back burner while the Town waits for completion of the Economic Impact Study it ordered. I am hopeful the newly seated members of the Town Council will take a very careful and critical review of the report.

I have continually monitored real estate activity in Southwest Colorado, including the average and median selling prices of homes and condominiums, and the rate of sales. I believe it is unlikely a reputable outside consulting firm will find our current market conditions will justify a large scale residential and commercial development, one that would require selling price ranges above $300 per square foot. It is equally doubtful to expect a national hotel chain to build a new hotel project while our present hotel occupancy rates remain below 40%. Mees and Dawson have not prepared a market feasibility study, an absorption rate projection or a construction cost estimate for their “development”, I doubt an outside consultant will able to find economic justification for a taxpayer investment of $7 million for a bridge to their land. How the Mayor and his friends Mees and Dawson could possibly spin things differently remains to be seen. With three news voices and votes on the Town Council, we all hope sensible, rational decisions and direction will prevail.




Recently we closed the sale of a property south of Pagosa Springs, which we had listed for sale at $1.6 million. So far this year, the sales activity above $1 million has been limited and our analysis clearly indicates the depressed energy sector is at least partially to blame. Going back over a ten year period, more than half the purchasers of $1 million+ properties have been from Texas. A very large percentage of those purchasers have been connected to the oil and gas industry. The price of oil began its descent in July of 2014 when it was above $100 per barrel to today where it currently trades in a range $40-$50 per barrel. With the downturn, oil rig counts have dropped, and layoffs and capital spending cuts among large and mid-size oil firms have been widespread as companies make adjustments to ride out the downturn. The ripple effect of these changes began to be felt here in Southwest Colorado a year ago–more luxury properties were put up for sale and fewer Texas purchasers were actively shopping. To date we have not seen any drastic price cuts or panic selling, but luxury properties are certainly taking longer to sell and there is a higher level of negotiating taking place. With all this negative economic news, what is there to be optimistic about?

Back to the sale that we just closed. The purchaser owns a company engaged in construction of natural gas pipelines. Recently several huge gas pipeline projects were announced, including a line supplying Texas gas to Mexico’s factories in Monterey and other industrial centers. His company will be involved in the construction of the huge natural gas pipelines. Because the price of natural gas is low, it makes sense for many large energy users to convert away from coal generated electricity to natural gas— we are seeing this across the U.S. as coal burning power plants are converting on a large scale. For some companies in the natural gas industry, new opportunities are opening up, even while the price of oil remains impaired. We may see more improvements in this corner of the energy sector in the months ahead and we are hopeful we will see a greater number of Texas second home buyers will be returning to Southwest Colorado.

In the meantime, prospective purchasers have plenty of luxury second homes to choose from, both in Pagosa Springs and the Durango area. Many may be acquired for a significant discount to replacement cost. Interestingly in spite of the abundance of $ 1 million+ homes available for sale, there are several custom homes under construction well above the million dollar level. For some folks, saving a substantial amount of money by buying an existing home is not a motivator. They choose to design and build exactly what they want, because they can.


mixed-bag-web-370x229It has been an interesting summer for the real estate world in Pagosa Springs. Overall sales activity is up slightly as measured against the prior 12 months. 2016 is a bit ahead of 2015 for the total number of properties sold with the total dollar volume of closed sales up nearly 5% above the prior year. For all property types (building lots, acreage, commercial, ranch, single family, condos, etc.) the average selling price was down 2.5% over the prior year. These numbers summarize the broad performance of all components of real estate sales within Archuleta County.

Homes sales activity is the measure that typically attracts the most attention. For my analysis, I track the sales activity of single family detached homes as a market benchmark. This excludes condos, townhomes, duplexes, modular and manufactured homes. (I look at condos, townhomes, duplexes, manufactured homes separately.)

The number of homes sold is up over 10%. There have been 151 homes sold so far this year versus 137 for the same period in 2015. Total closed sales dollar volume is up 10% above 2015 at $50,235,841. The average selling price of $332,687 is nearly unchanged from 2015 while the Median Selling Price of $297,500 is up 6.4% above last year. 75 of the sold homes were under $300,000. For most that follow the local market, these figures are probably not surprising, but they should not be considered the only important indicators of what is happening within the local housing market. True, there are more spec homes under construction and most are selling quickly, but, there is a narrow price band of robust market activity that may distort the reality of the market as a whole.

When you cross into the $500,000+ price ranges the level of supply significantly outpaces demand as shown below. What are the factors that are impacting this imbalance? First there have been changes in the buying preferences of both primary and second home buyers over the last several years. More buyers are choosing smaller homes and lowering their financial investment for vacation and primary residences. We also see this change from the next wave of housing consumers. Unlike many Baby Boomers that are now aging out of the housing market, younger buyers in second home markets are not choosing the larger, more expensive homes their parents chose. This is a change we are seeing across many of the second home and resort markets across the country. Second, the market in Southwest Colorado has been impacted energy prices. Pagosa Springs has always benefitted from our visitors and second home buyers from Texas and other nearby energy states. An increasing number of households with a significant portion of wealth and income tied to oil and gas are choosing to postpone plans for a second home or cabin in the mountains of southwest Colorado. When oil recovers they will return, but until then we can expect to carry a higher level of unsold home inventory, especially in the upper middle and high-end of the price ranges. Third, I suggest there are some Buyers that are holding off their purchase plans until the outcome of the November elections are known. This is a hard factor to quantify, but I can attest to the fact that a fair number of upper-end Buyers I have communicated with this summer have decided to wait until next year so that they can first assess the impact of the elections on their tax burden and discretionary income. How much change we will see after November is anyone’s guess.

For specifics on a particular price range or real estate category, email me at: or give me a call at my office: 970 264-7000.

Average Annual Number Homes Sold All Price Ranges (based on last 5 Years): 271

Listing Inventories:

$200,000-$300,000 – 67 Active Listings =        10 month supply

$300,000-$500,000 – 90 Active Listings =       16 month supply

$500,000-$750,000 – 53 Active Listings =       29 month supply

$750,000-$1,000,000 – 35 Active Listings =    76 month supply

$1,000,000 + – 49 Active Listings =                 106 month supply


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In one of my earlier articles I discussed the potential impact of low oil prices on our real estate market here in Southwest Colorado. You can read that article here lower down on this site. Subsequent to those discussions I did an analysis of the residential closings for 2015 to look specifically at where the upper-end Buyers in Pagosa Springs, Colorado came from last year. I define upper-end as those sales that closed at $500,000 and above. Generally this will include custom single family homes within the Pagosa Lakes Area, including Timber Ridge, homes on small acreage within planned ranch developments such as Echo Canyon Ranch and Hidden Valley Ranch as well as large acreage ranch properties that included at least one residence.

For all of 2015 there were 48 upper-end closings, totaling $40,926,825. I could have chosen to only look at sales above $1,000,000 or started with a lower bracket, but historically, this is how I have defined the upper-end of the market in all of my past research. Within this group, 13 of the 48 purchases were made by Colorado residents totaling $8,676,600, representing 21% of the total, with an average purchase price of $667,431.

Buyers from California purchased only 3 upper-end residences for a total of $1,755,500, with an average purchase price of $585,167. Our friends to the south in New Mexico purchased a total of 3 homes for $1,805,000, an average of $601,667 per home. Buyers from California and New Mexico each accounted for 4% of the total sales volume of $40.9 million. During 2015 we did not have any upper-end Buyers from our other neighbor to the south, Arizona.

Let’s look at the volume of upper-end residential Buyers that came from Texas last year. There were 22, purchasing a total of $19,145,500 in residential properties, accounting for 47% of the total, with an average purchase price of $870,250. These are significant figures to consider, especially in light of the current downturn in the energy field.

Will Texans continue to visit Southwest Colorado and invest in our real estate? During the summer months, the daytime temperatures in August in Lubbock and Houston run from 91-95 degrees with humidity of 74%-90%. Unless there are some radical climate changes near term, the mountains of Southwest Colorado will remain an attractive place to visit and invest. If we continue to improve our area and remain friendly to the many folks that help to make paydays possible in a tourism-based economy, we should survive. If we forget how important our visitors from Texas are to our local economy, more could decide to bypass Pagosa Springs and drive an extra hour to Durango. Please, don’t forget to say “Welcome, glad you’re here” to those friends with the white and black license plates.

For assistance of any kind related to Colorado real estate, you can reach me at 970 264-7000 or email me at:

2015 Real Estate Summary Pagosa Springs

2015 YEAR END MLS REPORT latest-happy-new-year-2016-photos

As 2015 ended, market data* confirms the real estate recovery is continuing in southwest Colorado. For the year, Total Closed Sales of all real estate categories showed an increase of 4.6% in dollar volume over 2014, totaling just under $142 million for the year. In terms of the Total Number of Closed Transactions, 2015 showed an increase of 17.5% over the prior year. This quick summary indicates more properties are moving and more dollars are changing hands in the local market.


Figures for the single family home market showed an increase of 10.1% from 2014, with a total of $100,431,191 in Closed Sales of 287 homes. This compared to Total Closed Sales of $86,742,931 and 272 homes for 2014. Homes took less time to sell in 2015 than 2014, showing stronger demand within the local market. The Median Selling Price for single family detached homes also increased during 2015 to $288,000, an increase of 7.7% over 2014.


Closed Sales for condos and townhomes during 2015 were up nearly 27% over the prior year with $11.6 million in volume for 71 units. The Median Price for Condos and Townhomes during 2015 remained unchanged from 2014. The increase in condo and townhome volume is in part due to the low level of inventory in lower price ranges. During 2015 there was a shortage of homes priced under $200,000 while demand was still strong. Some of these Buyers moved into the condo and townhome market to acquire a home while interest rates remain low. The combined sales of single family detached homes and condos and townhomes accounted for 83% of the entire real estate closed sales volume for the year.


Land sales also improved during 2015, recording Total Closed Volume of $19.3 million as compared to $18.3 million for 2014, an increase of 6%, with an increase of 33.5% in the number of closings; 311 versus 233 during 2015. The Median Selling Price dropped only slightly over the prior year. Builders reported increased volume for 2015 and initial signs look encouraging for 2016 from what we are hearing from architects and planners.


Cheap money continues to be available for qualified borrowers. During 2015, the average interest rate for 30 year FNMA mortgages was at 3.97%, up only slightly from the average rate during 2014 of 3.93%–still very low on a historical basis. Forecasts for 2016 range from 3.8%-4.4%, according to FNMA and long term bond rate forecasts. This slight trend upward may increase demand slightly as first time homebuyers rush to acquire ahead of the rise and is expected to have only a minor effect on overall housing demand during 2016. We expect the market to continue to improve in 2016, though not across all sectors.  There are several loam programs for first time homebuyers and others looking to acquire homes with less than 20% cash down payments. Buyers can apply for down payment assistance which includes down payment contributions that do not require repayment as well as special interest rates and other terms, depending on the Buyers qualifications. You can contact our office for more details and access this link for more specifics:

In the Pagosa Springs area, there remains an over-supply of housing inventory within some price ranges and a shortage of homes in the entry level price range- $175,000-$250,000. If you would like more details on any segment of the local or regional real estate market, contact Mike Heraty at

*Market data provided by CREN, local MLS stats and proprietary company property records database, all deemed reliable, however, if specific data is an important criteria for a read decision, figures should be independently verified.


Is the Price of Oil Affecting the Economy of Pagosa Springs?


Recently I was part of a discussion group that was looking at the present and future impact of reduced oil prices on the economy of Southwest Colorado.  In June of 2014, oil was priced at around $113 per barrel. Average oil production costs in the U.S. are $36 per barrel. (By contrast, Saudi Arabia can pump a barrel of oil for $10 on average.)Today oil sits at slightly over $38, a decline of 66% from the summer of 2014. Drilling rig counts are way down from one year ago. Many large, multi-national oilfield service companies have laid off thousands of workers, a number of mid-sized oil producers have filed bankruptcy and the roaring housing market in the Houston area has slowed down considerably. From what we analyzed of the futures markets, most forecasters are projecting oil to be under $65 for the next two to three years. Will there be more layoffs? Will the weak energy sector negatively impact other industries? Will we see fewer visitors to Southwest Colorado from Texas, Oklahoma and Louisiana in the years ahead? Good questions to ponder when you consider how important those areas have been in the tourism economy of Southwest Colorado.

According to a 2014 study by Longwoods International, Colorado residents were the top vacationers in their own state, followed by California, Texas, Illinois, Florida and New York. Typically the Vail Valley, Summit County and Aspen areas see a large number of visitors from Illinois, Florida and New York while visitors from Arizona and New Mexico are more prevalent in the southwest region of the state. The number of Californians visiting this part of the state has declined since the end of the recession in 2009. From our informal surveys, after our own residents, Texas represents the largest percentage of visitors to the Pagosa Springs area. We are one of the closer mountain resort areas for those Texans that drive to their vacation spots. Snow conditions in the Ruidoso area have been pretty marginal over the last ten years, the Angel Fire Ski Area and Taos Ski Areas have suffered from poor snow in recent years and more Texans have opted to travel a little further to Wolf Creek and the Pagosa Springs area. During summer months and peak winter periods you can see the influx of Texans by looking at the license plates in the City Market parking lots and along Pagosa Street downtown. You can see the same thing during the fall hunting season.

I can tell you that the ongoing glut of supply and downward price pressure has certainly reduced the number of qualified ranch buyers looking at one of the finer recreational ranches we are involved in. (Photo Above). We toured the ranch with a buyer from Texas that came close to signing a contract but the continuing weakness in the oil industry caused him to retreat to the sidelines. That was the end of last summer and prices have declined further since them.

Next Article-How many properties did Texans purchase in our area last year?



“That would be”

The percentage of Americans that own their homes is declining slightly. Some housing economists are predicting the percentage of homeowners will decline from the current level of 64.4% to 55% within a few years. Others are not as pessimistic, but the majority of analysts believe a big factor in the equation is the homeownership choices of Generation X and Millennials. Though many within this group still believe in the value of home ownership, some lack the down payment and credit scores needed to become homeowners. Some site student loan debt and the hangover effects of the earlier housing recession.

Others see different trends in the data. Millennials tend to be more mobile in terms of relocating for job opportunities- relocating from Denver to Seattle for example, and therefore less interested early on in their careers in anchoring into an area as a homeowner. By renting they are more easily able to take advantage of better job opportunities.

Still another reason given for the decline in new homeowners is misinformation. Some Millennials believe they need a cash down payment of 20%. This is not true. In fact, there are lending programs that permit down payments as low as 3%. This is information that those of us in the Realtor and banking community need to do a better job of communicating. While it is true that higher credit scores are required than was the case in the last decade, there are still a number of good viable loan programs that enable younger people to qualify with little cash down.

So long as the cost of renting in markets does not drift significantly below the month cost of owning, there is little to fear this trend will noticeable impact the near term value of homes. If however, renting became much cheaper than owning, home values would begin to be decline, all other things being equal. Given the cost of new construction today, it is doubtful we are likely to see a huge supply of cheap rental housing flood the market creating a wide margin between the cost of renting versus owning.

Here in Southwest Colorado, local members of the Community Development Corporation and other interested stakeholders are working hard to find ways to attract more Millennials to the area. Housing affordability is not an issue in Pagosa as compared to other mountain communities such as Vail, Aspen and Telluride. Entry level homes can be acquired for $200,000-$250,000 with condos and townhomes available from $100,000.

For information on real estate and related topics in Southwest Colorado, give me a call at 970 264-7000, or email me at:

Thanks for reading-Mike


Total Closed Volume for 2015 Year to Date is $1,637,500 as compared to just $189,000 for the first 8 days of last year- an increase of over 766%. The total number of closings was up by 100% with 4 reported so far this year against only 2 closings for the same period of 2014.

We don’t want to take too much away from this very limited measurement of the market. It really demonstrates how making assumptions or declaring trends too early or based on too little data can be misleading, or worse, it reminds us how statistics can be used to purposely deceive people. See How Statistics Lie: Click Here

Still, we welcome this positive change relative to last year and hope this early sign of improved momentum will continue. In all likelihood our market will have a tough time continuing on this level of performance as compared to last year, but perhaps overall things are heading up as I reported in my Year End Real Estate Report and Future Forecast.

For real estate information that is accurate and insightful, drop me an email  or call me at 970 264-7000.

Thanks, Mike


Starting with the bigger picture, things look brighter as we peer into 2015. From the information coming from the National Association of Homebuilders (NAHB) and National Association of Realtors, (NAR) it sounds like the nation’s real residential real estate economy will improve further during 2015. Both these national trade groups feel the numbers will look better as more first-time homebuyers enter the housing market and better job creation numbers are achieved.

According to the NAHB Chief Economist David Crowe- “Single-family builders are feeling good. They are not overly confident, but confident enough to keep moving forward.”  Crowe goes on to say: “This is mostly due to significant pent-up demand and steady job and economic growth that will allow trade-up buyers who have delayed home purchases due to job insecurity to enter the marketplace.”

Lawrence Yun Chief Economist for NAR was equally optimistic when he addressed the Annual Convention in New Orleans last month-“the improving job market has consumers feeling more confident, and the rebound in home prices is building household wealth for homeowners and giving them the ability to sell after waiting the last few years.” Yun was careful to add that the housing market does have some headwinds out ahead, in the form of a likelihood of increasing interest rates the second half of next year, tight credit requirements and student loan debt. Still, overall the forecast at the national level looks encouraging.

Pagosa Springs’ market behavior is somewhat different from most urban real estate economies, due to the heavy influence of our second home owners. These Buyers and Sellers are not driven by job relocation in their real estate decisions, more by their confidence in the economy and their jobs or businesses, their discretionary income and savings, the health of the housing market in their home community and their lifestyle preferences. (More about the areas with better economies and housing markets in our next Blog article).

Pagosa Springs has much to offer folks that enjoy snow skiing, snowmobiling, soaking in the Hot Springs, exploring Mesa Verde, rafting down the San Juan River, boating on Navajo Reservoir, hiking in the Weminuche Wilderness, enjoying a day trip to Durango, trail riding, fishing and golfing. Then again, lots of other mountain communities have many wonderful

outdoor resources. It is our particular combination of recreational opportunities, our small, friendly and safe mountain town, good values in real estate inventory, that a certain segment of the second home buyers find appealing in Pagosa when compared to other choices in the Rocky Mountain Region.

For the year, closed real estate transactions totaled just under $128 million, as compared to $114 million for 2013. This is an increase of just over 12%. Total single family home closings for the year totaled $84 million, up 5% from 2013. The average home selling price dropped only slightly from $319,000 to $316,000 for 2014.

As we enter 2015, there are plenty of single family homes, condos and townhomes for Buyers to choose from in the MLS listing inventory. Levels remain above the ten year average with 292 existing homes for sale at year end. This compares with 277 at the end of 2013. The number of new home building permits for 2014 we back up to the levels we were at in 2008, inching up to 64 from 59 in the prior year. By the way, for Buyers considering putting off a purchase until spring or summer of 2015- think again. Some of my most successful clients always buy in the winter- fewer competing Buyers, and more motivated Sellers.

With a refreshingly new energy in the local political and municipal leadership and management, a growing collaborative spirit among community groups, including the School Board, Chamber of Commerce, Town Tourism Committee and Economic Development Committee, there is much to be optimistic about in the Pagosa Springs area. A slowly growing enthusiasm and positive attitude is gaining strength within the local business community. Are there a few issues floating about that could create some surprises? Yes, as always, the global economy and political environment could derail a number of things. But, those are risks we all live with. Keep your eyes, ears and minds open as we enter the New Year- good things will be happening!

If you would like to discuss your particular property investments or other matters related to real estate, give me a call at 970 264-7000 or drop me an email at:

Thanks for reading-Mike



Home builder confidence is up, according to the most recent survey by National Association of Home Builders/Wells Fargo housing market index (HMI). According to NAHB chief economist David Crowe, “low interest rates, affordable home prices and solid job creation are contributing to a steady housing recovery,” He went on to say “after a slow start to the year, the HMI has remained above the 50-point benchmark for five consecutive months, and we expect the momentum to continue into 2015.” “Growing confidence among consumers is what’s fueling this optimism among builders,” said Kevin Kelly, a home builder and NAHB’s chairman. This last statement is especially important for the second home and vacation property market as growing consumer confidence is one of the most important ingredients that positively affect the real estate market in resort areas such as Southwest Colorado.

 MORE GOOD NEWS :Despite mild October temperatures, lodging reservations for the six-month winter season (November through April) are currently running ahead of the same time last season. Denver-based DestiMetrics, an organization that tracks mountain lodging bookings in 19 Western mountain resorts in six states, said that reservations as of Oct. 31 are up 7.4 percent over last year. From our initial survey of lodging companies here in Pagosa Springs it looks like this winter ski season could be a strong one in terms of the number of visitors. The snow last week helped get things kicked off at Wolf Creek Ski Area and reports are the conditions were quite good. With the new ownership at Durango Mountain Resort we are all anxious to see what changes Purgatory Ski Area will implement this ski season. If I can help you or any of your family or friends with real estate matters, recommendations for places to eat or lodging options, give me a call at: 970 264-7000 or email me at: