The Pagosa Springs Area ended 2013 with positive improvements in nearly every category of its real estate market. It looks like we are gaining momentum on our way out of the ditch! We were slow to enter the recession that started in 2007 and it has been slower coming into the recovery, but the data for 2013 clearly indicate we are on a positive upward trend line.
Total Real Estate Sales Volume was $114 million as compared to $105 million for 2012, an increase of 8.8%. The Median Selling Price (which is a composite of all types of property; homes, condos, land, etc.) was up 11.5%. The Total Unit Volume for 2013 was only 3 below the prior year at 529 closings. Yes, we are a long ways off from the peak years of 2001-2006, but we now have a “New Normal” that we are learning to live with.
For the benchmark Single Family Residence Sales*, the figures were more impressive. We had 250 Closings for the year. Total Sales Volume was up by over 10.5% for the year. Pagosa Springs had $79.7 million in Closed Sales for 2013 as compared to $72.1 million for 2012. The Median Selling Price rose by 15.4% to $250,500 versus $217,000 for the year earlier.
There are two trends indicated. One is a decline in the percentage of foreclosure sales and the other is the price appreciation that is starting to show up in the market, first appearing at the entry level prices. The inventory of available homes under $250,000 has declined significantly and as demand has remained strong, prices have moved upward for this bracket. There were a total of 277 Single Family Residence Listings across all price categories at year end. This is a 13 month supply, down slightly from year-end 2012.
CLOSER LOOK AT PAGOSA HOUSING MARKET:
Looking more closely at different price points within the Single Family Residence Inventory we note there were 10 sales of homes priced above $800,000 that closed during 2013 for a total of $12.7 million, up 6% from 2012 totals. The Median Selling Price declined by 11% from $1.2 million to $1.07 million. There were 54 listings in this price category at year-end, representing 65 month supply. This remains the most Buyer-Friendly segment of the market in Pagosa Springs.
Total Sales Volume for homes priced between $500,000 and $800,000 was double the amount from 2012 by both unit and dollar volume. The Median Selling Price moved up by 5.6% to $645,000. Some Sellers finally responded to market pressures and lowered prices. This is further indicated by the decline in the average and median number of days on market for the highest price range homes.
For homes priced between $250,000 and $500,000, Total Sales Volume increased by 16.6% to $30.3 million. Here again, the Median Selling Price declined by 2.3% and the median and average number of days on market declined, an indication that Sellers gave in to market pressure and lowered prices in order to achieve sales.
Finally, we saw real strength in the category of homes priced under $250,000. Here Total Sales Volume for 2013 was up over 20% from 2012, while the number of sales declined from 164 to 125. These 125 sales represented 50% of the Total Unit Volume for all single family homes sold in 2013. The Median Selling Price for homes under $250,000 increased by 7% for 2013.
Foreclosure Impact Declines
The number of foreclosure sales as well as recorded defaults slowed considerably during 2013 while demand for entry-level priced housing was strong from both Owner-Occupant and Investor Purchasers. We expect demand to remain strong in the entry-level price range during 2014 which will put upward pressure on prices, eventually into higher priced homes. At the point at which existing home prices more closely approach new construction cost we should see a big uptick in new housing permits in the area, something many in the construction trades would welcome. In 2013 we had a trickle of new homes being built on speculation and we expect that activity to increase moderately during 2014.
Condo and Townhome sales for 2013 also showed improvements over the prior year. Total Sale Volume was $7.2 million as compared to $6.8 million a year ago. The Median Selling Price increased by 8%, from $125,000 to $135,000 for 2013. Two new condo/townhome projects came on stream during 2013 along the San Juan River. Pagosa Riverwalk sold two of its recently completed units during December. At year end there were 57 Condo Listings, which represents a 15 month supply.
Commercial Market Finally Gaining Traction
Commercial property sales were on the upswing for 2013 with an increase in Total Sales Volume of 18% over the prior year. 18 Closings were recorded totaling $4.1 million for the year as compared to $3.5 million during 2012. The Median Selling Price edged up by 4% over the prior year. With Tractor Supply completing their new store this spring and Walmart expecting to start construction within the next 120 days the commercial market will show further improvements during 2014. We are having preliminary discussions with several national restaurant and retailers interested in locating near Walmart.
Land- Slowly Improving
One of the last components to show improvement has been the land market. For 2013 we see solid improvements here as well. Total Sales Volume was $9.4 million for 2013, up by nearly 20% from 2012’s total of $7.9 million. The Median Selling Price increased by 6.2% for the year. The inventory of available residential and ranch land parcels remains high, with an 81 month supply of 35-Acre Tracts, a 76 month supply of 5 Acre Tracts and a 52 month supply of 1-5 Acre Tracts still in the Multiple Listing Service.
The Wrap Up:
So, in summary, 2013 may not have been a banner year, but we experienced solid improvements within our real estate economy. Mortgage rates have risen nearly 1% above a year ago, but, 30 year money for less than 5% is still very cheap money. The Fed seems to indicate they will slow down the printing presses during 2014, but most economic forecasters do not expect significant increases in long term interest rates. America still represents the strongest and safest economy on the planet. Thankfully, our private property rights, rule of law and level of accounting transparency continue to make us an attract place to invest.
We have a great selection of available properties here in Pagosa and homes priced above $500,000 represent some fabulous buying opportunities. I do not expect these conditions to last much longer. Other mountain resort areas have moved further along in the price appreciation curve and that will make our values here stand out more during 2014. I regularly interface with my associates within Durango, Telluride, Vail, Aspen, Steamboat Springs, Summit County and the other mountain resort communities. We share market data and help each other improve our businesses. As the real estate markets in each of those areas continue to ramp up, we will follow; as the strength of their current increases, our economy will be pulled along.
Perhaps Pagosa Springs can speed up the recovery process by all working together to improve our community for ourselves and the visitors we depend on for our livelihood. Over the holidays my wife Lauri and I attended a party hosted by close friends and clients that spend time here as their second home. This couple has invested well in excess of several million dollars in our community. At their party on New Year’s Eve $100,000 was raised to fund the planning process for expansion of our hospital. Three of the major contributors were second home owners. There are many great aspects to Pagosa Springs. Its people: the residents, second home owners and visitors continue to be its most valuable resource. I was greatly humbled by the outpouring of generosity I witnessed that evening. I am so blessed to be able to live here and serve the good people that live and spend time in this special place. We are grateful for the efforts of our Contract Manager, Robin Curvey and to have our son Michael Richard helping in the office. 2013 was a rough year for our family and our business. Our continuing journey has been sustained and rewarded greatly by your support, encouragement and friendship.
Mike and Lauri Heraty, Managing Broker/Owners, Pagosa Source Real Estate Advisors.
*For my market metrics I define Single Family Residences as “site-built” or “stick-built” residential structures. I exclude manufactured homes, mobile homes, fractional ownership residences and duplex units. The number of duplex unit sales within our market over the last five years has not been significant enough to warrant analysis. Data provided by the Colorado Real Estate Network.