WHAT WE CAN LEARN FROM OTHER MOUNTAIN RESORT COMMUNITIES?

Posted on September 23, 2013 by Mike

I just returned from a meeting of the Rocky Mountain Commercial Brokers in Breckenridge. Our group of 13 Partners meets four times each year at different locations within the Colorado mountain areas to discuss real estate issues, share Best Practices, tour real estate projects, meet with state and local government officials, banking and other commercial real estate consultants and real estate service providers. At each meeting we discuss the real estate metrics from each of our areas, looking at sales and unit volume as well as property product mix, near term and long term trends, what special marketing strategies are being employed as well as a the impact existing and pending government regulations are having on commercial real estate markets. We also look closely at the

Fall in the Town of Breckenridge, Summit County, Colorado

residential real estate components within each geographic location as those elements tend to drive the commercial markets.

Having lived in Summit County I have continued to be interested in their market trends and this meeting provided fresh insights into the changing economies of mountain resort areas. Each area has its unique selling proposition and each market has a slightly different angle on the target markets they have chosen to serve. The Summit County market is closely connected to the economies of the Denver Front Range Area as it is a “drive-to” destination. Generally, the Summit County economy tracks about one year behind the Denver Front Range economy. Things are going along quite well at present as the Front Range economies are growing out of the recession, with improving employment figures, strong new home construction starts and a healthy level of existing home sales, all translating to improving residential real estate values. Increasing consumer confidence from these factors helps drive sales of condos, timeshares and second homes in Summit County.

Sales tax revenues reported for July were ahead of the prior year by over 27%; new building permits in Summit County were up 20% year to date as compared to 2012. The average price per square foot for single family homes in Summit County in 2013 was $263, with an average selling price of $764,262. (I will compare these figures to the Pagosa Springs Area in Part Two of this Series.) Other measurements confirmed the area is on the upswing with new hotel, timeshare and commercial projects coming through the planning process, including a Whole Foods Store. Further help will likely come from the expansion of the Breckenridge Ski Area which received approval for the Peak 6 Expansion which will add 20% more ski terrain to the area. All the above factors are positive influences for the Summit County economy. They are not without their share of challenges. The I-70 Mountain Corridor, Eisenhower Twin Tunnel Project will provide some relief to the terrible traffic congestion leaving Sunday afternoons during ski season.  They are also trying to deal with a Pine Beetle Infestation that has killed 154,000 acres of their trees, struggling to find appropriate funding mechanisms to continue to support Summit Stage, their free bus service, as well as protecting their water resources from the far reaching needs of the Front Range.

More Insights and Comparisons to come in Part Two

Posted in Colorado Landowners, Pagosa Real Estate, Pagosa Springs | Comments Off on WHAT WE CAN LEARN FROM OTHER MOUNTAIN RESORT COMMUNITIES?

WHERE WE’VE BEEN AND WHERE WE’RE HEADING

Posted on August 21, 2013 by Mike


While much of the real estate news reported by the major networks has focused on the improving housing markets within many of the major cities, Pagosa Springs has rather quietly finally begun to move forward. It seemed for a time we were destined to remain in the ditch we entered at the beginning of the housing market meltdown. The real estate data, which I will go into in my next article, is showing measurable improvements.

Historically, Pagosa Springs has entered the downturns a bit later than many areas and our momentum climbing into the recovery cycle typically lagged behind other markets. Often over the last 18 years I have observed how the Durango market is trending as a window to what lies ahead for Pagosa Springs. Similarly, in predicting the future direction and strength of the Durango market I include a look at the general economic measures of communities that historically provided a large percentage of second home buyers and vacationers to the area, such as Phoenix.

The Greater Phoenix area has been in the news fairly regularly over the last 18 months due to the ongoing recovery of its housing market and the rising home valuations in the area. Employment and income figures are improving in that area as well, though slowly. These are key components that move consumer confidence, an vitally important element in the vacation home market. As housing values continue to improve we would expect to see an increase in the number of second home Buyers returning from the Phoenix area. Arizona continues to attract businesses that are leaving California in favor of the better business and tax climate in the desert state. Presently, USAir offers two non-stop flights daily from Phoenix to Durango, and with a little advanced planning you can often book a round trip airfare for under $275.

In addition to the state of Arizona, our area has always attracted a large number of visitors from Texas. Many of those Texans have become business owners or vacation homeowners in the community. Fortunately, during the recession, most of Texas retained a high level of employment and residential real estate, (which had not hyper-inflated during the Housing Bubble) retained most of its value. A number of Texans visitors that had withdrawn from the buyer pool during 2005-2008 began to return in 2012 and 2013.  With the high energy prices over the last several years and increased oil and gas drilling activity in the U.S., we would expect buyers from the energy states to continue to be a significant market force in Southwest Colorado.

The state of New Mexico has also provided plenty of visitors and second home buyers to Southwest Colorado over the last thirty years. Both Wolf Creek Ski Area and Purgatory have become more attractive to New Mexicans as snow conditions at Angel Fire, Santa Fe Ski Basin and Ski Apache in Ruidoso have declined over the last several years. Being only three and a half hours driving distance from Albuquerque makes Pagosa Springs an attractive destination for both winter and summer visitors.

The New Mexico economy is expected to grow at a rate of 3.6% annually over the next five years, the 8th fastest rate in the nation. As defense spending is declining, big employers in New Mexico such as Los Alamos Labs and Sandia National Laboratories are redirecting their focus towards more energy and environmental programs in addition to their research in alternative energy and materials sciences as well as work developing, engineering and testing weapons components. Intel continues to employ a large number of scientists and engineers at its chip plant in Rio Rancho. The median home price and unit volume in Albuquerque are both rising from 2012 figures.

Pagosa Springs would do well to recruit more visitors from our neighbor to the south, especially the scientists, researchers and engineers, many of whom are young and enjoy the lifestyle and recreation offered in our small mountain community. Pagosa Springs needs to attract a new generation of tourists and real estate customers. The ownership life cycle for vacation property requires replacement Buyers. Perhaps our Town Tourism Committee and Chamber of Commerce and other groups would consider developing and launching a new and effective marketing campaign. One that specifically targets the young professionals from the major employers in New Mexico; not by offering some freebie in exchange for sitting through a timeshare presentation, but by showcasing more detail about the lifestyle and the abundance of outdoor activities and experiences available in and around Pagosa Springs–just a thought.

If you have questions or comments relating to the Pagosa economy or real estate matters, please email me at MikeHeraty@frontier.net, or call me at 970 264-7000. Also, be sure to visit our website www.pagosasource.com  for more real estate information and a look at all the properties available in the area.

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CHANGES TO THE REAL ESTATE MARKET IN SOUTHWEST COLORADO

Posted on February 11, 2013 by Mike

During the last 15 years we at Pagosa Source have always studied the numbers carefully in order to improve our vision of what lies ahead. The Closed Sales data, including an analysis of price reductions leading up to a contract, the number of days on the market, the timing of a property into the Active Listing Inventory and the competing inventory throughout all of the real estate classifications are all reviewed and scrutinized on an on-going basis. We also examine the county recordings to determine where the Buyers are coming from. Though our local MLS system contains an abundance of useful information, we find it necessary to look beyond it and data aggregators such as Trulia and Zillow in order to derive an accurate assessment of the real estate market at any given time.

We will continue to carry on these tasks as an integral part of our business, in order to better serve our clients and customers. The market that lies ahead will certainly bring changes to Southwest Colorado and we have spent some time forecasting what those changes will consist of, and how our clients and customers will likely be affected. A summary of these changes are listed below:

  1. Inventory of single family homes offered for sale during 2013 will decline slightly from 2012 levels. Some of the reduction is the result of a decline in the number of new foreclosures entering the pipeline. Another factor is the slowdown in the number of new distress sales, ahead of foreclosure. This has come about from the low interest rates and some forbearance efforts from local and national lenders.

2. We will see fewer middle income Buyers active in the market. For many in this bracket, confidence in real estate has been shaken during the Housing Crunch and prolonged recession. Tighter credit qualification requirements coupled with reduced equity in their primary residence have impaired this group as they also struggle with the reality of less take home pay with the change in income tax rates and other impacts imposed by Washington’s lawmakers in order to avoid the fiscal cliff. Homes priced in the range of $400,000- $800,000 have been where most of the upper middle-income Buyers had been focused and we expect this price range to continue to be significantly over-supplied in 2013.

3. The percentage of Buyers from the energy belt (Texas, Louisiana, Oklahoma, etc.) will continue to grow as oil prices and employment are expected to remain strong. We expect to see more public company oil industry executives as well as small and medium size oil field service company owners buying real estate in our area. We are recognized as being an area with exceptional real estate values and we are closer to Texas than many of the other destination resort areas such as Vail, Aspen and Steamboat Springs. Historically, many of our Texas second home owners drive to Pagosa and like the fact that we are 2-4 hours closer than other mountain resort areas. We expect Texans will purchase the majority of our upper-end inventory during 2013, homes priced above $800,000.

4. Buyers will begin to return to Southwest Colorado from Arizona, but few Californians will be seen in the area. Arizona’s economy is improving and homes values are rising at a steady rate within the Phoenix Metro area with fair amount of new home construction underway. Arizona State University’s W.P. Carey School of Business year-end report for 2012 showed median home prices were up by almost 34 percent and foreclosures plunged by a staggering 51 percent. California will continue to suffer as there has been little improvement in their housing markets, outside a very limited number of areas such as the San Francisco Bay area and, to the south, the Silicon Valley. We also expect to see more Buyers coming from the Front Range as their residential values have recovered to pre-recession levels and employment remains strong.

5. Buyers will remain very value-focused during 2013, choosing the best combination of location, construction quality, condition and price within each category. We expect more detailed and critical inspections and fewer Buyers willing to purchase homes with deficiencies or deferred maintenance.

Give Mike Heraty a call at 970 264-7000 to discuss how these changes may impact you as a Buyer or Seller during 2013. Mike would be pleased to have a no-obligations discussion of your real estate objectives and the best means of achieving them this year.

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UPDATE FROM THE ROAD JANUARY 23, 2013

Posted on January 23, 2013 by Mike

 

I just returned from a meeting of the Rocky Mountain Commercial Brokers (RMCB) in Palisade, Colorado. Our group is comprised of the top independent commercial real estate brokers from the San Luis Valley, Salida, Steamboat Springs, Summit County, Vail, Aspen, Grand Junction, Montrose, Telluride, Durango and Pagosa Springs. We meet every other month to share market data, property and investor opportunities and industry best practices. The meeting is hosted by a different member in a different location, with a presentation by area experts explaining the components and drivers of the particular area.

Our meeting this last week in Palisade included a presentation by the Manager of the Chamber of Commerce and Ron West and Alex West, owners of Varaison Vineyards, a renowned Palisade winery. Thursday night we were treated to a comprehensive tour of the winery and an in-depth presentation on the art and science of wine making, wine tasting and wine paring. The Owner and his son Alex did the presentation followed by a fabulous private dinner. Though I do not drink, I still found the experience very worthwhile. I had been around many of the famous wineries in California while I was working for a construction firm during my college years. Though the Varaison Vineyards Winery in small in comparison to the more well-known wineries in Napa and Sonoma Counties, its owners have created award winning wines and developed quite a following, without the benefit of restaurant and liquor store sales. Their best wine, according to the awards it has earned is their 2007 Merlot. A trip to Varaison is well worth the drive and you can also visit any number of other wineries in the Palisade area while you are there. Link: http://varaisonvineyards.com/#

The presentation by their Chamber of Commerce Director was also interesting. Their community has a lodging tax which is used to market the area. They have been spending their limited funds successfully attracting visitors from the Salt Lake City Area (not a lot of wineries in that state!), the Front Range, and the State of Texas. They have regularly advertised in two magazines, 5280 and Texas Monthly, and they have been using an advertising agency in Denver to help them with their ad design and placement. Though Palisade peaches are well-known, the small wineries in the area are gaining popularity as the wines have become known outside of Colorado. Link: http://www.palisadecoc.com/

Area Year End Results:

During our business portion of the meeting, brokers from each of the mountain areas represented gave their year- end summary of their real estate market and the general economic outlook moving into 2012. Most areas reported improving real estate statistics with Aspen leading the field. In all areas there were a large number of end-of-year transactions driven by the change in the tax rates for 2013 and beyond. There continued to be weakness within the commercial property sectors of each community, especially the Montrose area. All communities have seen a number of new projects being planned, with the majority of the financing coming from Private Equity. The residential components are improving in all the areas with a reduction in the influence of foreclosure activity and some shortages of inventory within the lower price points.

Rocky Mountain Commercial Brokers is expanding its marketing penetration during 2013 as we will reach more of the commercial real estate brokers along the Front Range. As a network we are providing an integrated group of commercial real estate professionals with the necessary local market knowledge and expertise to match the services provided by national firms in Denver and Colorado Springs. More about RMCB: http://www.rockymtncommercial.com/

 

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END OF YEAR PAGOSA SPRINGS REAL ESTATE REPORT

Posted on December 31, 2012 by Mike

(Part One Published 12.29.12 available in Archives)-

PART TWO:

RESULTS FOR SINGLE FAMILY RESIDENTIAL SALES- ALL PRICES

Winter in Southwest Colorado

 

For all price categories of the single family residential market (SFR), the number of Closed Sales was nearly unchanged 252 this year, 254 last year, with the a median selling price of $216,000 versus $218,750 for the prior year. Total volume in SFR was $69,340,344, down 8.3% from 2011.

Within the SFR market there are a variety of year- end figures for different price categories.

Results for Homes priced above $800,000

There were 10 Closed Sales recorded with the median price moving up from $1.1 million to $1.2 million for 2012. I was the Listing or Selling Broker for 4 of the recorded sales for homes within this price bracket. The average number of days on market, a measure of how long it is taking to sell a property dropped from 328 to 261. This indicates some of the older inventory has sold and that Brokers are convincing Sellers to price their properties more realistically. At year end there were a total of 61 Active Listings priced above $800,000. At the current absorption rate, this represents a nearly 5.5 year supply of homes.

Results for Homes Priced $500,000-$800,000

There were 13 Closed Sales reported, only 1 was a foreclosure property with the Median Selling Price rising to $611,000 from $573,000, an improvement of 6.6% over last year’s figure. Total Closed Volume was $8.2 million as compared to $10.0 million for last year. There were 41 Active Listings in this price range at year end, representing a little over a 3 year supply.

Results for Homes Priced $300,000 – $500,000

There were 45 Closings reported for the year, while 2011 recorded 51 sales. 3 of these were foreclosure properties, representing 5.8% of the total. The Median Selling Price was $399,500 as compared to $375,000 for the prior year. Total Closed Volume declined from $19.5 million to $17.5 million for 2012. At year end there were 78 Active Listings in the $300,000- $500,000 price range representing a 21 month supply.

Results for Homes Priced $200,000 – $300,000

67 Closings were reported for 2012, against 59 Closings for the prior year.  8 of the Closed Sales were foreclosure properties, accounting for 13.5% of the Total Unit Volume. The Median Selling Price for homes in this bracket was $242,500, down 6.7% from 2011. Total Closed Volume increased from $17.5 million to $19.5 million. The Median Number of Days on Market decreased slightly from 157 to 154 days, showing a little quicker turnover rate. 55 Active Listings were offered at year end in the price range of $200,000- $300,000 representing a little over a 9 month supply.

Results for Homes Priced $100,000- $200,000

A total of 86 Closings for 2012 versus 88 for 2011. Of these Closings, 31 were foreclosure sales, or 36% of the Unit Volume. Total Closed Volume was nearly unchanged at $13.01 million as compared to $13.11million for the prior year. The Median Number of Days on Market increased from 89 to 129. This may be due in part to the number of short sales within this price range that closed this year. These sales typically take much longer to close from the time an initial offer is made as compared to conventional transactions. At year end there were 43 Active Listings in this price range representing a 6 month supply.

Condo Market Results

Sales of condos and townhomes increased with 45 Closings reported for 2012 versus 42 for 2011. Only 3 of the Closed Sales were foreclosure properties. Total Closed Volume was up 26%, from $5.0 million in 2011 to $6.3 million for 2012. The Median Selling Price jumped as well, moving up to $125,900 from $95,000 as reported for 2011.  For condo sales above $100,000, there were 29 closed in 2012 as compared to only 19 in 2011. The Median Number of Days on Market increased from 144 to 169. There were 67 Active Listings on the market at year end- an 18 month supply. 

LAND MARKET SLOWLY IMPROVING

For the year there were 166 Closed Sales of land in Archuleta County. This figure is up 36% from the 122 transactions recorded in 2011. Total Closed Volume was up as well, $11.7 million versus $10.1 million. The Median Selling Price declined from $35,500 to $24,500. Active Listings were at 835, representing a 5 year supply. This is a slight improvement over last year. During the period from 2005-2008 development of hundreds of additional building lots were planned for several large area ranches and land parcels. Fortunately, these plans were cancelled as the market retreated and we were spared a flood of additional lot inventory. It is doubtful we will see any of those projects coming forward during the next few years unless there is a very strong increase in demand. With the number of infill homesites available in today’s market at a fraction of the cost of creating a new lot, it would take a good number of years before we would expect to run out of existing buildable lot inventory. As the price of existing homes closely approaches the cost of new construction we would expect to see the land inventory drawn down below the current five year level.

WHERE ARE THE BEST VALUES FOR BUYERS?

The lower price ranges offer fewer choices for Buyers going into next year. I do not expect this to change as there is little if any speculative building going on in the area. The most over-supplied category is the $800,000 + price range and there are also some great buys in the $500,000 – $800,000 range. For Buyers willing to purchase existing homes rather than going through the 1-2 year process of building a luxury custom home, the savings can be considerable. High quality new construction can easily exceed $200 per square foot and there are a number of well-built custom luxury homes on the market that can be purchased for under $150 per square foot. I feel the best value on the market within this price range today is the home at 783 Oren Road in Piedra Estates. This 3 year old custom home has over 5,000 square feet of heated living space and a 2,400 heated and insulated shop building, situated on nearly 7 acres less than 10 minutes from downtown. This property is priced at less than $127 per square foot or $649,000. Replacement cost for a home such as this in today’s market would easily exceed $950,000. There are other great values that I am watching for Buyers looking to take advantage of some of the gaps in the market. 30 year fixed rate mortgage money is available for under 3.5%. This historically low rate cannot last forever. With a number of good properties offered at steep discounts to replacement cost and very cheap mortgage money there should be little downside risk. Now is the time to buy!

WHAT SHOULD SELLERS DO IN THIS MARKET?

If you purchased or built your home in the last five years it may presently be worth less than your cost. The exceptions to this condition are those homes that were purchased below market and those that have extraordinary features such as unblockable mountain peak views or water frontage. There are very few properties that fit these conditions. For all the rest that don’t, this remains a Buyer’s market with buying decisions largely driven by the value proposition. In order to compete in this market, you really need to know what properties you are competing with, how many there are, how many are likely to sell within that price range in the next year and how your home stacks up against those competing homes. You want to price your home so that it will be among the top 10% of those in your price range. If you do not price strategically you will likely spend a long time on the market. If you price high you will end up chasing the market and you run the risk of your listing  becoming “shop-worn”. Selecting your Realtor based on which one gives you the highest suggested listing price is a foolish mistake. Look very carefully at the market data and ask lots of questions. Examine the track records of the brokers you are considering. The market conditions we are in are very different from how things were between 2000- 2007. Feel free to call me for a confidential discussion of your real estate needs, without cost or obligation. You can reach me at MikeHeraty@frontier.net or call me at: 970 264-7000.

Note: Data extracted from CREN MLS Service, Pagosa Source Internal Files and related sources, as of December 26, 2012.  Though sources are deemed reliable, accuracy is not guaranteed. Some figures have been rounded. For complete information contact Mike Heraty at Pagosa Source Real Estate Advisors, email: MikeHeraty@frontier.net or call: 970 264-7000.

 

Posted in Archuleta County, Colorado Landowners, Housing Recovery, Pagosa Real Estate, Pagosa Springs, Property Rights | Comments Off on END OF YEAR PAGOSA SPRINGS REAL ESTATE REPORT

Q4 RESULTS MIXED FOR PAGOSA SPRINGS REAL ESTATE

Posted on December 29, 2012 by Mike

I am grateful to be able to report Mixed Results for Year End, as has not been the case through much of the previous five years. Though there is evidence of continuing weakness in several categories, the data suggests we are beginning to enter a more solid recovery mode. This is good news for all property owners. Since the recession began in 2006 and the local real estate market was hammered hard, beginning in 2007, we have had to report year-end numbers that offered little encouragement. I can say unequivocally the market has begun to take a turn for the better. Median and Average Selling Prices are up as compared to last year in many categories. For the year I am pleased to report I was the Top Producing Realtor within our county. In a relatively tough year, without any large ranch sales, the results were good. I give credit to the good clients I have had the privilege of working with, the great referrals I have received from friends and associates, the exceptional staff that we have at Pagosa Source, and the other Realtors I have had the pleasure to work with with during the last year.

Our slowest component in the recovery remains the land market, which is to be expected as this category has been the weak link in other geographic market recoveries across the Rockies and within many of the regions most impacted by the real estate downturn. It will still take time for the supply and demand components to restore some order to the land market.

While attending a meeting of the Rocky Mountain Commercial Brokers in Glenwood Springs during October, all areas were reporting improving real estate market conditions, except for Montrose, which remains significantly overbuilt and oversupplied with residential and commercial properties. Our market has been somewhere in between the conditions reported for Montrose and those of the other mountain communities, such as Glenwood Springs, Steamboat, Vail, Summit County, Telluride, Durango, Alamosa and Salida. Finally, we are moving in the right direction and the market stats indicate we are establishing a firm foundation, which is needed to support gradually strengthening values for homes and land within the area.

I have prepared some summary figures below and for the next blog entry for our local real estate market for our readers. I have much more detailed information available to clients and customers that need more specifics. This year I have purposely left out any in-depth discussion of the commercial market. This segment is extremely fragmented and difficult to summarize because of the wide range of variables impacting the market and individual transactions. I maintain a sizeable amount of transaction data for the commercial market as I have been involved in a large percentage of the commercial transactions over the last three years. I am often consulted by appraisers from outside our market that are doing commercial property appraisal work here. If you have a need to discuss commercial real estate in our area, please call me at 970 264-7000.

The number of units closed across all real estate categories is up as compared to last year, though the Total Dollar Volume is down 6.7%. $105,630,866 vs. $113,278,117.  Our MLS shows a total of 538 Closed Sales versus 507 for last year, an increase of 6%.  Summary details of various categories and price ranges will be provided on my next blog entry early next week.

Watch for Part Two on New Year’s Day

 

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Has the Worst of the Foreclosure Crisis Passed?

Posted on October 30, 2012 by Mike

 

Cattle Grazing in Blanco Basin Near Pagosa Springs, Colorado

Yes, it has. Since the downturn began in 2007, foreclosure properties have taken their toll on values throughout Southwest Colorado. Many homeowners found themselves in financial trouble, with mortgage loan balances far ahead of their adjusted market value. For some of these “underwater homeowners” there was little to do other than wait things out. For other less fortunate borrowers, their hands were forced when second mortgages became due, or when their adjustable rate first mortgage reset. A number of purchasers acquired their properties using one or more of the creative financing options the banks were offering at the time. In some cases the special mortgage product allowed purchasers to get into homes with no money out of pocket. In others, the initial interest rate was set artificially low, with an upward adjustment set 3-5 years out. Some of these initial rates were as low as 1.9%. Monthly payments were set at 60% or more below the level of normal market rate interest for fixed rate mortgages at the time. When these mortgage rates were reset, many of the borrowers were unable to keep up with the new payment schedules. The monthly payment amounts doubled and tripled for some borrowers. Attempts to refinance again into a fixed rate mortgage were unsuccessful as values had declined to the point that many borrowers no longer had any equity in their homes.

For some time it appeared as though the banks were genuinely trying to work with borrowers to keep as many people in their homes as possible. After a while, it became apparent that the heavily promoted federal programs were doing little if anything to stem the tide of foreclosures. Only a handful of borrowers were assisted by the programs that were so heavily publicized and very few of those resided here in Pagosa Springs or Durango, Colorado.

Fast forward to today. Mortgage interest rates are at historic lows. Qualified borrowers can obtain 30 year fixed rate mortgages below 3.5%.  In some regions of the county, values have increased by 15%-25% above the floor established during the downturn. Within certain price ranges homes have gone up as much as 40% in the Phoenix market. Lenders there are cautious about playing into a re-inflation of the market. Values here in Southwest Colorado have not experienced the increases of Phoenix, but, thankfully we are finally seeing a diminishing influence of the foreclosure and distress sales. The pipeline of new foreclosures has declined and we expect the negative impacts to lessen significantly during the next 12-24 months. Some borrowers that were foreclosed or forced into short sales in 2006-2008 are already re-qualifying for home loans. Where they have repaired their credit and saved up a down payment, lenders have shown a willingness to get them back into home ownership. Rental rates have shifted now making ownership more economical in many regions.

The health of the second home or vacation residence market really depends largely on the level of consumer confidence that exists within the geographic markets buyers are drawn from. Historically, Durango and Pagosa Springs, Colorado have attracted buyers from Arizona, California, New Mexico and Texas. Presently consumer confidence is strongest within the state of Texas. Its residents did not experience the drastic meltdown in residential real estate values that were seen in Arizona and other states. Also, the price of energy has remained relatively strong throughout the recession and that has kept employment figures within Texas fairly strong while other states experienced significant job losses. We have experienced a resurgence of buying interest from residents of Texas during the downturn and I expect it will continue unless energy prices declined considerably. Some would say this is a mixed blessing. We are glad to have Texans buying second homes and other real estate in our area. Their value baseline tends to be less favorable than residents of other states such as California and Arizona where residential values are generally much higher. For our firm, we welcome buyers, from anywhere and we have helped folks from as far away as Australia and Switzerland to become involved in property ownership here. The Texas Buyers coming to Pagosa Springs and Durango can continue to support our market until consumer confidence among folks in Arizona, California and New Mexico improves enough to make them feel comfortable investing in a second home here in the mountains again.

 

Posted in Archuleta County, Colorado Landowners, Housing Recovery, Pagosa Springs | Comments Off on Has the Worst of the Foreclosure Crisis Passed?

3rd Quarter Real Estate Summary

Posted on October 11, 2012 by Mike

 

 

I did a quick review of the Pagosa Springs Area MLS Stats through the 3rd Quarter of 2012. The numbers were not too impressive. When compared to the same period of last year, Total Dollar Sales Closed was off by 13%. Looking more closely at the figures and isolating the Single Family Residence data showed more unimpressive numbers. As compared to the prior years’ first three quarters, the Closed Sales Dollar Volume was down by just under 16%. The total number of units sold were also off, 173, versus 197 for the prior year. As expected, the median and average selling prices were down as well. To some degree these figures reflect the continuing negative impact of foreclosure or distress sales. On the positive side, the inflow of foreclosure properties into the Archuleta County pipeline is lessening and we expect to see a greatly reduced impact on prices as we go into next year.

The figures here at Pagosa Source for the first half of the summer were discouraging as fewer people were in the area looking at property, due in part perhaps to the fire in the Upper Piedra as well as the negative publicity surrounding the terrible fire northwest of Colorado Springs. For the second half of the summer, our numbers here at Pagosa Source turned around significantly as we closed the sale of three or our $1 million + listings within a two week period. We worked hard to achieve those sales and are continuing to be as creative as possible to generate more sales. The number one source of new business for Pagosa Source is referrals from past and present clients and customers, for which we are extremely grateful.

A positive factor at work in the market place is the extremely low mortgage interest rates available to qualified borrowers. Currently, lenders are quoting rates at or slightly below 3.5%. By anyone’s measure, that is extremely cheap money. When interest rates were at 5.5% (still cheap by historical standards) the monthly payment required to service a mortgage of $200,000 was $1,135. At 3.5% interest, the monthly payment amount is $898, a savings of $237. For anyone that does not currently own a home, now is the time to buy. There is a good selection of inventory, with very favorable pricing, compared to where the market was in 2005-2007. Additionally for those that qualify, interest rates the lowest they have ever been. If you are looking at buying, carefully consider several important features. Location: buy where you have well-maintained access and good central water and other utilities. Consider owning within an area that has protective covenants. Historically, values do better with land use protections than without. Also, stay within a reasonable distance from town and the conveniences of shopping and medical services. We have seen a continuing trend for a closer-in preference among Buyers over the last five years. Be very careful buying bank-owned properties and don’t go that direction without using the services of a qualified broker with experience dealing in that type of property. It is a totally different experience than buying from a private party. If you have questions or concerns, give me a call without cost or obligation at 970 264-7000.

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Posted in Pagosa Real Estate | Comments Off on 3rd Quarter Real Estate Summary

Guest Report from Travis “Buck” Kingman III

Posted on September 29, 2012 by Mike

View From the Pagosaw Saloon

Thoughts on Pagosa’s Reservoir Hill

I was over to the Pagasaw Saloon last night in Pagosa
Springs, Colorado, getting a little hair off the dog that bit me the night
before and come across a some guys that was talkin bout that Reservoir Hill
project there in town. They was sayin how in the old days, that hill was
witness to a lota courtin and in fact, there was the beginins of a lotta  families up there. Seems back then it was a
handy place where a guy could take his girl fer a look at the stars and the
twinkling lights of town. They said under the ether of that view, and with the
help of a little Boon’s Farm Strawberry Hill, or a snort or two of Mad Dog
20/20, an ole boy could sometimes get well beyond first base with his gal. Outa
that, The Hill (that’s what they used to call it) kinda became a place that
stuck in their minds as special, beins what got conceived up there, so that’s
one of the reasons some folks is against changin it.

Anaway-some other fellars in the bar was sayin there’s secret
government plan underway to transfer the alien community from Archuleta Mesa up
there to The Hill and nobody’s supposed to know. That got me thinkin. I seen a
lot of them blacked out SUV’s with no plates on em when I was in town earlier
in the year. And, when I was movin cattle off DeRosset’s place up next to the
top of the Mesa a couple years back, I seen them Black Ops guys on the back of
his ranch and they run me outa there. They said they was patrolling the area in
their Humvees for the Injuns, but they didn’t look like no Injuns. They had
black military gear on and wasn’t none too polite in escorting me outta there. Guys
I know out there twixt the San Juan River and Montezuma sez there’s been some
recent animal mutilations, including a horse that ended up with weird tattoos
and fishing tackle pierced onto its face. They think them alien fellars are
getting stirred up again like they did when that guy tried to develop the
Archuleta Mesa Ranch ten years back.

Apparently there’s a group of folk comin to the Town
Meetings fightin the move by Disneyland to put PagosaWorld up there. Buford,
the one drinker in there with a real bad case of stink breath sez those Disney
folks are determined to get that park built up there and have even brung in
George Lucas, that fellar that done Star Wars to negotiate with the aliens down
there other side of Edith. Supposedly he was joined by some high powered
attorney outa Dallas by the name of Rosey that’s gonna be sure Disney gits what
it wants. He and Lucas is supposed to give them alien beings some jobs at the
park and in his next movie if’n they agree to keep their underground city
inside Archuleta Mesa.

This gal who was sittin two stools down from me heard us
talkin and she offered her two cents worth. She said she been there for 30
years and she seen them aliens more than once, even before she was sent to
detox. Seems she wuz out trappin fer pelts on the Mesa early one winter and
come across a big ole burn hole up in the trees. She said this creepy looking
thing with a big head and no hair on em come up outta that hole and squeeked
sumpin to her in some alien tongue. She got so scared she ran down the other
side of the Mesa and kept running til she got into Dulce. She said the Tribal
police refused to help her and she never went out there again. She said her husband,
Clovis went out there to check things out and never returned. She filed a
missin person report and nobody ever followed up. She’s thinkin if they do move
them aliens to Reservoir Hill, her husband may show up again, though she said
she might not recognize him.

Another gal in there by the name of Faylene sez the real
reason folks is against fixin things up on The Hill is cuz some of them
newcomers got some wacky tobacky plants growin up there. Seems they dropped a
big long extension chord they plugged in to put growin lights in to keep them
pot plants a growin. Faylene sez she seen those people in the Farmers Market and
the Folk Festival sellin their crops and they is the same ones that show up at
the public meetings speakin out against any development on The Hill.

Finally, another fellar named Cooter chimed in with his
opinion on why some folks is against putting anything up on The Hill. Cooter
sez it’s all about keepin some endangered wildlife species protected. According
to him there a rare kinda miniature skunk that makes its home up there and The
Hill is one of the few places that skunk is reproducing. The animal protection
folks is trying to get The Hill designated as a National Monument to the Rocky
Mountain Dwarf Skunk and they are expecting President Obama to declare it so,
just as he done fer Chimney Rock. Accordin to Cooter that tiny skunk packs a
mighty wallop of stink, unlike any other skunk. He sez the Injuns thowed him
into the Pagosa Hot Springs way back when, and that’s how they got the smell
them springs got. (A former owner of them springs always told me it was the
smell of money.)

After hearin all these stories I realized things ain’t right
in Pagasaw. Maybe after a couple more Jacks and branch water things will look
better. That’s the View from the Pagasaw Saloon-

See ye all next time I’m in town-

Travis “Buck” Kingman III

Posted in Archuleta County, Colorado Landowners, Pagosa Springs, Property Rights, Reservoir Hill, Wal Mart | Tagged | Comments Off on Guest Report from Travis “Buck” Kingman III

Pagosa Springs Business Report 1st Half 2012

Posted on July 7, 2012 by Mike

Head Count Up- Bag Count Down!

We are well into the summer tourist season, past the Memorial Day and July 4th holidays. The first half of 2012 is now in our rear view mirror. The local economy has produced mixed results thus far, with some improvements in sales tax and lodging tax receipts and a slight increase in reported employment figures. In informal discussions with Main Street merchants, several have commented that the head count is up but the bag count is down, indicating that perhaps we are seeing an increase in the number of visitors, but their spending is restrained. Given the choppy and fragile economy, cautious spending behavior should be expected. This is likely to be the case until real growth in non-government employment improves consumer confidence.

Fortunately, some of our visitors and vacation home owners have decided the present real estate buying opportunities are too good to pass up. With savings accounts paying less than 1%, bond market returns generally disappointing and mixed results from the stock market, some investors have chosen to place a portion of their funds in real estate here in Southwest Colorado. In many cases, buyers are acquiring improved properties far below replacement cost, and commercial land and buildings at a fraction of where prices were just a few years back. Some investors are purchasing lender-owned properties, others are purchasing from private parties exiting the market with a substantial penalty rather than waiting for conditions to improve.

The Risk Takers are the first to recognize and capitalize on opportunities before the greater number of investors and consumers confirm the positive momentum of the market. They scoop up properties early while the crowds are still on the sidelines. They require and are rewarded with greater returns on their investments.  More
cautious investors trade greater returns for lower risk, each party establishing the risk-return ratio they are comfortable with. Both are essential to the market, and each complements the other in a recovering economy.

For those with the necessary level of risk tolerance and some discretionary investment cash, there are substantial opportunities for growth and profit within the present real estate market here in Pagosa Springs as well as Durango, South Fork and Creede. If these opportunities interest you, please give me a call or drop me an email.

Pagosa Real Estate Summary

It is interesting to hear the different opinions and feelings of where things are in the local real estate world. Often opinions are based on the local rumor mill and a few isolated and invalid samples from the total market activity. In this report, the facts are presented. The Total Closed Sales Volume for “All Classes” of real estate for the first half of 2012 increased 4.3% over the first half of last year. Closed Sales for the first half of 2012 totaled $41,970,380 as compared to $40,248,597 for the first six months of 2011, an increase of 4.3%. The total number of properties sold was
228 versus 194, an increase of 17.5%.

The Median and Average prices for “All Classes” of real estate have declined when compared to the figures reported for the first half of 2011. The market reported more units sold, and more total dollar volume, but declining prices. The average and median sales prices were down 11.3% and 3.5% respectively. “All Classes” includes single-family detached, multi-family, manufactured homes, building lots, land, ranches, farms commercial, etc. So, for the broad measurement, sales were up, but prices were down.

The current pattern is somewhat expected as the market is clearing out distress properties and bank-owned real estate ahead of firming up values and returning to a more sustainable rate of appreciation, in line with normal supply and demand components. The speculative home building portion of our local real estate market has effectively evaporated during the last four years. The supply side of the housing equation has not increased during the downturn, and this factor will have a more significant and positive impact on pricing when the market enters a stronger recovery phase.

Home Prices, Sales and Inventory Levels

Sales of Single Family Detached Homes are down for the first six months of 2012 as measured to the first half of 2011. This category of real estate comprises approximately 70% of the total dollar volume of real estate transactions within the county, certainly the most significant benchmark to monitor.

Closed Sales totaled $30,028,674 versus $36,190,345 for the first half of last year, a decline of 17%. The number of single family homes sold during the first half of 2012 was 113, as compared to 115 for the first half of 2011. A closer look at the numbers also shows the Average and Median prices for single family homes have declined as compared to the first six months of 2011. During the first half of last year there was one sale that skewed the figures slightly upward. That was a sale reported at $3,125,000. By removing that sale from the total and also removing the highest reported sale for the first half of 2012, the total Closed Sales Volume is still down over 13%.

Closed Sales 1st Half of 2012 & Supply of Homes by Price

$150,000- $250,000- 37 sales, 117 active listings, a
19 month supply.

$250,000- $500,000- 35 sales, 160 active listings, a
27.4 month supply.

$500,000- $750,000- 8 sales, 58 active listings, a
43.5 month supply.

$750,000- $1,000,000- No sales reported for
the first half of 2012 with 31 active listings.

$1,000,000- $1,250,000- 2 sales, 9 active listings,
a 27 month supply.

$1,250,000- $2,000,000- 1 sale, 29 active listings, a
174 month supply.

$2,000,000+ No sales reported for the first
half of 2012 with 15 active listings.

As the above figures show, some price ranges are significantly more over-supplied than others. For homes priced above $1.25 million there is a huge surplus of inventory. Sales in the upper price range often compete with new construction, where a very affluent client will prefer to have a home built to their specific plans on land of their choosing rather than acquire another owner’s dream home, even when the cost differential is quite substantial. They choose this route because they can.

This is still a strong Buyer’s market as the transaction data conclusively shows. We continue to see an increasing number of Buyers from Texas and fewer Buyers from California. The Arizona housing market is improving, as is the employment picture there, so we may see more folks returning to Southwest Colorado from that state in the months ahead.

If you would like additional details on the local real estate market or have questions about anything presented in this report, drop me an email at MikeHeraty@frontier.net, call me at 970 264-7000, or drop by our office- Pagosa Source Real Estate Advisors at 286 Pagosa Street, Pagosa Springs, Colorado.

Note: Data presented was obtained from CREN MLS and internal real estate database records. Home Sales and Inventory figures exclude manufactured homes, condos, townhomes, duplexes and timeshare units. Contact Pagosa Source Real Estate Advisors for additional information.

 

 

Posted in Archuleta County, Colorado Landowners, Housing Recovery, Pagosa Real Estate, Pagosa Springs | Comments Off on Pagosa Springs Business Report 1st Half 2012