Southwest Colorado News

SOME SECOND HOME MARKETS SLOWING DOWN

Mike Heraty, License Partner-Engel & Völkers Pagosa Springs

The recent reduction in the Federal Funds Rate, helped lower 30-year mortgage rates down to the 6.0%-6.25% range. Though above the Covid-triggered rates of 2.5%-3%, the new rates on an historical basis, are reasonable. It may take some time, but if rates stay at or around this level, consumers will accept them and that should free up more inventory.

On a national level some second home markets have cooled down during the past year, due to the high rates and shifting buyer habits. There have been more all-cash purchases, but there have been fewer investment buyers in the second home market, causing prices to soften in some markets. Rental rates have stagnated, or in some instances, declined. This may be due in part to the trend away from remote work when larger companies are calling all employees back to the office. The vacation rental market in some areas became oversupplied from 2021-2023 and that factor also affected prices.

REAL ESTATE IS LOCAL

What about the market in Pagosa Springs? The Median Selling Price for single family detached homes in Archuleta County sits at $665,000, compared to $600,000 one year earlier, an increase of 11% year over year. So, the Pagosa market is bucking national trends. Why is this? Two big factors. First, limited inventory- we do not have production builders in our market, adding supply. Building costs are still high, there is a shortage of skilled construction workers and the time to complete a new home is significantly longer than in metro markets. Second, demand is still strong, despite higher prices and interest rates. Comparatively speaking, homes here are an excellent value in comparison to other mountain second home markets, and home prices in Pagosa are about 15% below Durango. Second home Buyers that have been priced out of Vail, Summit County and other mountain resort areas are finding their way to Pagosa Springs, where their money goes much further.

WHAT LIES AHEAD?

On the national level, economists at Goldman Sachs are predicting home appreciation levels of 4.4% for 2025. Expect mortgage rates to trend a little lower, but we also expect demand to continue to grow as the Pagosa area becomes more discovered. Meeting with a highly qualified, seasoned area real estate professional, who consistently studies the market is the most valuable first investment you can make in any real estate transaction. To discuss your circumstances and real estate goals, give me a call for a free consultation. I can be reached at 970 946-6030 or email me at Mike@PagosaRealEstate.com.

“ Frontline Heroes of our community: Health Care Workers, EMS, Law Enforcement, Fire Department, Emergency Services, Teachers and School District employees– be sure to visit The Lift Coffee House next to Mountain Pizza for a free coffee or espresso drink this month with thanks from Pagosa Source Real Estate Advisors.”

Will our national and local economic recovery be “V-Shaped” or “U-Shaped”? Will it be a quick and steep bounce out of the bottom, or will it be a slower, more gradual climb back up. Will the furloughed and laid-off employees gain their jobs and pay back, or will employers find they need fewer workers as things start to re-open?

Trying to formulate an educated guess of what a recovery will look like is no easy task and requires a coordination of three different sciences. This approach was proposed by some sharp real estate journalists that closely monitor changes in home buying behavior.

Business Science: How has the economy responded in the past to similar crises? How long did it take for employment to recover? This is a tough question to answer. We have never had this type of pandemic, this level of job loss and rapid decline in economic activity.

Health Science– How long will it take for Covid-19 to be controlled, and to research, develop and implement a vaccine? Will there be a second wave of infections, or will the virus mutate and return?  Health science is working around the clock to understand this virus and to find an effective treatment and vaccine.

Behavior Science—Once businesses open back up, how long will it take for people to feel safe and comfortable to return to their normal consumer behaviors?

How quickly will visitors feel safe taking a commercial flight from Dallas or Phoenix to Durango; enjoying a cold beer in a crowded local brewpub, attending a concert on Reservoir Hill, getting into a raft with ten other adventurers to ride down the San Juan River, or slipping into the Hot Springs with 6-8 friends and fellow visitors?

Trying to combine these three sciences to forecast the future of the economy creates lots of uncertainty and differing estimates.  Many Economists and Analysts project the recovery will take between 6 and 18 months. That seems like a reasonably educated guess. This will be a different real estate environment for sure.

Interested in knowing when it makes sense to request mortgage payment relief from your Lender and what impact that would that have on your credit? Do you want to know how local residential and commercial landlords are responding to the abrupt decline in local business activity and huge jump in unemployment claims?

What are the three most important factors if you are selling in this market? For Buyers- how do you know you are buying right in this kind of market? Learn how smart investors keep emotions from turning against them during these uncertain times. Watch for Part Three and Four, or call or text me at 970 946-6030, email me: Mike@PagosaRealEstate.com

Something Pretty DOWP is Here in Pagosa

I take my coffee and grab a seat. Before me sits a bright-eyed, curly-haired, handsome young man. He’s full of energy and ambition, and I can already tell he has the kind, considerate nature of a Pagosa Local. I have the pleasure of talking to Julian Caler, the co-founder of DOWP a snowboard group. 

As soon as he starts talking about his snowboards, I don’t have to do anything to urge him on. From the beginning, his passion comes through with every word. 

For five years now, Caler has been teaming up David Yerton. They design custom-made, one of a kind snowboards right here in Pagosa Springs. They build the brand around the energy and culture of snowboarders. The duo is funny and edgy and always ready to take on the next adventure. 

For Caler, snowboarding has always been a passion. It’s something that helps him relax and get away from stressful days. But designing snowboards is something he had to get talked into. 

It was David Yerton who talked Caler into designing and selling unique snowboards. Caler took a ski and snowboard business class in Steamboat Springs. He learned a few marketable skills and landed several internships in major companies. But after a company wanted him to move to New York City, he returned home to Pagosa Springs. 

That’s when Yerton convinced Caler that they should create their own boards. The ski and snowboard industry is one that’s hard to get into. So Yerton and Caler knew they would have to carve their niche to get a foothold in the market. 

They succeeded. Their boards are one of a kind from the design to the build to the backstory. Though Caler says their business isn’t enough to cover all the bills yet, it’s slowly but steadily growing and gaining a following. 

 What Makes DOWP Unique? 

They’re committed to creating high-quality homemade products. It sets them ahead of the pack, and their attention to detail shows. 

Yerton provides snowboard designs. But he’s been doodling them since he was ten. In the team’s first meetings he brought sketches and designs from over a decade go. His signature was always DOWP, and the duo knew they would stick to it for their company name. 

They make the boards from bamboo. This keeps the board light for the rider. But it also makes them more flexible, and more resilient than boards from other materials. 

To make the boards even better, they apply a polyurethane coat as a liquid. It dries as part of the bamboo board. Other boards have the polyurethane coat glued to the board. DOWP’s method makes the boards more flexible, more durable, and more resilient. 

But they also have a unique shape. Caler told me about two unique designs, for his boards. The first is square edges. At first, they were looking to create a unique-looking board. 

But when they tested the product, they found out the square edges gave the boarder better grip on the snow. This comes in handy when the rider goes to land a jump or another stunt. 

Other boards have a unique beavertail design. It’s designed to look like the mammal’s big flat tail. The beavertail design makes it easier to stay on top of fresh powder. The tail sinks in the back, giving the board more air over powder. The concept originated from a similar style on surfboards. But it applies to snowboards too, so the team ran with it. 

Each design is unique and full of personality. One design has Bigfoot eating a chocolate bar. Presumably, he tied the Boy Scouts behind him to the tree. 

Another depicts a bear sitting next to a roaring campfire. The smoke depicts a battle against the night sky. 

These boards have some of the coolest designs I’ve ever seen, and you’ll love them too. (Check out more cool styles on their Instagram here.)

Each board is a limited edition masterpiece. Once a snowboard sells out, they don’t make more. DOWP wants to see people who love their current board come back for a newer version, and ideally start a collection of DOWP snowboards. 

If you have a particular design you want on a snowboard, DOWP can make it happen for you. 

Why Pagosa Springs

Caler has lived in Pagosa since he was a kid. He moved away for a while going into college in Steamboat Springs. “It was more like two years of skiing and internships than college,” he tells me. 

But he didn’t like being away from this unique mountain town for long. Pagosa Springs is home for him. After a few years, he moved back and intends to stay. 

We talked for a while about how unique and special Pagosa Springs is. From its mountain views to rural ranches, Pagosa Springs calls to people from all over the world. There’s no other town like it. 

While Pagosa is a tourist town, it doesn’t feel like a tourist hot spot. Tourism is the industry, and yet, Pagosa Springs still keeps its own small-town culture. 

And Caler is a perfect example of its friendliness. I mentioned I drove my scooter to meet with him (in the rain) and without hesitating he let me know he’d be happy to give me a ride. 

Caler wants to see Pagosa grow, and he’d love to see DOWP grow as a part of it. But even if it doesn’t Caler says it’s something he knows he’ll always have. 

When he’s stressed, he can go work on a new snowboard and test it out on the slopes. He admits running and managing the business can get hard sometimes. But its also something he loves. When things get tricky, his passion helps him push through. 

No matter how big it grows, he wants to keep DOWP snowboards local. While he thinks it would be great for DOWP to get big enough to export production, he plans to keep his business here. 

How Can I Get a DOWP Snowboard?

You don’t have to be a local to love DOWP. These boards are great for anyone who loves to get into the mountains and into the snow, even for a few days a year. DOWP snowboards are a Pagosa treasure with a unique Pagosa Springs story behind them. 

Right now, boards run between $300 to $600. Prices are sure to go up soon. To get your hands on a snowboard of your own, contact DOWP a snowboard group on their site or via Instagram. 

Written by Juliara Baeten, Staff Writer for Pagosa Source Real Estate Advisors

The Neon Mallard: Build Friendships in the Coolest Lounge in Pagosa Springs

The goal was to “create a space that was different than anything else.” Annie DeMille and her husband, Tony hit their goal right on the nose. They’re the owners of the new bar the Neon Mallard. 

The Neon Mallard’s unique design starts with its black-painted exterior and outdoor fire-pit. Once inside, green textured bar stools and bird-inspired decor catch the eye. The Neon Mallard is different from anything else. 

When you first step foot in the door, it feels almost as if you’ve stepped back in time. It’s as if you’re off to the roaring ’20s, with darker lighting and a chic loungey atmosphere. There’s not a tv screen in sight. It feels like you’ve found a space where you can escape the pressures of the outside world. 

And that’s the goal behind the Neon Mallard. It’s designed to be a place to hang out with old friends and meet new ones. 

An Eclectic Avian Touch for Decor

On top of that, Annie and Tony created an eclectic, unique appeal to the bar. Each piece is handpicked from antique stores across the country. Between the Neon Mallard and the Nightingale Inn, they decided to go with bird-themed names, and included a bit of avian-related decor in the bar. 

They even picked many pieces out of their own home to get the feel right, and each piece is one of a kind. While I sat, we talked about an odd, holographic pheasant all in coppertone. We talked about a massive painting behind me. Two eagles seemed to be fighting to pluck a duck out of the ocean. It doesn’t make sense, we all agree, but it’s super cool nonetheless. 

Some friends have even donated their own pieces to the bar. Annie and Tony collect pieces from across the country, but here in Pagosa too. They think it’s likely they’ll have adopted pieces that once belonged to long-time residents. 

They’re not through decorating yet. Since every single piece is handpicked, Annie and Tony have high standards of what does and doesn’t go in the bar. They still want to add decor to the restrooms and rotate the art to accommodate new pieces. 

They hope that even regulars will notice new pieces popping up. Hopefully, they’ll provoke you to get up and take a closer look. 

Tony built the liquor shelves and the bar top behind the bar from timbers pulled out the inn’s renovations. Parts of the old inn dated back to the 1890s. The timber to build it would have come from Pagosa’s surrounding mountains. It’s possible the boards now holding a liquor shelf date back as far.

All this adds to the bar’s nature that’s distinctly unique, but equally Pagosa Springs. 

The Neon Mallard and Pagosa Springs

Annie and Tony bought the inn and slated it for renovations last November. They opened up the bar about a month ago on 13 September. It was a rush to get all the renovations done before snowfall, and they’re pleased with the progress. 

Annie grew up in Pagosa Springs and lived in Hawaii and California for about ten years each. She and Tony met in California, and eventually, Pagosa called Annie home. Tony fell in love with the place too. 

When they planned the Neon Mallard, they wanted a space that was their own. It didn’t matter that it didn’t necessarily match the ideas of what a bar should like. Despite being unique and pretty different than the rest of Pagosa, they’ve had a lot of positive feedback. 

They hope that by opening up something different, they might inspire others to do the same. The Neon Mallard is something that’s a part of Pagosa but also strays a bit from what people usually expect. There’s a lot of room for Pagosa to grow and innovate. Annie and Tony hope people follow their unique dreams, goals, and ideas for Pagosa Springs. 

Best Food and Drinks at the Neon Mallard

The food and drinks seem to match the same high-quality standards as the bar’s unique decor. In part, Annie and Tony wanted to thank Cliff and the rest of their staff for that. Having things flow smoothly, only happens with great people on board. 

The Neon Mallard strays away from your typical bar food, but they don’t disappoint. It surprised the staff that the cheeseboard was such a big hit. They also offer a Charcuterie Plate. It has salami, prosciutto, and other meats with baguette and assorted crackers. 

Or, appease your sweet tooth with New York cheesecake or a flourless chocolate torte. 

The Neon Mallard also features a handful of specialty cocktails. Look for drinks like The Chocolate Raspberry to a special Pagosa Pina Colada. Let’s not forget the Neon Mallard won second place for best Margarita in Pagosa Springs at the Chile Cha Cha fest. 

Even if you’re not a drinker, Cliff can still whip up something for you. He enjoys coming up with creative mocktails – alcohol-free. 

The menu changes seasonally, and the fall foods and drinks are on their way, so keep an eye out. 

And while the Neon Mallard is primarily a place to relax and socialize, a few events are coming up. First, the Neon Mallard is planning a rocking Halloween party. Then they’ll be putting together a fundraiser for Pagosa Springs to host a skijoring event. 

So ask if anything cool is coming up because there likely is. 

Neon Mallard – For Locals, Friends, and Friends-To-Be

As the Neon Mallard starts to find its groove, Annie and Tony plan to adjust the bar to the people that fill it. If they see they need more group seating, and fewer tables for couples, they’ll make more adjustments. If they realize they need more space, well, there’s always another wall they can knock down to create more room. 

The Neon Mallard is truly a must-see destination in Pagosa. It’s a great place to regroup after a busy day, to relax and recount your adventures. Share a pint or the second-best margarita in town. 

It’s a place where the locals go to catch up and run into friends – somewhere besides the grocery store. So when you visit the Neon Mallard, you’re always likely to run into old friends or make a few new ones. 

Want to be part of the Pagosa Springs community? Check out available Pagosa Springs real estate. 

Article written by Juliara Baeten, Staff Writer for Pagosa Source

Due to an oversight, an earlier amendment to the Archuleta County Land Use Code created an unintended negative consequence- that is, technically it made short term rental activity within many parts of the county a violation of the code. At the time the code was amended, it was in response to issues related to multiple cabins being placed within small acreage tracts in the county. Now, however, in subdivisions which do not have restrictions on short term rentals, a handful of disgruntled property owners have come to the Planning Department to insist they prosecute their fellow property owners that are using their homes to generate short term rental income. Some individual subdivisions have chosen to amend their Declarations to restrict rentals, (Echo Canyon Ranch and Lost Valley of the San Juans for example.) They made these changes in compliance with the governance documents of their subdivision, with a required majority vote of owners. In some subdivisions where a handful of owners have not been successful in convincing the necessary majority of its members to restrict short term rentals, they have asked the County Planning Director to step in and threaten owners with fines of $500-$1,000 plus $100 per day for failure to comply with the Land Use Code. This was not the intention of the County and they have agreed to address this unintended consequence.

Pagosa Springs’ and all of Southwest Colorado’s economy is based on tourism—that is an indisputable fact. It is not a self-sustaining retirement community—plain and simple. Our visitors come here to enjoy the friendly, safe and fun mountain environment that many of us have chosen to call home. In ever-increasing numbers, visitors are choosing to stay in private cabins, homes and condominiums rather than motel rooms. This is especially the case for a growing number of families, and not just in the mountains of Colorado, but worldwide.

The growth of Airbnb and VRBO (a subsidiary of Orbitz) is phenomenal and is expected to continue for decades. Pagosa Springs has a shortage of commercial lodging units, especially since the Pagosa Lodge went dark in early 2017. Without the extra rooms provided by private owners offering short-term rentals, we would be turning folks away during summer months, at Christmas and Spring Break.

In the fiercely competitive tourism environment, Pagosa Springs would experience very significant negative financial impacts if it were not able to continue to offer a large number of short term rentals. Without the generous and much needed revenues from tourism, it would only be a matter of time before we deteriorated into another Walsenburg or Cuchara. The folks opposed to short term rentals would find the lifestyle they thought they were protecting could not be supported when the majority of the tourism related economic activity disappeared from our community. We must oppose this short-sighted view opposing Short Term Rentals and accept and embrace the fact that we are a tourist destination, dependent on providing a great experience to our visitors, including an appropriate number and variety of lodging choices. A balanced, reality based perspective on this issue is needed.

According to a recent forecast by Zillow chief economist Svenja Gudell, inventory shortages will drive the market in 2018. There is a huge generation entering the housing market and they are not finding the level of inventory and home choices they would prefer. Gudell expects builders to respond to this on a national level by moving from adding density within cities where land costs and zoning laws push home prices out of reach for first time home buyers, to the suburbs where land prices are more reasonable and zoning issues are easier to navigate.

She predicts many first-time home buyers will move to the suburbs, which they have so far resisted, hoping to be able to afford a home within an urban center. Builders will shift some of their focus away from urban center luxury residential projects to capture market share of the pent-up demand among first time home buyers.

Gudell also expects a large number of homeowners to skip the historical trade-up scenario in favor of staying put and remodeling their existing home, making it feel and look brand new. (This should help to further boost the stock prices of Home Depot and Lowes.)

She says Boomers and Millennials will drive home design with wide halls for strollers and wheelchair access (aging boomers) and more “smart home” technology applications.

What does Gudell forecast for home price appreciation during 2018? She expects the current rate which she pegs at 6.9% to drop down to 4.1% next year. What about mortgage interest rates in 2018? Here there seems to be a consensus view that rates will creep higher next year, climbing to between 4.25%-4.75% or slightly higher by year end.

If the stock market and job growth continue to be strong in 2018, we expect demand for vacation homes and condos to increase in mountain resort areas.

Within the Pagosa Springs housing market, there will be more speculative new home building during 2018 as construction lending sources expand and demand within the $250,000-$400,000 continues to be strong.  We also expect the luxury home market to gain further strength and see a reduction in inventory of homes priced above $800,000. Homes prices will rise during 2018, though not at the same level as 2017, but we are projecting prices of existing homes will move toward reducing the 20% gap between the cost of existing homes and the cost of new construction.

Other factors that will come into play next year are the final components of the Federal Tax Reform. Will mortgage interest deductibility be capped at $500,000 for new loans? Will property taxes no longer be deductible? Will there be a limitation on mortgage interest deductibility for vacation homes? What impact will we see from lower income tax rates?  Locally, will there be efforts to curb the growth of VRBO and Airbnb rentals? How will this impact home values? How will the shortage of experienced construction workers impact new home prices in 2018?

Will there be consensus on how serious the local workforce housing shortage is here? Will the town and county come forward with effective solutions and develop the necessary funding or incentives needed to create new below-market rental units? Will the Town of Pagosa Springs follow the lead of the County and look again at eliminating Impact Fees?

There are plenty of variables to analyze and here at Pagosa Source we spend a considerable amount of time each week looking at these and other issues, to provide our clients and customers with the best real estate guidance possible. As residents and/or property owners, we encourage all our readers to be active participants in local government. Your money and your future are at stake.

You can reach Mike Heraty at Mike@PagosaRealEstate.com or by phone at 970 264-7000. You can also explore more on our website http://PagosaRealEstate.com