MIKE HERATY LOOKS BACK AND BEYOND
2022 brought an increasingly shifting real estate market to southwest Colorado, which began at the start of the summer. As the impact of Covid-19 decreased, we saw a reduction in the inflow of new visitors and homebuyers into the area. During 2022 total home sales in Archuleta County hit just over $300 million, down 18% from 2021, which was the strongest market on record for the area. 456 homes sold in 2022, representing a decrease of 36%, from the 620 sold in 2021.
The runup that started in early 2020 slowed down, due to combination of higher home prices, a jump in mortgage interest rates and a poorly performing stock market. These factors led to a return to numbers more indicative of the long-term averages in our area. The number of homes sold during 2022 was closer to where things were prior to 2020. There are other interesting facts within the data we studied.
First, the median selling price for homes during 2022 hit $539,500, an increase of 13.6% over the prior year. The median number of days on the market stood at 64, unchanged from 2021. So, things have slowed down in terms of the number of transactions, but with limited inventory, properties are still moving, and prices have continued to move higher.
With higher interest rates, a foggy near-term outlook for Wall Street, and large layoffs among tech companies, some are predicting a major decline in home values in 2023. Some bloggers have gone so far as to predict a meltdown of home prices like 2008. I don’t think this is likely and I’ ll give you four reasons why.
First, the housing market crash of 2008 was the result of very loose lending policies, with many home loans funded without any proof of income, tax returns or credit checks. Second, homebuilders were ahead of demand in terms of overbuilding, flooding the market with unsold inventory. Third, during 2022, nearly 37% of home purchases were made with cash. 53% were purchased using Conventional Financing, which most often requires a minimum of 20% cash down payment. Loan qualifying requirements are strict, unlike the period from 2000-2008. So, there is a lot more solid cash equity in the market, which creates stronger staying power during shifts in the economy. Fourth, there continues to be a large imbalance of available housing inventory relative to demand, and the cost of new construction remains high, which supports the value of existing homes. Further, bringing new housing developments to market is extremely expensive, with significant political, timing and market risk. Some new projects are under way and others are in the preliminary planning stages. The projected number of new homesites and dwelling units will still fall short of the forecasted demand.
We will experience a slower real estate market this year, but, during the early months of the Covid-19 pandemic, more people discovered Pagosa Springs for the first time. Many had only passed through on their way to Durango or Telluride, and many had previously vacationed in Vail and Summit County. Now that they have discovered and experienced the beauty of our area, the friendliness of our town, and the much better value proposition we offer, they are returning. We will continue to attract more second home buyers from the Dallas area and from the corridor between Austin and San Antonio. Folks from Arizona and New Mexico are continuing to visit and invest here. More Coloradoans are traveling down here from the Front Range as an alternative to the crowded and very expensive I-70 corridor from Dillon to Glenwood Springs.
Two new restaurants are being planned for Pagosa Springs, both east of our office in the East Village. Several condo and townhome projects are in the works as well. More future choices, more opportunities, more to offer our residents and guests. We will have further details and other exciting news during the next 90 days.
For over 25 years, I have provided real estate services to clients and customers here in Southwest Colorado and created and closed successful transactions through the ups and downs and flat periods of the real estate economies. I continually study the data, research, and analyze the events, factors and influences that affect the real estate economy, to provide the most resourceful guidance, advice, and brokerage service in the area.
For a more detailed discussion of the local real estate market and your goals related real estate, call or text Mike Heraty on 970 946-6030.
