Luxury Housing Dominating the Real Estate Market

The colors seemed to hang around longer than usual this year, and much like the lingering leaves falling to the ground, the median price has rebounded to last year’s number, rather than shooting to the moon. All that and more on this month’s local “Real Estate Update.” The seasonal slowdown is indeed upon us. While some sectors are still seeing record levels of sales, which we’ll talk about shortly, others, such as the number of single-family home units sold in La Plata County, saw a decline year over year. The number of units sold dropped 30% in October, and while that’s a pretty big disparity, October 2020 notched the highest number of single-family homes sold in the county in the history of the MLS. And even with that 30% drop from last year, the number of homes sold in the county is still up 20% over October of ’19. In congruence with the units sold, it’s comforting to see that the median price has returned to the last year’s level, rather than continuing its trajectory upward into the stratosphere. Had it continued along that ’19-’20 trend line is outlined here. The median price would have been super close to the million dollar mark, which would have been an unsustainable median price point for right now. Only time will tell as to where it will land come January/February, when the trough of the wave is expected to reach its low point. So when looking at all price points, numbers are down. But, market trends within the La Plata County luxury market have become quite the outliers. Durango and the greater county had more million dollar homes sold in September and October of 2020 than in the previous 13 months combined. Fast-forward a year later to today, and the volume of luxury homes and ranches transacting in our county are a whopping 17-1/2% of the total homes sold in October. For context, at the end of October this year, there were 115 homes actively for sale in La Plata County. Of those, 60% are listed above a million. Alternatively, only 12 homes or 10% of the market are priced under 500. Durango has become more and more enticing to higher wage earners, as the ability to remote work is becoming the norm. And retirees are deciding to spend more and more time here. It’s evident that luxury homes will continue to be a predominant sector of the market, as a substantial portion of the new inventory continues to land above that million dollar price point. From a macroeconomic perspective, there are many factors to take into account when trying to make sense of all of this data. Interest rates continue to play a big part in demand, but with such a limited supply, we’re starting to see declines in the sales volume, while prices continue to be propped up. LPC has experienced a near 30% drop in both single-family units sold and dollar volume. That’s why analyzing October year over year, both numbers are going to be higher than any other month in 2021, but below any other number in 2020. To say the least, we are experiencing some wild times, and I’ll continue to track these trends to help you make sense of them as we move closer to what I’m hoping to be some sort of normalcy over the next 12 months. All of the stats lead back to the saga about supply, or the lack thereof anyway. And one of the major holes in our current market, and markets in mountain towns all across the state, is the lack of workforce housing. Now I’m not going to go into all of the nuanced differences between workforce and attainable and affordable housing, not in this video anyway. But for those of you who have tried to rent a place in the last 12 months, you know that it’s a nightmare to try and find a home that makes financial sense. The good news, if there is any, is that City of Durango along with La Plata County and other major stakeholders have this issue as one of their top priorities, and are performing studies and welcoming suggestions as we move through this together. One of these stakeholders, the Southwest Colorado Council of Governments, recently performed a housing needs assessment study, and the picture painted was less than rosy. The study quotes, “In the past decade, new housing has favored occupancy by seasonal and vacation owners over workforce. About 80% of new households forming in the region since 2010 contained no workers. No county has been able to keep up with demand for housing to accommodate employment growth and demand for seasonal and vacation housing.” They also state that our region is short about 1,000 housing units, and does quite the deep dive into data points that we don’t have time for in this update. So, if you’d like to chat about how to save the world or anything else real estate-related, please feel free to email me at [email protected], or shoot me a direct message on any of our social media handles @DurangoBrokers. If you like this content, please subscribe below, and help out the algorithm by smashing that Like button. Stay vigilant in achieving your real estate goals. Say hi to a stranger on the Animas River Trail. And thank you for watching.

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