Persistent trend of low stocks, high prices end the year
Total real estate sales in 2021 hit more than $1.6 billion in La Plata County, setting a record for the area and sending another scare into the air for the working class as local leaders apply a magnifying glass to the housing crisis.
Year-end real estate statistics released this week by the Durango Area Association of Realtors reveal residential inventory continues to decline while selling prices soar.
The total volume of all real estate sales last year, including residential, land and commercial sales, was $1,653,756,762, according to year-end data released by DAAR.
La Plata County’s total sales volume of townhouses, country homes, and condos/townhouses alone was $1.4 billion.
Heather Erb, general manager of the Durango office of Coldwell Banker Distinctive Properties, said in an email to The Herald of Durango that the lack of inventory drives prices so high that the county can achieve a higher value of homes sold despite lower overall sales.
“Until we see more inventory, we will continue to see prices rise,” Erb said.
She said expected mortgage interest rate increases in 2022 will put some pressure on buyers, but that won’t be enough to make a difference to how the market ultimately shapes up this year.
“Luxury home sales have also significantly increased the (price) volume of home sales,” Erb said. “If you want to see the effect of luxury sales on the market, take anything that sold over $1M in 2020 and 2021. The number of MLS home sales in this segment increased by 86 % in one year !
Rick Lorenz, broker at Durango Wells Group Real Estate, said he also thinks some buyers might be deterred from jumping into the market if the federal government raises mortgage interest rates, which would help inventory a bit. .
Record sales have troubling implications for workers such as teachers and nurses, Lorenz said. He noted that even lawyers could struggle to find housing in Durango if prices continue to rise at the rate they have been.
Lorenz warned that Durango is set to become the next Telluride, where the working class has been pushed out of town, and wondered if this community would of course correct its real estate trajectory if given another chance.
The broker echoed many of the sentiments that could be heard at recent housing meetings hosted by the La Plata County Economic Alliance and the Durango Chamber of Commerce. He said NIMBYism (not in my back yard) isn’t helpful and he’s worried about young professionals if home prices continue to climb while the number of available units continues to drop.
Lorenz said that three or four years ago, 400 units available was considered low inventory. Only 110 residential units were available as of Dec. 31, according to its data.
DAAR statistics show that 182 residential units priced at $1 million or more were sold last year compared to 98 units priced over $1 million sold in 2020. Despite the fact that the number of units priced of $1 million or more nearly doubled in 2021, the total number of units sold across all price ranges decreased slightly from 1,456 units to 1,420 units.
The median price of 181 Durango townhouses sold last year was $650,000, an increase of $75,000, or 13%, over the median price of 216 Durango townhouses sold in 2020.
In Bayfield, 65 town homes sold for a median price of $399,000 last year, compared to 80 town homes selling for a median price of $331,500 last year.
Lorenz said in a written analysis that while average and median home prices have increased noticeably, “properties over $1 million really have a major impact on total dollar volume.”
He said the number of buyers buying homes with cash increased significantly last year compared to 2020. There were 85 cash purchases on units priced at or above $1 million l year compared to 51 cash purchases the year before, according to Lorenz data.
Cash purchases of properties priced at $1 million or more accounted for 46.7% of sales in that price category, he said.
Lack of inventory is driving up home prices across the county. DAAR Board Chairman Lois Surmi said the current market is a seller’s market in a December interview with the Herald.
Lorenz agreed that a lack of inventory helps drive up the prices of inventory units due to the economics of supply and demand. He said the sales were also driven by the fear of missing out on the opportunity to buy a given unit. Some buyers are also willing to pay above the market listing price.
It’s not too uncommon for a buyer to sometimes pay a few thousand dollars above the listing price, he said. But more recently, he’s worked with people who spent $200,000 above the listing price.
The La Plata County Economic Development Alliance recently received a grant from the Colorado State Rural Economic Development Initiative in partnership with the City of Durango.
Michael French, executive director of the alliance, said the money will be used to create “a workforce housing investment strategy or plan” aimed at helping resident workers find housing in an increasingly expensive real estate market.
To deal with the housing crisis, Lorenz said the expansion of utilities and greater residential housing development will be needed to meet the demand for more inventory.