The magic word in real estate is location, and location within La Plata County certainly made a difference in sales and prices through September this year.
Bayfield real estate values continued to decrease, sales of open land in the county showed a big leap, and pretty much everyone else is seeing slow but steady growth.
“We’re just chugging along,” said Jarrod Nixon, president of the Durango Realtors Association, which released its year-to-date through the third quarter statistics for the Multiple Listing Service real estate transactions. “We’re showing a very gradual recovery, after sales bottomed out in September of ’09. But we’re probably still three years away from what I would consider a normal market.”
Bayfield continues to struggle with decreasing median prices – down 7.27 percent from 2010 and 28 percent from 2008, with 20 percent fewer sales so far in 2011.
“We have a situation with a lot of forced sales,” said Dave Hardy, the owner of Bayfield Realty. “We have a lot of repossessions and relocations of oil and gas people that’s driving prices down. But I feel like we’ve hit the bottom of pricing.”
Hardy said his office has been quite busy for the past week or so, which may indicate an uptick in sales.
One of the brightest spots in the local real estate picture is the sale of raw land in the county.
“The best way to summarize it is ‘land banking,’” said Justin Osborn, a Realtor with the Wells Group, who has sold a lot of land this year. “People who have cash are seeing some of the lowest land prices in 10 years, and with the stock market and bonds unreliable, it seems like the best time to buy for a long-term investment.”
Location of the property makes all the difference. Osborn said prices vary from $800 to $20,000 an acre, depending on variables such as water rights and views. He closed on three major properties in the third quarter, including the 800-acre Red Mesa Ranch that went for $750,000 and 400 acres of the Continental Divide Ranch, which sold for $2.6 million.
“The (U.S. Department of Agriculture) is still doing its (Conservation Reserve Program),” Osborn said. “So rather than overgrazing or developing, people can leave the land in natural grasses and still bring in up to $50,000 a year. So they can invest in land, get an income and enjoy the land. People like to go fishing, ride ATVs, go on picnics, go hunting or even grow their own food on their own land.”
Most of the land currently for sale was purchased for development before the market crashed, he said. Old-time ranching families are holding on to their property until prices go up.
And buying raw land isn’t for the cash-strapped.
“Unlike home mortgages, which are available at historically low interest rates, lending for raw land is not getting any better,” Osborn said. “Banks are asking for 35 to 40 percent down, which can be a lot of money.”
In Durango, where the median price was up a little more than 4 percent, and the number of homes sold was up almost 10 percent, location mattered, too.
“It goes neighborhood by neighborhood,” Nixon said. “The avenues (historic downtown Durango) have performed really well and held their value. But Durango West and even some of Crestview are still showing declining value.”
All three men cautioned against reading too much into quarterly trends. Osborn said it takes only a few big land sales to skew the statistics.
“In 2010, the federal government was offering that $8,000 tax credit through the first two quarters,” Nixon said. “That really affected the third, and into the fourth quarters. And purchase timing has changed. Loans were taking 60 days to close last year, and this year it’s down to 35 or 40.”
The number we should really be looking at is inventory, they said. Seven to 10 years is the estimate for raw land, Osborn said.
“We have between nine and 12 months of inventory in town,” Nixon said. “Six months is the norm. Until some of that inventory is absorbed, we’re not going to see prices go up too much.”
In the meantime, the next big development push will be for rental housing.
“When home ownership is declining, we see an immediate need for rental properties,” Nixon said. “That’s a large shift for us. We have more people and less supply.”
