COVID-19 may have changed much of the world, but the real estate market in La Plata County isn’t likely to be harmed by the outbreak of the virulent virus now causing alarm across the country and the world.
In fact, the outbreak could even give La Plata County a competitive advantage for summer tourists determined to maintain there summer break despite the viral threat.
Tourism is important for the real estate market, said John Wells, broker-owner of the Wells Group. He often notes that tourists are a prime source for new residents who move here after discovering Southwest Colorado during a visit.
“Let me just talk about the blessing we have living in Southwest Colorado,” Wells told a sparse crowd of about 100 who attended The Wells Group 2020 Real Estate Forecast on March 12 at the Fort Lewis College Community Concert Hall.
He noted La Plata County has about 33 people per square mile versus 7,000 people per square mile in Los Angeles County.
“So let’s say someone wants to take a vacation this year. And they go: Do we go where there’s already 7,000 people (per square mile) plus millions of visitors or do we go to the clean air and the bright clear skies and the open space in Southwest Colorado?” he said.
Durango’s prime tourist market comes from automobile visitors from Texas, New Mexico, Arizona and the Front Range, and Wells said that should continue in 2020, and it is likely to provide some cushion from decreasing air travel caused by the coronavirus outbreak.
“So, we actually think we will see a good tourist season because of where we live,” he said.
Consistently rising home prices, especially for in-town Durango, will continue to frustrate residents who would like to convert from renters to homeowners, said Bob Allen of Allen & Associates, who offered a look at data he collects about La Plata County’s housing market.
He noted since 2010, the median home price in La Plata County has increased 30%, but household income has risen by only a sliver over 10%.
“Household income is not rising with house prices. The affordability gap widens and so we have this affordability problem,” Allen told the audience.
The growing inaffordability of housing is a drag on efforts to diversify the economy because it serves as too big of an obstacle for workers to overcome even with jobs lined up.
Laura Lewis Marchino, executive director of Region 9 Economic Development District of Southwest Colorado, told the crowd in a prerecorded video, “So, in La Plata County, for example, right now 42% of the population cannot afford to buy a home based on their income. That’s something we’re really trying to work on to make sure that folks who want to buy a home can purchase one in La Plata County, because if you can’t afford to buy a home, it’s really hard to stay here long term.”
According to Region 9’s studies of a livable wage, living La Plata County requires a job of $13 an hour in Durango or $12 in Bayfield or Ignacio. Those wages are frequently difficult to find in the tourism sector, the region’s biggest economic sector.
“If you don’t make that wage because the area is too expensive, then you have to make some choices,” Marchino said. “You either have more than one job, you don’t have health insurance, you may not have an automobile. Things like that.”
Wells offered 10 predictions for the county’s 2020 real estate market:
Coronovirus: There is much talk about this. However, where we are located could be a benefit to residents and tourists.Cost of construction: It will continue to limit new housing coming on the market in all price categories.Natural gas industry: The impact of the buyout of BP may benefit the housing market, as the new owner, German firm IKAV, has indicated it will keep BP employees, providing a more stable job environment for prospective home buyers.Land sales: The number of land sales will increase from limited numbers in recent years, largely because the inventory of new homes is thin and new developments will first require the purchase of land.Millennial buyers: Younger buyers, ages 22 to 37, will increase substantially, supported by low interest rates.Market competition: Aging homes will need updating to attract buyers. Millennials especially expect homes to be in top condition, including repairs, new paint and decluttered.Interest rates: The cost of mortgage interest rates is likely to stay low for the year, which should benefit real estate sales.Investors: People looking to buy real estate as an investment and use their properties as rentals are likely to increase, in part helped by lower interest rates, which should boost their rate of return on properties.Attainable and affordable housing remains an issue, nationwide, statewide and in La Plata County, with in-town Durango’s median house now above $500,000. Large employers themselves will begin to move on creating housing themselves to attract workers.Level of sales: The market pace will resemble 2019 levels. “This is good news because we had a good market last year,” Wells said. “We had a good, robust market last year, so being about the same is not bad.”email@example.com