COVID-19 may be hurting restaurants, small shops and salons, but the real estate market appears to have developed herd immunity to the problematic pathogen.
The Durango Area Association of Realtors released third-quarter statistics Wednesday showing the median price for a home in unincorporated La Plata County at $431,250, up 12% from $385,000 in the same quarter in 2019. The number of homes sold in the county hit 962 in the quarter, up 94 sales from the same quarter in 2019.
In Durango, the median price for a home reached $550,000 for the quarter, which ended Sept. 30. That’s up 9.1% from the $504,250 in the same quarter last year. The number of Durango homes sold in the quarter was 150 – up 30 sales from the same quarter in 2019.
“We’re seeing people retire early, people wanting to work remotely, but a lot of our areas don’t have very good internet, and that can be an issue. But yes, we’re just seeing a ton of people coming here that had not been here before, from all over,” said Christine Serwe, president of DAAR and a real estate agent with The Wells Group.
Serwe noted the number of mountain homes sold north of Durango increased from 13 in the third quarter of 2019 to 31 in the third quarter of 2020, a 138.5% increase.
The strong demand for mountain homes showed just how robust the high-end home market has been in the latter half of the year, she said.
Even more impressive than the increase in sales prices is the number of units sold and the decrease in inventory of homes on the market, said Rick Lorenz, an agent with The Wells Group who also compiles his own statistics and has a newsletter on the Durango market for clients of Team Lorenz.
“The one thing that jumps off the page more than anything is a decrease in inventory,” Lorenz said. “At the end of September last year, we had 705 units on the market in all of La Plata County. It’s down to 288, That’s an incredible stat.”
Heather Erb, managing broker at Coldwell Banker Heritage House Realtors, said low-interest rates are making it easy for people to move to Durango and existing residents to refinance their mortgages, making it more affordable for them to stay – and both those dynamics lead to a shrinking inventory.
Zillow showed a 30-year mortgage for $400,000 was available for 2.615% in Durango on Wednesday.
“The demand is manifold – get into the right house while the rates are low, make the move to Durango while you are contemplating what the next chapter of your life should look like,” Erb said. “It’s very much related to rates and the opening of people’s minds to be able to work remotely from a town they want to live in, Durango.”
For Bob Allen, owner of Allen & Associates, a real estate appraisal and market analysis firm, the falling inventory of homes is the story.
“Everybody wants to talk about prices, but to see the number of homes on the market drop from 705 to 288, that’s huge, and it raises the question in your mind: How sustainable is the increasing number of sales when inventory is falling through the floor?” he said.
Allen said limited land availability, high land costs, increasing construction costs and a labor shortage are factors keeping new construction levels below market demand.
The dearth of new construction combined with the strong demand is likely to keep pressuring sales prices higher, he said.
“I don’t think anyone has repealed the laws of supply and demand,” he said.
In tracking sales, Allen said the market was strong through March, then fell off with the arrival of COVID-19 in mid- and late March.
Home showings were not allowed for about a month beginning in late March.
“Right after the Fourth of July, sales started to heat up, and what that tells you is that activity picked up about 45 days before that,” he said. “We had to have had huge buyer activity in late May, and it wasn’t reflected until closings in July.”
Allen said Durango’s attraction from people fleeing urban areas because of the novel coronavirus was only one factor in a complex market leading to increased demand for Southwest Colorado homes.
“If you find out why everything happens, let me know because I sure didn’t predict what was going to happen,” he said. “But right now, we have a strong market, and that’s across all market segments. Durango is a desirable place to live, but we need product to accommodate all the people who would like to live here.”