A year ago, many people scoffed when John Wells, owner-broker of The Wells Group, predicted the then-emerging novel coronavirus, the first serious viral pandemic since the Spanish Flu of 1918, would have little impact on La Plata County’s real estate market.
The prediction came in March 2020 during The Wells Group 2020 Real Estate Forecast. It was delivered about a week before a consensus emerged: Widespread economic destruction would ensue from the pathogen, no matter the economic sector.
Imagine the guffaws Wells would have drawn a year ago if his crystal ball had accurately foreseen what eluded almost everyone in March 2020 – COVID-19 would not only have little impact on the county’s real estate market, it would supercharge it.
Wells has returned to examine the county’s real estate market in The Wells Group 2021 Real Estate Forecast, but this time it was held via an online video, another consequence of the year-old global pandemic.
After Wells’ online take of the market, Bob Allen, owner of Allen & Associates, presented a statistical analysis of the local real estate market and what it might indicate for the coming year.
“The supply of real estate, in all categories for La Plata County, has dropped by a dramatic amount, 35%. But demand for all properties went up by about 30%,” Allen said. “That was unexpected. We didn’t know that was going to happen after this pandemic started back a year ago. We had a few very slow months and then things really started to rock and roll in June, July and August.”
Especially influenced by the viral pandemic was an explosion in high-end sales.
“The dollar volume was way up. We had a lot of high-end sales that drove that volume number up about 46%,” Allen said. “This is the first time that La Plata County has seen sales dollar volume above a billion dollars. It’s a significant event that happened here in this past year.”
In 2020, total sales volume for all single-family residential units totaled $1.11 billion up from $800 million in 2019 and $770 million in 2018.
As Jim Wotkyns, another owner-broker of The Wells Group, said to start the 2021 forecast, “A year ago, we were at beginning of a ride none of us were anticipating. COVID has created a market locally and nationally that has tipped the scales.”
A big factor fueling 2020’s increased median prices is a lack of supply, something Wells anticipates will continue in 2021.
The No. 1 prediction from Wells for 2021 is that inventory, the ability to find a home on the market, will continue to be problematic.
“Inventory is the largest challenge to buyers. But it’s also a major challenge to sellers; Where do sellers move?” he said.
Families in Southwest Colorado looking to downsize as children have grown or to upsize with a growing family are all having trouble finding product with the limited supply on the market, Wells said.
“They find out there’s not much inventory for them to make a change, and so they’re hesitant on selling the home, and therefore the buyers have less inventory to consider when they are shopping,” he said.
Allen noted in La Plata County, single-family homes for sale at end of December 2019 totaled 469 units compared with 156 single-family homes in 2020, a 67% decrease.
In December 2019, 938 single-family homes had sold in La Plata County compared with 1,123 sold at the end of December 2020.
The problem of supply is not getting better.
Allen noted as of March 24, the beginning of the cyclically strong selling season, 200 homes were for sale in La Plata County, but 50% of them were already under contract.
With low interest rates and prime rural locations across the country drawing interest from urban refugees, the fuel causing median prices to rise remains abundant.
The median price of a single-family home in Durango rose to $562,045 in 2020, up from $501,400 in 2019, a 12% increase. The median price in 2018 was $487,000.
“When we see supply is down and demand is up, we pretty much know what is going to happen to the median sale price, it’s going to go up, and that’s what we saw,” Allen said.
Besides Allen’s prediction that inventory would be the No. 1 factor in the 2021 market, he forecast four other top factors for La Plata County real estate in 2021:
No. 2, affordability: The cost of building materials and increasing interest rates are likely to put further pressure on rising housing costs.No. 3, interest rates: An era of plummeting interest rates likely will come to an end. Interest rates after falling to as low as 2.74% are now around 3.2% to 3.3%.No. 4, in-migration: An attractive lifestyle, a low population density and limited traffic hassles will continue to bring urban refugees to the Animas Valley.No. 5, internet speeds: Incoming buyers have to be connected with “respectful” upload and download speeds.Wells said, “Now, probably what the first question (from a prospective buyer) is: ‘Tell me what the internet speed is because I depend on that.’”