The big news in our real estate market is the return of appreciation in median price, which set a new historic high for the first nine months of a calendar year.
The previous high was in 2006, reaching $335,000 for all residential real estate in La Plata County, and the new high is $336,200.
The median price is up 9.15 percent over the first nine months of last year. It has taken eight years to recover from the deep recession, and it has been a wild ride, with prices dropping as low as $292,500 in the first nine months of 2009, and only 386 homes sold in La Plata County compared with 756 homes this year.
Home sales are down in 2014 by 6 percent compared with last year, but sales of homes have increased by an average of 14 percent annualized since 2009. It appears that homebuyers who were waiting for the market to fully correct returned to the market last year and are benefiting from the new price appreciation. This year is the second-best real estate market since the bottom of the market.
Price appreciation in real estate is normal in a historic perspective. As an example, the average price of a single-family home in Durango was $79,142 in 1983, and for the first nine months of this year, the average price is $437,417 for an average annual appreciation of 5.7 percent.
There may be other factors affecting the overall appreciation such as the size of the home, but nevertheless, homes appreciate significantly over time. In fact, most homeowners consider their home their best investment.
If we have returned to a “normal” market, it would not be unusual to see long periods of appreciation. For example, homes appreciated every year, except for one, from 1990 through 2006.
It has been speculated that a lack of inventory is affecting the number of home sales this year, and that does not appear to be correct. Inventory levels were very low in the first quarter of the year in Durango, but there was a significant increase in inventory levels of homes on the market in the third quarter, and there appears adequate inventory in all market areas, with the exception of the town of Bayfield.
The La Plata condominium market was one of the worst performing markets this year, as 87 units have sold, compared with 130 last year, a decline of 33 percent. The decline of sales has affected Durango in-town condominiums and the resort condominiums. There appears to be an adequate inventory level, but sales may be affected by the financing options.
The real estate market is very segmented, and each segment has its own supply and demand features. Sellers will want to know how many competitive homes are on the market, and buyers will want to judge the best opportunities for making a wise investment.
Don Ricedorff is a Realtor at The Wells Group in Durango, and a past president of the Durango Area Association of Realtors. He can be reached at email@example.com.