With all of 2023 on the books, we have a full set of market statistics to analyze. As we saw in 2020, 2021, and 2022, home prices rose yet again. 2023 did not see the huge double digit appreciation numbers we saw in the last 3 years, which is an indicator of the market becoming more balanced. Similar to 2023, we saw continued low home inventory partnered with high interest rates (rates we have not seen since in over 20 years). We anticipated the Fed would start to reduce interest rates towards the end of 2023, but unfortunately that was not the case. We mentioned this last year, but it is important to note again; with rising home prices and rising interest rates, it creates a large affordability problem for buyers. As an example, if you obtained a loan for $400,000 in 2020 or 2021 when interest rates were at about 3%, your payment (principle & interest) would have been $1686/month. Rates are now around 7%, which would make the monthly payment on the same loan $2661/month.
2023 Recap
Looking back at 2023, there were a total of 877 residential sales in all of La Plata County, which was a decrease of 330 sales, a 19.6% decline as compared to 2022. We have not seen total sales under 1,000 since 2012 (833 sales). The continued low inventory is largely to blame for this. There is still good news for sellers and homeowners; the median price of homes in La Plata County increased by 4.68% to $638,000. The average sales price also increased significantly to $813,046, from $768,734 in 2022, which is a 5.76% increase. One noteworthy factor contributing to this increase is the result of 151 homes selling for between $1 million & $2 million, and 41 homes selling for over $2 million. To give some perspective on sales over $2 million, in 10 years, 2010 to 2020, there were 62 total sales over $2 million, an average of 6.2/year vs. 41 in 2023. Average days on the market (ADOM) has remained remarkably consistent over the last 3 years, 87 ADOM in 2021, 86 ADOM in 2022, and 85 ADOM in 2023.
La Plata County Residential Real Estate Market Statistics
2023 was another strong year for price growth on Durango in-town properties. The median sale price in 2023 was $649,000 ($595,500 in 2022), which is an increase of 8.9%. The total number of sales fell sharply in-town again; in 2022 there were 277 total sales and in 2023 there were only 237, a decline of 14.4%.
Bayfield saw a drop in total home sales for both in-town and rural areas, ending the year with 140 units sold in 2023, compared to 197 in 2022, a decline of 28.9%. Unlike Durango, and to our surprise, median home prices for both in-town and rural properties in Bayfield decreased slightly. The in-town median home price fell to $460,250 (a decrease of 0.75%), and the median rural home price fell to $531,250 (a decrease of 2.6%).
2024 Predictions
What do we expect in 2024? Low inventory will continue throughout the year, as will higher interest rates in the 6% – 7% range. In listening to industry economists over the last few weeks, they are predicting that if we are to see rates start to drop, it will likely be in Q4. There are a few factors that will keep inventory low next year in La Plata County:
1. Interest rates.
We believe the high interest rates are keeping people from selling the homes they are in. Most homeowners have current interest rates at or around 3%. It can be difficult to justify selling your home with a 3% interest rate and good equity, and take on a new loan at 6% to 7% along with a higher purchase price. Until rates drop into the 5.5% range, we believe this trend will continue.
2. Limited new construction inventory hitting the market.
While there are some larger projects in the pipeline, we don’t see any of them having a substantial impact on inventory in 2024, or even 2025 for that matter.
3. Residents do not seem to want to leave Durango, no surprise there!
Overall we believe our real estate market will be similar to 2023; 4-5% appreciation for residential properties, 80-90 average days on market, and total residential sales under 1000 units.
Lenders are predicting that rates will drop slowly in 2024 - if this is the case, we may see a little uptick in home listing inventory towards the end of the year. We believe lower rates, in the 5-6% range, will be enough to get some folks to sell their home and purchase a different home that better suits their lifestyle.
We hope you all have a happy and healthy 2024 and please contact us with your real estate questions or needs!
