After over two decades of The Wells Group Annual Real Estate Forecast presentations, our company has pivoted to a published presentation that includes the same insight on the local real estate market. Below we explore topics like local migration, affordability, taxes, insurance, generational impacts, and opportunities for buyers and sellers.
Mortgage Rates
Although there are many uncertainties right now, the real estate market is predicted to stay relatively stable. Housing, while it includes many national factors, is not one hundred percent reliant on stocks or trade. Federal mortgage rates are based on the 10-Year Treasury Bond which has remained stable: near or above 4% since the middle of 2023, after the low during the Covid Pandemic. While mortgage rates - currently hovering around 6% - are not expected to decrease substantially, analysts anticipate slight reductions but no major increases.
The Inventory & Affordability
La Plata County real estate inventory continues to grow month over month and year over which is a positive change. After the inventory dropped down to a third of the “normal” in 2021, it’s gained nearly 100 listings across all sectors since. While this is still less than half of pre-pandemic times, the growth - even if a little - is necessary. This includes some new housing developments which are aimed to help lower housing costs and affordability in the area. However, as La Plata County and Durango specifically continue to be a desirable areas (and still more affordable than other Colorado mountain towns: Aspen, Vail, etc.), there is noticeable migration of employees/previous residents to the surrounding areas (Montezuma County, CO; Archuleta County, CO; and San Juan County, NM) for lower housing costs. Housing affordability, especially for the workforce continues to be a hot topic and is being met with some local initiatives like Homes Fund, large rental apartment complexes, and deed restricted properties. Another factor that will likely keep supply historically low is high interest rates which are keeping home owners from selling. There are a lot of current homeowners that would likely sell to upsize or downsize, but they do not want to lose, or cannot afford to lose, their sub 5% interest rates. Additionally, new construction remains very slow in La Plata County, there are multiple factors for this: lack of labor, high material costs, and lack of easily buildable land with infrastructure.
Property Taxes & Homeowners Insurance
Some of the other factors affecting affordability in our area are increased property taxes and home owners insurance. Property taxes are on the rise primarily due to the property values climbing higher each year. While property taxes are increasing, it’s still important to remember that Colorado as a whole still has some of the lowest property taxes across the country. In the last two years, homeowners insurance has become a much larger part of the home buying process than it ever was before. This drastic change came partly as a result of the Marshall Fire in Boulder, CO at the end of 2021/beginning of 2022, multiple fires in California, and other natural disasters around the United States. These devastating events created unimaginable losses for homeowners which subsequently affected the insurance companies. As a result we are seeing insurance companies try to offset their losses in multiple ways:
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Increased premiums, sometimes double or triple what they were before
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Not issuing any new policies in certain areas, primarily high risk areas
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Not renewing policies in certain areas, so once your insurance policy expires, you have to go and find a completely new one
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Completely leaving an entire state as an insurance company
Generational Impacts
As the years progress, the different generations take on different roles in the real estate market. Millennials will become the primary buyers, mostly first-time homebuyers, within the next five to ten years. The median first-time homebuyer age is 38 years old, and many Millennials (born 1981-1996) will be reaching that age in the next ten years. On the other side, the Silent Generation (born 1928-1945) and Baby Boomers (born 1946-1964) will be selling their real estate investments. The 55+ age group, especially those retiring this year (over 4 million predicted), have historically been drawn to Southwest Colorado. They are drawn by the mild winters and summers, amazing outdoor opportunities, and active community lifestyle. As a whole, people continue to be drawn to Southwest Colorado, and that is obvious with the continued increases in traffic at the Durango-La Plata County Airport. Compare the number of incoming passengers to Durango-La Plata County Airport in 2019 it was 390,506 to 499,110 in 2024. This presents a great opportunity for local sellers.
La Plata County is, and always has been, an everchanging and evolving market. The La Plata County market is certainly not immune to external factors such as stock market trends, interest rates, and political/policy changes. While most of this is out of our control, it is obvious that people still want to continue to and move here to live in Southwest Colorado. We work to constantly stay on top of all of the factors affecting our market, and believe that is how we best serve and help our buyers and sellers. We are always happy to meet and discuss all of these changes, and how they affect your real estate needs. Please feel free to reach out to schedule a time with us!
To view the whole presentation, please visit our parent site here.
