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% 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 to 756 homes this year.
Home sales are down in 2014 by 6% compared to last year, but sales of homes have increased by an average of 14% annualized since 2009. It appears that home buyers that 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%. There may be other factors affecting the overall appreciation such as the size of the home, but never the less, homes appreciate significantly over time. In fact, most home owners consider their home as their best investment if they have owned for a long period of time. 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 thru 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 3rd 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 to 130 last year, a decline of 33%. The decline of sales has impacted 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. Astute buyers and sellers will want their real estate professional to provide detailed information on the individual market segment. 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.