Real estate

Housing market still seeking a new normal after the bursting of the real estate bubble

As data accumulate after the bursting of the housing bubble, two things seem clear: It was the bubble, not its aftermath, that was an aberration, and buying a house as an automatic road to riches is a discredited idea.

How that is reflected locally can be seen in the just-released figure for year-to-date home sales in La Plata County.

Statistics from the Durango Area Association of Realtors are broken down into nine categories according to location and type of property.

Sales appear to be healthy and prices have certainly not collapsed, but in only one category has the median price increased over last year. In all others, it has decreased.

More to the point, disregarding the sales of homes at Purgatory at Durango Mountain Resort, where the small number of transactions makes comparisons all but impossible, in every category median prices are lower than they were in 2009.

That is not to say buying a home is a bad choice. On the contrary, it has much to recommend it – including the opportunity to build equity over time. But as both national and local housing prices show, counting on immediate and sustained price increases is unrealistic.

And on balance that is good. A healthy housing market is an important component not only of the nation’s economy, but of our society as well. But a healthy housing market is one in which people see homes as somewhere to live, even if only part time, and not as lottery tickets.

People often speak as if rising real estate prices are obviously good – and for many they are. For many others, however, the ongoing price correction after the bursting of the housing bubble represents a welcome opportunity.

Any change in prices should therefore be seen as a mixed blessing.

Builders, real estate agents and brokers, banks and existing homeowners, of course, gain from rising home prices. Would-be home buyers, including many priced out of the market during the bubble, naturally have a different point of view.

From a societal point of view, the best situation might be stable prices. And that may be where things are headed. Zillow, the website focused on real estate prices, says the price-to-income ratio for U.S. homes has almost fallen back to its historic average.

At the height of the bubble it had been almost twice that. More desirable locations – including Durango – will naturally be higher, but should still reflect the pattern.

It is human nature to track almost any number as if it were a sports score, but more is not always better. La Plata County’s lower real estate prices should be seen simply as trending back toward reality.