Low inventory and high demand drove up the median sale prices for La Plata County homes during the second quarter of the year.
Data from the Durango Area Association of Realtors shows the median price of a home in La Plata County hit $625,000 for the second quarter of the year, an 18.6% increase compared with the $527,100 median price for the same quarter in 2021.
Lois Surmi, president of DAAR, said increased demand across La Plata County has caused prices to escalate.
“It's the mentality of: ‘We’re thinking of selling and my neighbor got this, so then I should be able to get this much more,’ and because there’s such a demand, they probably will get $10,000 to $15,000 more,” she said.
The second quarter median price for an in-town Durango home was $718,375, a 10.5% increase from the median price of $650,000 in 2021. Surmi credits the increase to a lack of housing inventory. However, she said in-town home prices were one of the lesser increases seen across the county.
Prices in Bayfield have also increased. Homes in town had a median price of $465,000 during the second quarter, a 20.8% increase from the $385,000 median price in 2021 during the same quarter.
Surmi said the value is often determined by comparative properties sold. She said the best indicator is comparing properties sold within similar subdivisions along with size and age.
In the Durango Mountain area, near Purgatory Resort, the second-quarter median price for a single-family home came in at $1.65 million, up 42.2% from the $1.16 million median price for the second quarter of 2021.
Surmi attributes a lack of housing inventory for the rising prices because it creates bidding wars with multiple buyers leading sellers to take the highest bid. That sets a new asking price for other sellers.
“You get five people that want that same house because there’s no other houses to go buy,” she said. “That’s when they start overbidding and that drives that price up.”
For townhomes and condominiums in the Durango Mountain area, the second quarter median price was $403,500, a 9.9% decrease from the $448,000 median price for the second quarter of 2021.
Surmi said the median price on condos and townhomes can be misleading. Because condo prices vary greater than houses, it can lead to more drastic changes in median price.
“If you start to see a lot of condos selling, as opposed to a $2 million house in Glacier or the Purgatory area, then all of a sudden it’s going to look like the price really dropped,” she said.
According to the report, interest rates started to climb in February with a Freddie Mac rate going 3.66% to 5.10%, which affects lendability rates. Someone who can afford a $400,000 house at a Freddie Mac rate of 3.66% may be able to afford a home that costs only $325,000 at a rate of 5.10%.
“The higher the rates go, the less money somebody can qualify for a loan, which means they can’t buy a house or they could buy a house but it’d be for a lot less money,” said Rick Lorenz, broker at Wells Group in Durango.
Lorenz calculates his own real estate statistics. His data shows 522 units were sold in La Plata County during the first half of 2022. Out of those, 103 cost $1 million or more. That is 32 more $1 million-plus homes than the 71 units sold during the first half of the year in 2021.
Lorenz said in times of financial downturn, those with the ability to do so invest in real estate because of utility. Homes over $1 million can be used in multiple ways to increase income opportunities such as rental property or subdividing land.
Another statistic that shocked Lorenz was the percentage of buyers who paid in cash for homes $1 million or more. Of the 103 units sold, 48.5% of the buyers paid in cash.
“That kind of tells you it’s people with money (up front) that are buying those homes,” he said. “It’s not people that are highly leveraged, where they’re putting 10% down and borrowing the rest.”
Lorenz’s data also showed that 213 out of 522 units were sold above the asking price. He said that is a result of a seller’s market, where buyers are having to place much larger bids on homes because of competition brought on by demand.
According to his numbers, housing inventory has increased from 2021. As of June 30, the number of available units was at 252 compared with 197 last year. However, compared to previous years, inventory remains low. In 2019, his data shows there were 645 units available in La Plata County.
“We’ve got sellers who want to sell, but are scared to sell because they won’t be able to find something else,” Lorenz said. “If you had instead of 252 units for sale, 600 units for sale, the seller would say we’ll be able to find something with 600 units.”
Looking ahead, Lorenz expects the market to slow down and fewer units will be sold driven by higher interest rates.