Some are predicting a strong market this summer for second homes and vacation homes, but the downturn in the natural gas and oil industries could blow a headwind into that market.
The Wells Group Real Estate Forecast in March predicted strong sales of second homes and vacation homes this year. But it’s no secret that many of those buyers in La Plata County get their money from natural gas and oil, particularly in Texas and Oklahoma.
Oil last week remained below $52 a barrel for West Texas Intermediate, while natural gas was priced at only $2.53 per thousand cubic feet on the New York Mercantile Exchange. Producers have reacted to the lower prices by pulling back on their drilling plans.
Yet industry money from Texas and Oklahoma long has buttressed the real estate industry in Southwest Colorado. The most eye-popping sale in recent years came in 2010 when Dallas’ Kelcy Warren purchased Bootjack Ranch at the foot of Wolf Creek Pass for $46.5 million. Warren, co-founder of Energy Transfer Equity, a pipeline company, is worth an estimated $6.7 billion, according to Forbes magazine.
Industry workers also buy many more moderately priced homes in La Plata County.
John Wells, owner and broker at The Wells Group, said he doubts energy industry buyers will disappear.
“They’ve gone through a lot of these cycles,” Wells said. “I think we’ll still see them.”
Interest rates remain fairly low, and prices most likely will increase in the next few years, providing an incentive to buy now, he said.
Bob Allen, a Durango real-estate analyst and appraiser, said the trends are not yet clear.
“It’s a little early to tell if the late 2014, early 2015 decline in oil and natural gas prices has had any impact on La Plata County real estate activity,” he said.
Sales of million-dollar homes jumped last year in La Plata County. Thirty-five residential properties sold for $1 million or more in 2014, up from 26 in 2013.
Natural gas activity, in particular, can affect the real-estate industry in Durango and Bayfield. The gas slump didn’t appear to hit Bayfield real estate in 2014, as transactions rose to 60 homes sold, up from 52 in 2013.
Locally, home prices continue to rise. The median sales price of Durango homes hit $400,000 in 2014.
Despite some monthly variance, home prices nationally are up since last year. Dallas and Denver have been two of the hottest markets.
“The combination of low interest rates and strong consumer confidence based on solid job growth, cheap oil and low inflation continue to support further increases in home prices,” David M. Blitzer, managing director and chairman of the Index Committee for S&P Dow Jones Indices, said in a news release.
cslothower@durangoherald.com
