Wells Group’s 22nd annual Housing Market Forecast suggests that rising housing demand coupled with limited supply will persist in 2022.
“We’re experiencing a drought, as you know, from a climate perspective but also an inventory perspective,” said Wells Group owner John Wells. “In 43 years of doing this in La Plata County, this is the lowest (inventory) I’ve seen in that entire time.”
Wells said there are a number of construction projects happening to increase housing stock, but nothing like the county saw before the Great Recession in 2008.
Wells noted the challenges with improving housing stock include building costs, material supplies and supply chain issues.
Things are looking good as far as a response to the housing stock shortage, said Bob Allen with Allen & Associates Appraisal Group. The downside is that most of the projects in the pipeline won’t break ground for likely another year.
“It’s going to take some time for that to happen so we’re going to be faced with this inventory problem for at least another year,” he said. “I think the city and the county all recognize we’re in an emergency response mode.”
According to Wells Group’s statistics, the housing stock in La Plata County is down 60% from last year, and demand is up 12%.
“If you look strictly at housing, the supply of single-family housing units, condos and townhomes is down 50% from where it was last year, and last year it was down almost 50% from the year before that,” Allen said.
Single-family home prices are up by 20%, which has the median home price in La Plata County up to $600,000, up from $500,000 in 2020.
“Those are big increases, but I’m not sure that’s going to change a whole lot, because we just don’t have much for sale,” Allen said.
The city of Durango is a similar story, with the supply of homes down 50% from the previous year, and demand down 4%. According to numbers released by the Wells Group, the single-family housing stock for 2021 is around 22 homes.
In the city of Durango, home prices also rose about 20%, with the median home price rising from $562,045 in 2020 to $670,000 in 2021.
People moving out of Durango and into Bayfield have put similar strain on Bayfield with supplies down 40% in the past year.
“The number of homes for sale in the past as of the end of December were five, and of those five, four were under contract. So really there was only one home available at that time in the town of Bayfield,” Allen said.
Median home prices in Bayfield are up 15% from last year jumping from $335,000 in 2020 to $384,575 in 2021.
Vacant land sales in La Plata County are up nearly 30%, Allen said, as a result of short housing supplies. People are purchasing land with the hope that a home can be developed on the lot.
Luxury homes, homes that sell for more than $1 million, were up around 80% in 2021.
“Just three short years ago when Bob and I did that forecast, the years of inventory for luxury products was seven to nine years of inventory. Now, it’s less than seven months of inventory,” Wells said.
The forecast noted things such as second homeownership and population growth as reasons for the increase in housing demand. The city of Durango has seen a 1.22% annual population increase between 2010 and 2020, while La Plata County has seen a 0.79% increase in population between 2010 and 2020.
“Many of our younger brokers tell me that social media wasn’t here 20 years ago,” Wells said. “Social media exposes this product and this lifestyle to so many people.”
Most people who are moving to Durango are coming from Texas at 11.32%, with 5.4% coming from Arizona, around 4% coming down from the Front Range and the rest coming from all over the place.
Short housing supply and high demand is also fueling employment struggles, with some of the cities largest employers such as Centura Health and Durango School District 9-R having upward of 50 job openings because people looking for those positions can’t find a place to live.
Eva Henson, city of Durango housing innovation manager, said the city currently has 569 affordable housing units. The city is looking at 1,230 units that are in the review process, approved process or have been recently submitted.
“The City Council at its most recent meeting on March 15, approved three new apartment rental projects that would add another 472 rental units to our community,” Henson said. “I think that realistically we can see between 500 to 1,000 in the next two-year time frame.”
In Bayfield, Community Development Director Nicol Killian said that based on the development proposals the town has right now, there are 600 potential units that are in the pipeline.
“With 1,100 units currently, that will be a 50% increase in the next two to five years,” she said.
As far as commercial spaces go, Wells said there is a need for more warehouse-type commercial real estate, because many construction and contracting businesses need to grow as a result of the low supply and high demand of the housing market.
Allen said there seems to be an increase in people looking for small commercial office spaces, but thinks there will be a need in the future for larger office spaces as people head back to offices with COVID-19 becoming less of a concern.
Predictions for the 2022 real estate market from the Wells Group forecast included inventory continuing to be a challenge over the next year, limited attainable housing will continue to drive more workers to commute from outside of the county, and second home and vacation homebuyers will increase exponentially.