Local real estate cools off
Average home price drops but market remains strong

More for sale signs than usual have popped up along East Third Avenue recently, one indication that local houses are not moving as quickly as in recent years. Realtors and officials agree that the local real estate market has slowed since the beginning of the year./Photo by Todd Newcomer

After years of short supply and rapidly rising prices, Durango’s real estate market is showing signs of cooling off slightly. The price of local housing has gotten so high that buyers are apparently either becoming more reluctant or are simply unable to compete. However, there is widespread agreement that Durango’s real estate market will continue to escalate, but not necessarily at the frenzied rate of years past.

Looking back just more than a year ago, Bobby Lieb, executive director of the La Plata Economic Development Action Partnership, commented: “The market was going gangbusters. I think it peaked a year ago. It was just humming.”

A slight softening

Lieb said that the market was so strong that the Missionary Ridge Fire provided little more than a hiccup from which land and home transactions easily rebounded. Not including For Sale By Owners, a total of 826 residences changed hands in La Plata County last year. As a result, more than $212 million also changed hands with an average home being priced at $257,000. However, since Jan. 1, a different picture has begun to form.

Gina Piccoli, broker/owner of Coldwell Banker Heritage House Realtors, commented, “My personal opinion is that appreciation is not going up as drastically as it was even a little while ago. But, the market is still really good.”

Through June 30 of this year, 344 residences have been sold for a total of nearly $83 million. So far, the average La Plata County home price also has dropped to $241,000.

John Wells, broker/owner of the Wells Group, said that market slowed most during the early months of the year. “Really the slow down came in the first four months of the year which were down 25 percent from last year, which was a record year,” he said.

Among other factors, Piccoli said that this slowing market can be attributed to high prices. “There are fewer places out there that people can afford to buy,” she said. As a result, Piccoli said that homes priced over $400,000 are beginning to glut the market. On the flip side, she said that local houses priced under $300,000 still sell almost immediately.

Like Piccoli, Lieb said the market began to outprice buyers. “We obviously were not keeping up with supply, and the prices were escalating and escalating,” he said.

Who can afford to live here?

The city of Durango Planning Department is another entity that has had its eye on the local real estate market. Greg Hoch, city planner, agreed that Durango’s real estate market has grown dramatically, saying homes have become increasingly more expensive since the fabled energy-crisis induced crash of the late 1980s.

“ Ever since then, things have escalated every year,” he said. “It’s been a steady straight line of increase.”

Hoch remarked that this strong market has been good for people who already own real estate and have seen their investments grow. However, he said it also has been pricing out Durango’s working class and changing the character of the local community.

“ Eventually, you end up with a nice quality of life, but no one else can afford to live here,” Hoch said. “My feeling is you try to strike the middle ground. You try to get quality but you don’t exclude people who could live there.”

In line with this thinking, the city’s 1997 comprehensive plan calls for “compact development that includes a mix of housing types.” There is belief that this community engineering could help retain some of the current flavor of local life. Not surprisingly, the market has responded to this call for dense development.

Doubling Durango

Currently, there are proposals for nearly 5,300 new residences at some stage in the city’s planning pipeline. They range from the Southern Ute Indian Tribe’s ambitious push for 2,400 new units in Grandview to townhome projects like Parkside Terrace, which will bring 71 new residences to Durango’s south side.

Hoch noted that 5,300 new units would nearly double the current size of Durango.

However, he added that the number should not be shocking, saying that the dramatic development of the city is meant to be staged over the next 10 to 20 years.
“ These numbers are meant to unfold over time,” he said.

Hoch said he acknowledges the flip side of supply and demand. He noted that this dramatic addition to the Durango real estate market could cause the market to further soften and potentially crash. However, he cited the examples of Denver and Boulder as urban areas that have continued to grow while retaining their value. He further noted that Durango is on the map now, and people in search of quality of life will move here.

“ I don’t see an end to it,” he said. “Durango has been discovered. It’s a place people want to live because of its quality of life.”

Piccoli agreed that the word on Durango is out, and that there is significant demand from outside for local homes. “I don’t see a downward trend happening because of the number of people who still want to move here,” she said.

Finding the right mix

Piccoli went on to note that a variety of price ranges, and specifically sub-$400,000 price tags, will be the key to Durango absorbing vast amounts of new housing. “If there’s enough of the product in different price ranges, it shouldn’t affect the market much at all,” she said.

Beyond Durango’s desirability, other factors exist to ensure the survival of the local real estate market. Lieb noted that the crash of the late 1980s was tied to national economic trends. Currently, he said that the national economy retains strength. Pointing to a growth in Gross Domestic Product of 3 percent a year, he said: “The economy is still kind of chugging along. We’re definitely not headed for a crash like in the 1980s.”

In fact, the market may already be on the rebound. Citing continued low interest rates and diminishing concerns about war in Iraq, Wells pointed to sales being up in May and June of this year and he said that his office expects a strong summer.
“ I’d say that May and June getting stronger is a good sign,” he said. “And we expect to see a strong July and August at this point.”

Lieb concluded that while the recent softening of the real estate market probably won’t hurt people who recently invested in area real estate, they also won’t see the radical increases in value of recent years.

“ I think someone who invested in the last six months may just have to wait a while longer to get return on their investment,” he said. “The real estate market might be getting soft. But I definitely don’t think it’s on a downslide.”









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