Lee Riley’s Real Estate Report
Happy New Year from Pagosa Country!
As I look out my window, I see a winter wonderland. It’s been snowing for days, which is great news for all the visitors who have been here over the holidays skiing, snowmobiling, and playing in the snow. Town has been very busy, with all the hotels, restaurants, bars, and shops going strong. This is just what we needed going into 2017. Last year’s sales tax revenues ended the year up 10%, which is great news for our local economy.
Most of the tourists are headed back home now, but many will re-appear on the weekends and holidays. We’ve got Winterfest coming up on February 4 and then President’s Day after that. Of course, the grand finale is Spring Break, when we’ll be flooded again with lots of folks, especially from Texas and Oklahoma.
Snow and sunshine are what pay the bills until summer comes along.
Turning to the real estate market, my prediction for 2017 is that interest rates are going to rise. Rates were down to 3.5% a couple months ago and have since risen to about 4.25%. I predict we’ll see further increases to the 4.5% to 4.75% range. This will increase the cost of housing and will keep some folks from being able to afford homes. But in other cases it will prime the pump, as people who have been sitting on the sidelines will be spurred into action as the cost of housing continues to go up.
My prediction is for median home prices to go up 10% — last year we saw an 8% increase. I expect the number of sales to be flat or maybe even down a little. All of these trends will be due to a lack of inventory. I also believe that the extremely low land prices we’ve been seeing the past couple years will start to go away. Anything currently valued below $25,000 will see a decent increase.
Due to the current lack of inventory, I expect quite a few spec homes will be built this year. As land prices increase, the overall cost of these spec homes will rise. I also predict that somebody will get on board and start building some rental properties. We have a severe shortage of rentals right now, especially long-term rentals. Someone is going to step up and fill that need.
I’m going to include several year-end charts this month that will summarize how the market is changing over the long term. First we’ll look at sales numbers. This chart shows the number of completed sales in each category over the last 13 years:
And then the same idea, but looking only at the last 5 years:
Next we’ll look at prices. In order to track prices accurately, you must pick fairly specific criteria to describe a certain kind of home. Then you track the sales that fit this criteria over the years to see how prices are changing. To represent a typical home in Pagosa Springs, I have chosen a 3-bedroom, 2-bath, 2-car garage home in Pagosa Lakes on less than 1/-2 acre:
For vacant land, I have chosen lots of less than 1/2-acre located in Pagosa Lakes:
For condos, we have to cast the net a little wider. There are relatively few condo sales in Pagosa, so we have to look at all the sales together in order to have a large enough sample size to get meaningful data:
Finally, I want to help you out with your New Year’s Resolutions. Rather than go to all the trouble of thinking up your own, just pick the ones you like from this handy list and check them off. The good news is they all expire in two weeks, so you don’t have to stress out or feel guilty for long.
Top 10 New Year’s Resolutions
- Lose Weight
- Quit Smoking
- Eat Healthy
- Get Out of Debt
- Spend More Time With Family
- Organize Your House
- Get a New Job
- Stop Procrastinating
Finally, I want to wish you and your families a great 2017!