Should Prospective Buyers Wait or Buy Now?
The overall nature of a real estate market involving a large area, all property types, and every price range does not necessarily reflect the market dynamics of all the subcategories, such as location, price range, and property type. In La Plata County, the strongest sub-market has been in-town Durango homes; the strength typically diminishes as you move farther away from the city limits. Another sub-market category is the price range of the property; so, the market for homes over $1 million may be totally different for homes priced in the $400,000 to $800,000 range. Each type of property also may have different market dynamics; as an example, the demand for condos may be soft (lots of inventory and few potential buyers), while the market for single family homes may be tight (few listings and lots of potential buyers).
Statistics have just been released comparing the median prices and number of sales of the various property categories during the first quarter of this year compared to the first quarters of the previous two years. The data indicated that median prices for all categories of properties in La Plata County increased by 3.4%, with the number of sales essentially flat. Conversely, annual median prices for 2024 compared to 2023 increased by 2.3%, with about the same number of sales each year. I believe the annual statistics are more reliable because there is more data; sometimes one very high or very low sale will have a significant impact on the results when using a fraction of the annual sales. Also, there is not as much supply and demand in the first quarter of a given year.
A further look at the annual statistics show that the submarkets and property categories behaved quite differently. The median price for all homes in La Plata increased by 2.3% from 2023 to 2024; the number of sales increased from 842 to 858, essentially flat; There would have been considerably more sales if there were more listings; inventory (supply) has been considerably smaller than demand, particularly in the in-town Durango submarket. This resulted in the in-town single family median price increasing by 19%, while Bayfield in-town and country homes increased 5.1% and 1.4% respectively. Durango townhomes and condos prices were basically flat with a .2% increase and 45 more sales (larger inventory).
The market for higher priced homes in the greater Durango area (including mountain and country areas) has been softer than the market for less-expensive homes. Since the beginning of last year, homes with an asking price of over $1.5 million were on the market for an average of 115 days; on average, those properties sold for 4% less than the asking price. Homes priced between $750,000 and $1.499 million were on the market for an average of 97 days and sold for 2.7% below the asking price. This demonstrates that the higher priced segment has more balance between buyers and sellers, while the lower price range segment is leaning towards a seller’s market (higher demand, lower inventory).
Overall, the market is becoming more balanced. Many prospective home buyers are waiting for values and interest rates to fall. For values to decrease, the inventory of homes needs to grow while the demand remains the same or decreases. If the economy remains stable or becomes stronger, demand for properties should remain strong, keeping upward pressure on prices. Interest rates should decline over the next few years, but not to the ridiculous levels of a few years ago. However, as rates decrease, more buyers can qualify for financing, increasing the demand side of the equation. I think it’s likely that values will remain stable or continue to increase in the 3-5% range in the foreseeable future. I think a good strategy for buyers is to buy in the short term and then refinance when rates fall, which will result in a lower price and eventually a great interest rate.
