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Michael Heraty
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Archive for October 2009

Pagosa Springs Real Estate: What About The New Village at Wolf Creek?

Monday, October 26th, 2009

Recently I participated as a member of a panel that made a presentation to the local Builders Association on the state of the local economy. As part of my presentation I briefly discussed the 3rd Quarter Summary Report that is within this Blog Site. After our presentation a representative of Red McCombs, Clint Jones, made a 45 minute presentation about their latest efforts to move forward with the Village at Wolf Creek.

Jones replaced Bob Honts, the previous front man and local development manager for McCombs. Jones appears to be a much more qualified representative, at least in terms of his public demeanor and diplomatic skills. Jones presented the group’s latest proposal for developing land adjacent to Wolf Creek Ski Area which involves a land exchange with the Forest Service. If approved it would give the development direct access to State Highway 160 and provide them with 207 acres of more buildable land in exchange for trading 207 acres of their existing holdings which include a significant amount of wetlands. If the exchange is approved, it would eliminate the need for Forest Service approval of a special access point to State Highway 160, which has been difficult to obtain during the last several years.

According to Jones, they settled their legal issues with the Ski Area and now enjoy a friendly and cooperative working relationship. Jones stated it was the Wolf Creek Ski Corporation CEO that suggested the land exchange idea. Jones also stated that he had initiated productive discussions with Colorado Wild, a major opponent of any development adjacent to the Ski Area during the past several years. So, will there be a development up at Wolf Creek? Good question. Clint Jones indicated the land exchange could take up to two years to obtain approval. Next they would have to submit their revised development plans and go through the normal planning processes in Mineral County. Both the land exchange and planning process would involve public hearings and public input. The revised plan which includes the land exchange would result in a more scaled down version of the plan previously approved by Mineral County. From several perspectives, the new plan makes much more sense. Still, there are issues that will need to be addressed. First, can a ski area development be successful without a golf course or other summer season recreational components? The market for resort properties has changed significantly during the last three years.  Demand has declined considerably and project financing has nearly evaporated. As wealth as Red McCombs is, he, like all developers utilize outside financing sources. Second, will a development at 10,000 feet elevation work? The base elevation at Durango Mountain Resort is 8,800 feet. When my wife Lauri and I lived at Keystone Resort, our home was at 9,500 feet elevation and a good number of our visitors suffered from the effects of altitude sickness. What will the Village do for the energy needs of the commercial space, hotel facilities, condos and single family homes? Presently the nearest natural gas transmission line is over the hill along the East Fork of the San Juan. Will they have to truck fuel up to the development, or rely on more expensive electric heat? How will they handle the waste water processing for the development? There are many other issues and questions that will need to be addressed before we ever see development at the Village at Wolf Creek. In my estimation, it will be at least five years before we ever see condos on the mountain, if ever.

Pagosa Springs, CO Housing Market: 3rd Quarter Real Estate Snapshot

Tuesday, October 13th, 2009

Not much in the way of good news to report after reviewing and analyzing the real estate figures for the third quarter of 2009. Our market, like much of the economy, continues to struggle, with too much inventory and too few buyers. Though mortgage money is still available to qualified borrowers as well as tax credits for first time home buyers, there has not been an abundance of buying activity. The number of foreclosure filings continues to be troublesome as eventually many of the defaults that are not cured will end up as bank-owned properties, competing with private parties for a limited number of buyers. Until the foreclosure inventory clears, its downward affect on property values in our area will continue. We are fortunate when we consider how other larger communities have been impacted to a much greater degree by distressed properties. Still, we feel some of their impact in that in past years, many of our second home buyers came from communities within Arizona and California, and that flow of buyers has dropped off considerably.

Looking for some positive factors, we can see that the dramatic downturn in building permits for new homes will keep the inventory of unsold spec homes from growing. Few builders are brave enough to build out of pocket in this market and very few lenders are presently willing to finance speculative building. When demand does begin to improve, Pagosa should be in a position to respond fairly quickly. We still have a good inventory of resort lots and small acreage homesites, and with demand having stalled out, some of the land values have declined to more supportable levels.

As can be seen from the table below, the number of closed sales and total dollar volume for the third quarter was down significantly when compared to last year. When you review the next table, 3rd Quarter YTD you see that the Year to Date figures show an slightly more negative trend, with both the number of closed sales and total dollar volume off slightly more.

Comparison of 3rd Qtr Stats 2006-2009

Sales

Average

Median

Time Period

Closed

Change

Selling Price

Selling Price

Total Volume

Change

3rd Qtr 09

99

-23%

$                  215,312

$                  167,800

$                     21,315,974

-41%

3rd Qtr 08

128

-20%

$                  283,826

$                  176,250

$                     36,329,826

-15%

3rd Qtr 07

161

-43%

$                  266,656

$                  175,000

$                     42,931,644

-34%

3rd Qtr 06

280

$                  233,192

$                  176,950

$                     65,293,862

The next table displays the closed sales and total volume for the 3rd Quarter YTD, going all the way back to 2004. This shows the dramatic downward slope we have been on from the peak period of 2005 when there were a total of 363 single family homes sold by the end of the third quarter representing total sales volume of over $94 million, as compared to 104 sales and $31.4 million thus far this year.

Comparison of YTD Totals at End of 3rd Qtr Years 2004-2009 All Classes

Sales

Average

Median

Time Period

Closed

Change

Selling Price

Selling Price

Total Volume

Change

9/30/2009

205

-33%

$                  195,139 $                  166,500 $                     40,003,510

-52%

9/30/2008

307

-34%

$                  273,386 $                  195,000 $                     83,929,735

-24%

9/30/2007

466

-40%

$                  237,401 $                  157,000

$                   110,629,234

-42%

9/30/2006

779

71%

$                  245,735 $                  160,000

$                   191,428,112

75%

9/30/2005

455

41%

$                239,826

$                198,000

$                109,121,050

38%

9/30/2004

322

$                246,408 $                174,000 $                  79,343,414

The next table below shows the YTD Totals for Single Family Homes. These figures are fall detached, stick built homes. Considering the total single family sales volume for the current YTD is down nearly $63 million as compared to where the figures were in 2005, the financial ripple effects have been substantial. In addition to the loss of income among builders and others in the construction trades, we have the material suppliers, the surveyors, the title companies, the insurance companies, the real estate brokers and all the support staffs. You can further project how their reduced income translates to declining spending and investments throughout our community.

Comparison of YTD Totals at End of 3rd Qtr Years 2004-2009 Single Family Homes

Sales

Average

Median

Time Period

Closed

Change

Selling Price

Selling Price

Total Volume

Change

9/30/2009

104

-26%

$                  301,891 $                  256,650 $                     31,396,751

-47%

9/30/2008

140

-8%

$                  419,864 $                  291,000 $                     58,780,976

7%

9/30/2007

153

-40%

$                  360,643 $                  300,000 $                     55,178,380

-38%

9/30/2006

253

-30%

$                  353,634 $                  275,000 $                     89,469,485

-5%

9/30/2005

363

23%

$                  259,676 $                  210,000 $                     94,262,729

24%

9/30/2004

294

$                  258,318 $                  178,000 $                     75,945,440

Many are searching for a way to survive and reposition ourselves while the market determines which way it will go and when it will change directions. Is it a good time to sell? That depends. Are you going to take your money and reinvest it in real estate in another market where prices have dropped to super-attractive levels? If you sell your property here now, will you look back in a few years and feel you left money on the table? Who knows? What seems sensible, for many, may be to wait things out. However, if selling your property here now enables you to achieve or reach closer to another worthwhile goal, why put things off and risk that you made the wrong bet?

I think the demand for the quality of life, exceptional natural beauty, and abundant recreational opportunities our area offers will return. When the economy in general improves, Pagosa will again stand out as a more financially sensible alternative to more well- known mountain resort areas. It is my belief that when the economy improves, buyers will remain more value focused. So long as we as a community retain a positive outlook, a tourist friendly attitude, practice sound fiscal management and continue to make tangible improvements to the infrastructure and amenities of our area, Pagosa will do just fine. Until then, there will likely be a few more bumps in the road.

Our real estate analysis also included the single family homes of $1 million and higher. If this market is of interest to you, let me know, I would be happy to share that information.  As our office has participated in a large number of high-dollar transactions over the last five years, we watch this category carefully and continuously. There have been some interesting trends recently. If you would like specific details of any portion of our real estate market, please give me a call at 970 264-7000, or email me at mikeheraty@frontier.net

Mike Heraty is the Managing Broker and Owner with his wife Lauri of Pagosa Source Real Estate Advisors. He has more than 36 years of diverse real estate industry experience including 15 years in Pagosa Springs. He is Pagosa’s only Certified Real Estate Brokerage Manager, his other professional designations include: Certified Residential Specialist, Accredited Buyer Representative, Senior Real Estate Specialist, Certified Sellers Representative, Master of Real Estate and Transnational Referral Certification. Mike has served as President of the Pagosa Springs Association of Realtors and four terms as a Vice President of the Colorado Association of Realtors. Mike can be reached at 970 264-7000.

Market Recap

  • Avg. Sales Price: $258,000

  • Avg. Days on Market: 230

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