A recently attended an annual real estate forecast presentation at Fort Lewis College on March 31, 2010. While the presentation focuses on activity in La Plata County (Durango) and surrounding counties, it also compares the local market with other resort areas, the front range including Denver, feeder markets such as Phoenix, Albuquerque, Dallas and Houston as well as national statistics. The trends and conclusions based on this annual study support recent comments and opinions presented by the Kansas City Federal Reserve Board and other economists presentations that I have attended. The major conclusions, from my perspective, are as follows:
- The housing market, while foreclosures still exist, has reached its bottom in terms or average sales prices and transaction volume.
- Some markets may still experience some downward pressure during 2010 but the combination of reduced supply and increased demand will soon positively impact home prices.
- In the last 3 months in La Plata County, real estate transactions and sales dollars are up over the previous year. This trend is also seen statewide and nationally.
- Single family homes in Durango have fared very well when compared to other markets with only a 8% decrease in home values from their peak in 2008. The western US has experienced a 23% decline from their peaks while some markets like Phoenix or Miami have seen 40% and 35% respectively. Of course these markets also had double digit appreciation.
- Air transportation (enplanements) in/out of Durango have risen significantly over the past two years and La Plata County Airport has become the “Regional” airport in SW Colorado. Tourism and Mercy Medical Center have also been unaffected and provide a level of service not seen in other communities of Durango’s size.
- Interest rates continue to be at 100 year lows and when combined with low housing prices or construction costs at or near the bottom, a good buying opportunity exists.
- The one dark cloud still persisting is the credit markets and appraisal process. However, Kogan Builder’s banking relationships can be of help in this area.
While the past year has not been pleasant for anyone, there is certainly a reason that Durango has fared better than most. Our mountains, community and resources will continue to make Durango’s lifestyle appealing to many people. Migration/population data indicate La Plata county’s growth over the next 5 years at 7,200 people.
Overall, the housing market is recovering, interest rates have only one direction to go, inventories are beginning to shrink and upward price pressure on new construction and existing homes is around the corner. We have already seen a 33% increase in lumber costs in the 1st two months of 2010. While we do not have a crystal ball, the cost of waiting could be quite high for those considering new home construction or the purchase of an existing home. As always we are here to answer any questions you may have about the area and our company.
CFO of Kogan Builders, Inc.