2022 in Pagosa Springs Real Estate - a Wild Ride!
The year 2022 brought an increasingly shifting real estate market to southwest Colorado, which began at the start of the summer. As the impact of Covid-19 decreased, we saw a reduction in the inflow of new visitors and homebuyers into the area. For the year, total home sales in Archuleta County hit just over $300 million, down 18% from 2021, which was the strongest market on record for the area. The 456 homes sold this year, compared to last year, represented a decrease of 36%, from the 620 home sales closed in 2021.
The runup that started in early 2020 cooled down due to combination of higher home prices, a jump in mortgage interest rates and a badly performing stock market. These influences led to a return to numbers more indicative of the long-term averages in the area. The number of homes sold during 2022 was closer to where things were prior to 2020. There are other interesting facts within the data.
A couple of specific data points stand out. First, the median selling price for homes during 2022 hit $539,500, an increase of 13.6% over the prior year. The median number of days on the market stood at 64, unchanged from 2021. So, things have slowed down in terms of the number of transactions, but with limited inventory, properties are still moving, and prices have continued to move up.
With higher interest rates, a foggy near-term outlook for Wall Street, and large layoffs among tech companies, some are predicting a major decline in home values in 2023. Some have gone so far as to predict a meltdown of home prices like 2008. I don’t think this is likely and I give four reasons why.
First, the housing market crash of 2008 was the result of very loose lending policies, with many home loans funded without any proof of income, tax returns or credit checks. Second, homebuilders were ahead of demand in terms of overbuilding, flooding the market with unsold inventory. Third, during 2022, nearly 37% of home purchases were cash. 53% were purchased using Conventional Financing, which most often requires a minimum of 20% cash down payment. Loan qualifying requirements are strict, unlike the period from 2000-2008. So, there is a lot more solid cash equity in the market, which creates stronger staying power during shifts in the economy. Fourth, there continues to be a large imbalance of available housing inventory relative to demand, and the cost of new construction remains high, which supports the value of existing homes. Further, bringing new housing developments to market is extremely expensive, with much political, timing and market risk.
We will experience a slower real estate market during 2023, but, during the early months of the Covid-19 pandemic, more people discovered Pagosa Springs for the first time. Many had either only passed through on their way to Durango or Telluride, and many had previously vacationed in Vail and Summit County. Now that they have experienced the beauty of our area, the friendliness of our town, and the much better value proposition we offer, they are returning. We will continue to attract more second home buyers from the Dallas area and from the corridor between Austin and San Antonio. Folks from Arizona and New Mexico are continuing to visit and invest here. More Coloradoans are traveling down here from the Front Range as an alternative to the crowded and very expensive I-70 corridor from Dillon to Glenwood Springs.
Two new restaurants are being planned for Pagosa Springs, both east of our office in the East Village. Several condo and townhome projects are in the works as well. More future choices, more opportunities, more to offer our residents and guests. We will have further details and other exciting news during the next 90 days.
For a more detailed discussion of the local real estate market and your goals involving real estate, give us a call at 970 264-7000.