Compared to the same period last year, real estate sales in Archuleta County have been robust during the second quarter of this year, according to a report released Tuesday by the Pagosa Springs Area Association of Realtors.
However, that jump in sales is apparently due to bargain basement prices in a depressed market: the same report indicated that median sale prices were down 20 percent from the same time last year. In 2010, the median sale price for all classes of property was $158,500 but dropped to $127,000 in 2011.
From the first of this year through June 30, overall sales (residential, commercial and land) are up 26 percent compared to the first six months of 2010, while median sale prices for all classes of real estate are down 22 percent.
Median sale prices for commercial real estate in Archuleta County showed a significant drop during the last year — down 83 percent from 2010. However, that steep decline in price did not translate in a significant jump in investment, with sales up just 12 percent over the past year.
The almost across-the-board drop in property prices has largely been driven by the glut of foreclosures on the market. According to local Realtor Kim Moore, “Prices have been dropping about one to one-and-a-half percent on non-distressed properties a month, two to two-and-a-half percent per month on distressed properties.”
Unfortunately, foreclosures have a two-pronged effect on overall property values. First of all, the more distressed properties that are on the market (usually offered below initial value), the more property prices and values fall as those properties become attractive to prospective buyers — a pure function of the law of supply and demand.
Secondly, bank owned properties tend not to receive maintenance from the bank or lender owning the home. A non-distressed property surrounded by REO (Real Estate Owned — owned by the lender) properties can be less attractive to a prospective buyer.
Still, Moore was sanguine about the market and her business. “It’s the best year I’ve ever had,” she said.
Moore said that during the last year there has been a shift towards lower-priced properties, a trend supported by other area Realtors.
“It has been busier, but it’s the lower priced homes that are selling,” said local Realtor Deneice Stacy.
Jim Smith, owner of a local Realty company, said that while sales have been up in 2011, “Most of it is foreclosed properties and properties priced aggressively.”
Like Moore, Smith was also pleased with market conditions in Pagosa Country. “I think we’re getting to a place where we’re hitting the sweet spot,” he said.
Local Realtor Brent Christians also stated that the strength of the market was a result of the number of bargains available to prospective buyers, saying, “The foreclosures are putting price pressure on everything,” but added that, “Financing is tight, but the rates are wonderful.”
With interest rates fluctuating nationally over the past several weeks behind uncertain economic news, those rates have declined over the past week. Last week, rates on a 30-year fixed rate mortgage were 4.75 percent with rates at 3.875 percent on a 15-year fixed rate mortgage. As of press time Wednesday, those rates had fallen to 4.5 percent and 3.75 percent, respectively.
The local housing and property market reflects a national trend. Although local sales have far outpaced the national market during the first half of 2011, home sales have increased in six out of the previous nine months across the country.
Late last month, the National Association of Realtors (NAR) released a report that stated that the number of contracts to purchase previously owned U.S. properties increased by 8.2 percent in May.
Also reflecting the national trend, the number of foreclosures appears to have nearly bottomed out in the area. Local Realtor Lee Riley released a report last week stating that, for his sales last month, “47 percent of all home sales were bank owned. Some good news is that the number of new residential repos on the market is on the decline.”
In their late-June report, the NAR reported that, while there are around 1.7 million homes in foreclosure, that figure is down 18 percent from its peak. The NAR report surmised that those numbers are falling as more foreclosures are sold and fewer loans are entering delinquency. Likewise, the NAR reported that the number of homeowners defaulting on mortgages is also falling.
What that means, both nationally and locally, is that prices could begin to rise if and when the number of foreclosures begins to decline.
In the meantime, local Realtors agree that, while now is the time to buy, the market remains brisk and could stay that way for months to come.
“The last couple of weeks, buyers have been getting off the fence and deciding to pull the trigger,” said Christians. “I’ve been busy in the last couple of weeks, busier than I was during the last five months.”
The next PSAAR report for 3Q 2011 — set for release in early October — should indicate if times have remained good for Realtors and if prices have begun to increase.