Realtors expect higher prices, fewer sales in 2022

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By Liz Teitz
Ouray County Plaindealer/Report for America
liz@ouraynews.com

High prices and low inventory have defined Ouray County’s real estate market for the last two years, and while the number of sales is likely to drop, those factors aren’t likely to change in 2022.

Local Realtors anticipate prices continuing to rise, barring any radical, unexpected changes.

“We are at the whims of the greater economy, that’s the big thing that none of us can predict,” said Marc Hitchcox, a Realtor with NextHome Virtual. “I think that this year will be a lot like last year, but with fewer sales because there will be just less inventory. That’s my general prediction, unless something wacky and calamitous happens.”

The median sale price for a single-family home in Ouray County in 2021 was $725,000, up from $565,000 in 2020 and $455,000 in 2019, according to the Colorado Association of Realtors. The median townhouse or condo sold for $471,000 in 2021, up from $320,000 in 2020 and $285,000 in 2019.

There were 164 sales in 2021, a number local Realtors expect to drop in 2022.

Realtors said their number of listings are down, leaving eager buyers with fewer options and more competition.

“We still have a huge demand, but no supply,” Ouray Real Estate Corporation owner Peggy Lindsey said. “I anticipate the market will be much slower than last year, simply due to inventory.”

“We went from carrying, typically, 135 listings to having somewhere in the neighborhood of 20 listings,” United Country Sneffels Realty Broker Owner Todd Schroedel said. “There’s no doubt at all that it will affect things.”

When they get new listings, they don’t last long, he said, and go under contract quickly with competing offers at or above asking price.

“Ouray County is the place to be,” he said, and it’s not becoming any less desirable.

There were just two new single-family listings in November and three in December, according to the Colorado Association of Realtors, and 165 new single-family home listings in 2021, down from 204 in 2020 and 179 in 2019. There were 26 new listings for townhomes and condos in 2021, compared to 22 in 2020 and 32 in 2019.

The influx of people wanting to move from cities to more remote areas, or looking for second homes in rural areas, hasn’t slowed since the pandemic again, Lindsey said. “The buyer has not changed,” she said “It’s still people wanting to get out of the city, understanding that they can work from home and choosing a different lifestyle than living among hundreds of thousands of people.”

“Historically, our big demographic has been early retirees and older people,” Hitchcox said, and they’re still looking for homes here, alongside locals and remote workers who are free to live anywhere, creating more competition for the limited inventory.

Schroedel said he’s also seeing residents looking to move within the county, such as people who live outside the municipalities looking for places in town or people wanting to move up to Log Hill.

Lena Street Commons Construction workers continue to make progress on the Lena Street Commons project in Ridgway on Jan. 25, 2022. Several buyers are under contract with the mixed-use development north of the Ridgway Public Library, which features three-bedroom townhomes starting at $855,000. Ouray County Realtors say they expect housing prices to continue to rise this year, due in large part to shrinking inventory.
Ouray County Plaindealer

“It’s kind of all over the board,” Ponderosa Real Estate agent Chase Girard said, including families from Texas, Florida and California. Interest in Ridgway is booming, he said, but there aren’t enough homes to keep up. He pointed to the Lena Street Commons project, which is still under construction and already has buyers under contract. Those 1,639-square-foot townhomes are listed for $855,000 for three-bedroom units.

Schroedel said buyers are seeking homes in Ridgway and Ouray’s walkable downtown areas, but homes and lots in Divide Ranch and Club on Log Hill are also in demand.

The ability to short-term rent a property is still a driving factor, and Schroedel said the varying policies between jurisdictions in the county can create confusion. “Anything that can be rented” is appealing to buyers who don’t plan to live here full time, he said, so making sure people are aware of the rules is key.

Ouray County allows 100 licenses and all are currently issued. Ridgway allows 50 short-term rentals and Ouray recently instituted a cap at 120 licenses, but both still have some available for new buyers.

Lindsey, a Ouray city councilor who voted in favor of capping licenses there, and in favor of putting a short-term rental excise tax on the ballot for voters, said she hasn’t seen much impact of the recent changes yet, because buyers can still get licenses.

That’s still an asset people are looking for, she said, because many see Ouray as a summer destination for residents and want to be able to rent the property when they’re not here.

“The ability to rent out the property short-term has been more of a driving factor than anything here in Ouray,” she said.

Girard said buyers have shown some interest in long-term rentals, but more are looking to be the primary users themselves, either as a full-time or vacation home.

The high demand for real estate also affects the supply, because potential sellers are deterred by high prices and low inventory, Lindsey said.

“People realize now, if they want to sell their home for a big price, where do they go? It’s not like you can buy the house next door,” she said. “If they want to get out of Ouray County altogether, it’s the perfect time to do it. But if they want to make money on their own house and buy something for less, there isn’t much of an opportunity.”

With so few homes on the market, prices are expected to continue to climb, with buyers making competing offers. Some buyers include higher escalation clauses, offering to pay more if a seller receives higher offers, and some have written letters to try to win over sellers.

“We’re supposed to disregard them,” Schroedel said, to avoid bias toward one buyer over another, but he said he’s seen success when the offers “show that people care about the house and are not going to be difficult to work with.”

Those tactics are more common in larger metro areas, especially with rising demand across the Mountain West over the last year, but Lindsey said Ouray County’s market hasn’t reached quite that level.

“We are seeing over-list-price offers and we’re seeing multiple offers,” she said, but they aren’t as high over list price as bigger markets.

She pointed to hedge funds’ involvement in the housing market as a new change that could bring unknown consequences. Investors with cash in hand are buying up homes in metro areas, and while she hasn’t seen that happening here, “what drives their market also trickles down to our market,” she said.

“That’s a little uncharted territory,” Lindsey said. But she’s still expecting the local market to continue slowing down, and prices to continue rising.

Schroedel said he expects demand will continue to drive prices up, though likely at a slower pace than in 2021; instead of jumping close to 30%, he’s estimating increases closer to 10% this year.

“I don’t know where the top end is, I don’t know where people’s threshold is,” Hitchcox said. “It’s quite possible that it’s going to continue to go up and people will just continue to pay more, because this is a really nice area.”

He compared it to the San Diego area, where he grew up, where “homes have been out of reach for regular people for decades.”

Market forces aren’t going to bring prices back down, Hitchcox said, so it will take external efforts to create more affordable housing.

“The market isn’t going to do anything, it’s just changed too much,” he said. In desirable areas, “it’s been the trend that prices were going up, it just got escalated because of COVID.”

Habitat for Humanity of the San Juans’ first project in Ouray County, a triplex in Ridgway, is on schedule to be completed this summer, Executive Director Erica Madison said.

“From here on out, it’s all finish work,” she said, as well as landscaping later in the spring. “If we could gather some volunteer involvement for the next steps, it would be great,” she said.

The organization is also partnering with the Home Trust of Ouray County, which recently obtained its nonprofit, tax-exempt status and received its first land donation. Hitchcox is on the Home Trust’s board.

Under the community land trust model, homes can be sold at lower prices because owners purchase only the building, while the trust retains ownership of the land. Through deed restrictions, appreciation on the home is limited and the sale price is capped to keep it affordable in perpetuity.

The Home Trust received a duplex lot on North Laura Street in Ridgway as a donation from Riverside Investment Partners LLC in December, according to county records.

Habitat will be the general contractor on the project, Home Trust President Andrea Sokolowski said. “Our organizations’ missions align and we feel that we can build affordable housing more effectively and efficiently together,” she said.

They are currently doing a soil survey on the property and working on architecture plans, as well as pursuing financing and funding options from the Department of Local Affairs and Impact Development Fund, a nonprofit Community Development Financial Institution.

Sokolowski and Madison said the organizations are still working on the details of their partnership, including the selection process for owners of the duplex.

But Habitat has worked with other land trusts in Colorado, “so we’re trying to recreate the best practices for what it looks like, and just make this a long-term partnership,” Madison said.

The Telluride Foundation’s plans for 14 deed-restricted affordable homes in Ridgway and a larger neighborhood in Ouray are still in the works.

Liz Teitz is a reporter with Report for America, a nonprofit program which places journalists in underserved areas. To support her work with a tax-deductible donation, click here.