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First Quarter Statistics

This week we'd like to share with you an article that appeared in today's edition of the Durango Herald regarding recent market activity.

Home sales increase in Durango, Bayfield

By Emery Cowan, Durango Herald

The number of La Plata County homes sold in the first three months of 2012 increased compared with the same period last year, while prices have continued to fall, according to the latest local real-estate statistics.

The report from the Durango Area Realtors Association showed the median home prices declined in most parts of the county compared with the first quarter of 2011.

Durango condos and Bayfield in-town homes saw a price drop of a bit more than 10 percent while prices on resort condos dropped 38 percent from $250,000 to $155,000.

Prices increased for Durango in-town homes, Bayfield county homes and undeveloped land.

In Durango, the median price for a home was $329,950 for the first quarter of 2012, a 1.52 percent increase compared with the same period in 2011. In Bayfield, the median home went for $171,000, a 10.66 percent decline from the first three months of 2011.

Across the board, the number of homes sold last quarter was up compared with the same period in 2011. Homes sales in Durango and Bayfield as well as Durango country homes increased 60 percent or more. Countywide, the number of properties sold increased by an average of 27 percent compared with the first quarter last year.

While most of the increase in home sales can be attributed to low interest rates and falling prices, the balmy weather during the first months of 2012 also could have played a role, said Jarrod Nixon, president of the Durango Area Association of Realtors.

The lack of major snowfall may have enticed some sellers to bring homes on market earlier than normal and also may have encouraged sellers who would normally take their homes off the market in winter to keep their units up for sale this year, he said.

“With such mild weather this winter, everything moved up,” Wells Group Owner John Wells said.

The increase in the number of sales is a good predictor that prices will start to rise as the inventory shrinks, Nixon said. Right now distressed properties like foreclosures and short sales are continuing to depress prices.

“Potential buyers still have a lot of options,” Nixon said.

In-town Durango homes priced below $300,000 are where that recovery is happening quickest, Nixon said. Average days on the market for residential properties in Durango dropped from 247 days in 2010 to 143 days in 2012, a sign that supply is dwindling. Other parts of the county where there is more inventory aren’t rebounding as fast, said Don Ricedorff, a real-estate agent with the Wells Group.

Even so, days on the market were generally declining in most parts of the county except resort areas, where properties spent an average of 777 days on the market last quarter, compared with 442 in the first quarter of last year.

The Move Up Buyer

I thought I'd share with you this week what I believe is an interesting perspective on a segment of the market that has been dormant recently, the "move up buyer," i.e the folks who are currently in a home but would like to move up to something bigger. These folks have been sitting on the sidelines of the real estate market because they feel that they would lose money on the house they're currently in. But in my opinion, move up buyers are losing a real opportunity if they don’t act right now. Yes, they may not realize what they'd like on the house they’re currently in, in many cases from the 2006 price, but they will save significant money on the house they’re moving to. The first chart below illustrates that concept given some hypothetical current and move-up home values. The second chart illustrates another important concept and that is that monthly mortgage payment savings on the new home bought at the 2012 price versus the mortgage payment on the same house purchase in year 2016 when presumably the price has gone up, given the low historical rates right now (this illustration is based on a jumbo loan rate).