Is it true…are we about to go into a recession. But first, let’s remind ourselves why we live and vacation in beautiful Pagosa Springs, Colorado.
It’s taken me some time to get this market recap out for 2025. And that’s because I wanted to wait and see if we could get a glimpse of what’s in store for 2025. And after three months in, well everyone is about as confused as Mother Nature has been so far this winter in Pagosa Springs. For reference, it’s been one of the worst snow years that many of the locals can remember. I think Wolf Creek is around 53% of snow pack for where it should be this time of year. Alright, back to the recap.
Ok here’s what’s going on in terms of the big macro picture of our local economy.
1. Consumer sentiment has fallen to its lowest levels since Covid.
2. The yield curve, which has predicted the last three recessions, recently went positive. Indicating a recession is just around the corner.
3. The US stock market has lost over 10% since recent highs while the global stock market has performed rather well.
4. And nearly 92% of CEO’s say they are concerned about a recession, due in big part to tariffs. Which have been all over the place.
One day they’re on. They next day they’re off. One day they’re 25%, the next day they’re 200%.
The problem here is uncertatinity. No one really knows what’s going to happen because there’s no clear signals as to what’s for real or not. And so in response, betting markets have increased the chances of a recession. Whether that happens or not remains to be seen.
But let’s prepare ourselves a little bit. Let’s ask the question what if we do go into a recession. And what will happen to our local real estate market. And I think that’s the key here…local. What could happen in major cities across the United States may not impact retirement areas like Pagosa Springs.
For instance…you might have heard in the news that inventory in residential real estate markets has now eclipsed pre-pandemic levels. Which is critical in getting housing prices to fall. And this is true for some pandemic hot spots such as Texas, Florida, Arizona….and even Colorado!
Colorado inventory is up 12% when compared to pre-pandemic levels.
But here’s what you have to remember. Colorado’s Western Slope is not the same as the Front Range. Southwest Colorado makes up only 4% of the state’s total population. Even though it accounts for 21% of Colorado’s land mass.
And it’s a very different story for our area compared to the rest of Colorado. Compared to pre-pandemic levels, Pagosa Springs is down 25%. And this is in big part because of a lack of construction in our area compared to these suburbs and cities. And because of that, our prices remain relatively stable when compared to greater Colorado. And especially Texas, where almost half of our market ends up coming from.
So if a recession does hit, it may not impact Pagosa Springs nearly as much as it could the Front Range. And even if it does, real estate typically fairs rather well in recessionary environments. In fact, real estate values continue to rise. Only during the Great Recession did we experience significant valuation decreases. What a recession usually means for real estate is lower interest rates. Which makes homes more affordable to the masses. Causing more demand to enter into the market. Which is why prices usually go up during recessions.
Demand
Speaking of demand, let’s take a quick look at how demand and supply faired in 2024. And whether we can expect similar numbers this coming summer.
New listings for Pagosa Springs in 2024 jumped up significantly compared to 2023. But because 2023 was a record low year, we’re still well short of average market conditions. And when I say average, I’m referencing the five year period before covid.
Sales in 2024 were down 1% for all properties compared to a year ago. But still did better than the recession years of 2010 through 2014. So in essence, demand continues to hold.
But there is some change in the winds for Pagosa Springs…Condo’s and townhomes had a little bit of different story than Houses did in 2024. When compared to a year ago, Condo listings were down 6% whereas houses were down 25%. But sales for Condo’s were up 26% while sales for houses were down 9%. So there’s definitely more inventory and more interest in Condo’s. Because it is at a much lower price point.
And this was evidenced in December and January. Where the median price for Pagosa fell pretty drastically. But the price per square foot held steady.
There’s also some potential trouble for our luxury market. In 2024, only 48% of homes above the million dollar price point crossed the closing table. Compare that to 2021 through 2023 where it was almost 60%.
Now understand that this is the kind of data you’re only gonna find from Team M-Squared. We dig deep to make sure you have all the information and confidence you need to either sell or buy here in Southern Colorado.
Team M-Squared
Now when it comes to selling your home, it comes down to two things. Price and Exposure. And we guarantee you more exposure than your competitors with our marketing program. Here’s the deal…we go far beyond just posting your listing to the MLS. We do more to get you more. Which means spending thousands of dollars on creating quality, cinematic advertising materials that capture a buyers attention. And then advertising those materials through targeted campaigns to residents and tourists passing through this area. The proof is in the numbers.
And when it comes to buying, well something huge happened this past December. Sherpa Real Estate bought Jim Smith Realty, creating the largest real estate agency here in Pagosa Springs. Not only do we have more listings than anyone else right now, but being with the largest and best real estate agency gives us a huge advantage when it comes to finding your dream home.
Alright, enough with the little promo. Back to the data. So now you know what happened in 2024. What can we expect this summer. After all, this is why most of you are watching this video. Well, here’s what I think.
What to Look For This Summer
First…If you are a luxury seller, it’s absolutely vital to have your home priced correctly. I believe this will be another year where the majority of homes above the million dollar price point will not sell because of unrealistic pricing expectations. Most will either cancel or expire. And they have the freedom to do that because of the low interest rates they are locked into. They don’t have to sell. And if they don’t have to sell, then prices will remain rather stable.
But here’s the deal, if you do need to sell and you don’t have incredible views or a home that looks like it was built in the 2020’s rather than the 1990’s, you’ll need to discount your price a little bit. In fact, in 2024, homes over a million dollars averaged a closing price that was 10.4% under their original list price. Nearly four points more than homes under a million dollars.
Second…Pagosa is still doing fairly well compared to other Southwest Colorado Regions. In 2024, sales were down only 15% compared to the five year pre-covid average. Compare that to to La Plata County where sales were down 44%. I think this trend will continue because Pagosa Springs is still one of the better deals out there in all of Colorado within a 30 miles radius of a ski area. And that’s not going to change anytime soon. It makes far more sense to buy a home here than along I-70, where you’ll sit in traffic for hours on end trying to get to your vacation home.
Construction Challenges
And finally….speaking of traffic. There are some challenges ahead in Pagosa Springs that could affect our local economy beyond just a recession. Now, one of my values is to always be honest with you. So I’m not going to sugar coat this at all. It’s not my style. But starting on March 24th, CDOT (Colorado Department of Transportation) is ripping up Highway 160 through Downtown Pagosa and replacing it with concrete. Once finished, it’s going to look amazing. But the issue is that construction is scheduled to last two years. And it will disrupt some of our local businesses. There will be delays in traffic. Parking on the street will be eliminated. And it’s going to test a lot of people’s patience.
But here’s the deal. Pagosa still has a kick ass location in Southwest Colorado. It still has awesome restaurants and local businesses ready to serve residents and tourists. It still has the San Juan River for tubing adventures. It still has the perfect climate during summer. It still has the same mountains and beauty that we get to stare at every single day. The only thing changing is that Pagoslow…may just go a little slower until the project is complete.
So I have hope for the future. I have hope for our economy. I have hope for our citizens.
Because I know who the people are in this community. There’s so much talent and ambition here.
And Pagosa is open. It’s open for business. It’s open for real estate. It’s open for adventures. It’s open for change. It’s open for a better lifestyle. It’s open for you.
Thanks so much for watching. If you have any questions, contact Team M-Squared. We’d love to help you dream of a better life here in Pagosa Springs, Colorado. Cheers!
