Did prices really increase this much in downtown Pagosa due to the STR ban? First, let's be reminded of why Pagosa Springs is so amazing.
Hello Pagosa Springs! And welcome to our real estate report for 2021! I’m drinking a Neon Rainbows IPA from the Ommegang OMG Series. I thought that was appropriate since some of the numbers I’m about to share will indeed make you go Oh My God.
So here we are…in the year 2022! Can you believe it? It’s hard to believe we’ve been in the midst of a pandemic for almost two years now. And regardless of your views on Covid, one thing for sure is it’s dramatic impact on our real estate market and economy. It ushered in the future and there is no going back.
Remote work is here to stay. And those that can work remotely have an incredible amount of purchasing power. It estimated 37% of jobs can be performed remotely full time and they account for 46% of all US wages. And these high income earners are choosing quality of life characteristics and second homes, which means outdoor opportunities rather than being crammed in a city. Which puts pressure on housing prices in more desirable states like Colorado.
And can you blame anyone for wanting to move to Colorado? This really is the best state in America to live. The mountains, the active lifestyle. the climate, the people, the low property taxes. It really is absolutely amazing here.
So what does that mean for the real estate market here in Pagosa Springs. Well, you already know the answer to that question. But let’s dig deeper into it and see if we can get a glimpse of where the market is headed. And that includes taking a look at the differences between Downtown Pagosa and Uptown Pagosa. Because there’s a fascinating experiment going on right now with downtown putting the stop to more STR’s while Uptown still allows them to come in. The question is what kind of impact will that have on our housing prices…if you’ve watched my videos before, you know my theory.
Banning STR’s makes current STR’s more valuable. If you own a STR in this situation, you are less likely to sell because future competition is now eliminated. Which means you’ll make more money through your STR. And the result is reduced inventory during a time in which demand is outstripping supply. Which will further cause prices to increase.
And we have our first set of data in that we can actually look at to either confirm or deny this.
Before we jump into the data, I just want to take a quick moment to say thank you for watching my content. And when it comes to listing your property, we strive here to go above and beyond in our analysis and marketing. Our goal is to make this process as easy as possible so you can focus on the next chapter of your life. From in depth property reports to cinematic videos that dramatically increase your exposure and views on Zillow and Realtor.com, we can confidently say that we can get you the best price the market will allow. If you have any questions, don’t hesitate to call or message me. I’d love to help you out. Or just have a beer with you.
Alright, let’s jump into the December data. Up front, we need to be careful with this. December is always a historically low inventory month. And it’s understandable because most folks don’t want to sell their home or condo during the holiday months. But regardless of this, this market shows no sign of slowing down.
In December 2021, the average price for all properties in Pagosa Springs was 815 thousand dollars. If you look at just homes, it’s 891 thousand. Which is remarkable. If you remember from my last video in September 2021, I mentioned that in five to seven years the average price of a home in Pagosa will be over a million dollars with 7% average growth per year. Well, since that video, the average price has jumped 34% in just three months. Which is absolutely ridiculous. At this pace, the average price will be over a million in a year or two.
But we need to hold onto our hats here and remember that these numbers may not tell the whole picture because during low inventory months, the numbers can be skewed quite a bit. So the first thing we need to do is look at the rolling three month average of our average price. This takes into account the data from the previous two months and averages all three months together to prevent any outliers from dramatically affecting the numbers.
So the average rolling three month price for December is 781 thousand. 17% higher than September and 31% higher for the entire year. And this sounds more realistic. But an even better measurement for our market pricing is Median Price. Which goes even further in leveling out that data by using the middle price point in a data set rather than the average of the whole. And the median, rolling three month price for homes in Pagosa in December was 628 thousand. That’s still 9% higher than three month median for September and 27% higher for the year.
One thing is clear here. This market is actually picking up steam, not slowing down. Based on the latest data set, the market in Q4 averaged a 3% gain per month for October through December compared to the 2.25% gain per month for January through September.
And there’s one reason for this. Real Estate Inventory.
In December of 2021, there was an all-time low of 53 homes available for sale in Pagosa Springs. It’s astonishing. Now it’s usually low this time of year, but I wanted to compare this year to previous years.
In 2017 through 2019, the same trend occurs. More homes available in September than December. But these years had considerably more inventory than 2020 and 2021. But even 2020 had 240 homes available. That’s 352% more than December 2021. And look at the reductions from September to December throughout these past five years. It’s usually about a 10% reduction in inventory or so. But 2020 saw a reduction of 46%.
It’s the covid effect. Many of us thought it wasn’t possible to go even lower, but 2021 proved the opposite. There was an incredible 50% reduction in inventory that occurred from September to December. Absolutely unbelievable. Surely it can’t go lower.
I mean, take a look at what has happened since 2010. If there’s any one picture that tells this story, it’s this chart right here. You can see inventory started to trend up in 2012. And then Covid hits in early 2020. And supply get gobbled up. In 2021, supply starts to rebound in the spring but that’s also when there was talk of the county banning STR’s. It came up during the April Board Commissioners meeting. Look what happened that April. Another free fall in inventory. And it’s never recovered.
And this is exactly why pricing continues to pick up steam. Eventually, inventory will rebound. This can’t occur forever. But once inventory increases, that doesn’t mean pricing will decrease. There’s still enough folks on the sidelines waiting to jump in which will sustain our price increases. The lesson here…like I said back in October, buy now. You would’ve saved yourself quite a bit of cash had you done so.
Alright. So let’s take a look at Uptown vs Downtown. There’s one thing I want to point out, which relates to the chart at the very beginning of the video. The problem with comparing downtown to uptown is the uneven data sets. The Uptown area is way bigger than Downtown. Within PLPOA, there’s over 6000 residential lots with 4 thousand 807 of those having been built on. It’s 79% built out.
Which leads to another point that we will explore in a future video. Pagosa is surrounded by millions of acres of National Forest. There’s only so much land to build on with many bigger parcels that could be developed belonging to conservation trusts. So what will happen to the market once PLPOA is built out? We’re only 20% away from that happening. Just another reason why I don’t see the market here in Pagosa Springs going down anytime soon. This isn’t a bubble, so long as there isn’t a major worldwide recession. And as evidenced by our supply chain constraints, the demand for growth is there.
But back to the comparison of Uptown to Downtown real estate. When we talk about Downtown, we are talking about this area as defined by the MLS. And uptown as the Pagosa Lakes area, again as defined by the MLS.
Because of how much bigger Pagosa Lakes is compared to Downtown, in order to truly compare these markets, we need more data. So we’re going mostly to look at the rolling 12 month averages. Which pretty much means adding up all the data from the past year and comparing these two markets by these annual totals. If we don’t do this, it creates outliers which can skew the data.
For example, take a look at Sold Units for December 2021. Pagosa Lakes had 18 whereas Downtown had only 4. Which creates problems like the following.
The average price for homes in December 2021 in Pagosa Lakes was 631 thousand. While in Downtown it was 2.18 Million. That’s an increase of 8% since September for Pagosa Lakes and 275% in Downtown.
It makes it seem as if the STR ban downtown made the market skyrocket. And it definitely played a part in the price increase. But it’s not the whole picture. With only four sales downtown, one sale skewed the entire data set. And that was 482 Rumbaugh at $5.5 Million. So we need to take a look at the Median Price instead of average price.
In December, the median rolling three month price for Pagosa Lakes was 602 thousand and for downtown, 560 thousand. Which is surprising to me because in my heart, I know that downtown is more pricey than uptown. But that wasn’t always the case. Downtown has had a long history of needing to be fixed up. Most retirees preferred the nicer homes being built in Uptown. But it wasn’t until recent years where that has started to change. And we’re starting to see a much needed renovation come to downtown, spurred in large part thanks to Covid. Because of that, you can see in the data how much faster downtown is growing than Uptown. In December, the Median Price grew 18% where as Pagosa Lakes only grew at 3%.
What’s more telling though is price per square foot since some months more smaller or bigger homes are sold than previous months. And there’s more smaller homes in the downtown area. And smaller homes bring with them a higher PSF than larger homes on a similarly sized lot. In December PSF grew 80% since September for the downtown area whereas it grew only 9% for Pagosa Lakes. I fully believe the STR ban has played a part in that.
Ok, let’s take a look the annual real estate numbers for Pagosa, Pagosa Lakes and Downtown and review what happened in 2021.
For 2021, Pagosa had 691 new residential listings. Now this doesn’t include land listings. Of those 691 listings, 404 were in Pagosa Lakes with only 33 downtown.
But the trend is clear. New Listings were trending up this past decade. Increased construction helps with that. But once covid hit, it started to change. And the trend line was broken. Had the trend line held, there would have been about 100 more listings than we currently have right now. Now I’m sure the question is in your mind about the trend line for the Downtown area. Especially with my STR ban theory. Less people will be likely to sell, right? But with such a low data set, I’m not sure you can make a clear cut conclusion at just three months. We need more data. But overall, the trend is the same for Pagosa as a whole. And listings are down 15% the past couple of years.
Onto sold data. Of these new listings, 600 sold in Pagosa, with 361 in Pagosa Lakes and 30 Downtown. That means a 60% market share in Pagosa Lakes with only a 5% market share in Downtown. Throughout the years, this has stayed rather consistent.
Of these new listings, about 87% sold during 2021. Which is incredible compared to previous years. It’s usually around 50% to 70% since during an average market it takes up to six months for a property to sell. Pagosa Lakes has always historically sold a little better than Pagosa as a whole. And downtown has fluctuated quite a bit, again due to low numbers as a whole that can create outliers.
For 2021, the average price for Pagosa was 593 thousand, for Pagosa Lakes, 471 thousand and for downtown, 602 thousand. Remember, this is averaging out the whole year. We are considerably higher at the current moment given how fast the market is appreciating. If you look at the past decade, you can see how Downtown continues to fluctuate. Overall, we have seen considerable growth since 2015 with our market almost doubling in value and most of that gain has occured in the past two years.
Our Median Price is of course lower than our average price with Pagosa at 484 thousand, Pagosa Lakes at 435 thousand and Downtown at 450 thousand. Downtown continues to fluctuate due to a low data set. But what’s interesting is that some years, the median vs average price is the same for downtown. Whereas for Pagosa as a whole, the average is consistently higher than the median. Usually about a 75 thousand dollar difference.
So that’s where we stand for 2021. The big takeaway here is that Downtown values are growing fast. The big question is how much of a role will the STR ban will play in future appreciation. I eagerly await an entire years worth of data to explore this.
Another is question is what would happen should Archuleta County follow suit and ban future STR’s. I think there’s enough evidence this is already occurring in the downtown area, so I do think it will create considerable pressure on our already low inventory and help send prices through the roof in the Pagosa Lakes area as well. It all goes back to supply and demand.
I know many folks think we are in a bubble here. But here’s three more points to be aware of that I think help support the idea the market will continue to go up. First, we are currently experiencing significant inflation due to global supply constraints and the safest place to park your money in such situations is real estate. Second, nearly every expert out there is predicting the US market as a whole will continue to increase. And third, Pagosa is about to experience record exposure thanks to a HGTV show to premier in April.
Which, by the way, did you see the Building Roots preview that aired over Thanksgiving break? I may be biased here, but as someone who has spent quite a bit of time in the video production world, I have to say it sure beats any of the other Fixer Upper spin offs that are on HGTV. A job well done Ben, Christi and crew! I can’t wait to see more episodes.
Alright, I bet you’re tired of all this data and I hope there’s not any data fatigue going on. But if you have any questions about buying or selling real estate here in Pagosa Springs, don’t hesitate to reach out! I’m here to help in any way that I can. I hope everyone out there has a fun and prosperous 2022. Cheers Pagosa!