The big story to start out 2024…real estate prices continue to climb to record highs. But….but…well, before I get into these butts, let’s remember why we are all drawn to this magical area.
Ah, Pagosa Springs in the spring. The snow has melted. The temps have warmed up. And life is completely chill as various businesses take their seasonal breaks.
But not for us real estate agents…things are picking up. So let’s take a look at how this year started off. It’s the Q1 recap for 2024. Let’s go.
Three takeaways…
1. Price Per Square Foot. It continues to climb. We hit record highs in February and then topped it in March. If we go off the three month rolling average, we’re now sitting at $355 for all residential properties. 19% higher than where we were a year ago. And 4% higher than our previous peak in July 2022.
2. Inventory is climbing. But this one is a bit deceiving. Right now, new listings are up 51% when compared to a year ago. But there’s more to the story than this. Typically, if listings don’t sell in the fall, sellers will often take the property off the market for the winter and re-list in March and April. In March 2023, approximately 17% of new listings were listed at some point during the previous six months. But this year, that number jumped up to 38%. What this means is that we’re basically flat when compared to a year ago when it comes to new inventory that wasn’t previously listed. So inventory remains a problem.
3. Demand remains flat. So far this year, 53 properties have crossed the closing table, up slightly at 4% when compared to a year ago. But still down about 24% from the five year pre-covid average. Now remember that the first three months are always the slowest when compared to the rest of the year. Our buying season doesn’t really begin until summer. But I will say this…it feels like demand is starting to pick up. We’re definitely starting to receive more calls and inquiries about buying real estate than we did at this point last year.
Alright, so what does this all mean for the market going forward. And this is where it gets tricky. Because we’re talking about crystal ball stuff. But two things to pay attention to…
One…There’s a lot of expectations out there that the Fed’s will cut interest rates three times in 2024. In fact, back in January, the market was pricing in a 75% chance that cuts would begin in March. Well, it didn’t happen. Recent inflation data in March saw an increase of 3.5% from a year ago. Well ahead still of the Fed’s target of 2%. So now the market is pricing in a 56% chance that the Fed’s will cut their rates in June. But just like how March didn’t pan out the way traders thought, I’m beginning to think June won’t either. And now I’m not expecting any significant rate cutes until 2025.
Two…There’s this little lawsuit settlement that happened last month. There were a class action lawsuit brought by sellers of homes claiming that the National Association of Realtors conspired to inflate real estate agent commissions by enforcing cooperating compensation to buyers agents.
Which ironically, the lawyers of this lawsuit are taking home a cut of up to 40%. Think about that…Lawsuits over realtor commissions of around on average only 4% to 6%. But yet these guys are collecting 40%? I should’ve been a lawyer.
Anyways, as a result of this lawsuit, two big changes are taking place in our industry. The first being that buyers agent commissions will no longer be allowed to be displayed on the MLS - which is the tool where agents display their listings to other agents and in turn, websites like Zillow display these listings to the public. And second, NAR agreed to require MLS participants working with buyers to enter into written representation agreements with their buyers before the buyer tours a home.
Now these changes don’t mean that sellers will no longer offer compensation to buyers agents. It just means it can’t be displayed on the MLS. So for the most part, I don’t think anything will really change all that much. But it could start a trend where some buyers forgo representation and choose to go directly to the listing agent.
Now I don’t recommend this. Buyers agents advocate and protect you from being taken advantage of by the seller. And this area is very different than cookie cutter suburbs where every sixth house is exactly the same. In Pagosa Springs, everything is custom. There’s water rights. Wells. Easement obstacles. Tap fees. Certificate of Occupancy issues. All kinds of issues that you typically don’t see in big developments in Texas. So it’s important to have proper representation.
But that won’t stop some buyers from going on their own. Which means for sellers that marketing matters now more than ever. You can’t just rely on the MLS anymore. You have to advertise in order to get in front of as many buyers as possible. And this is what Team M-Squared specializes in.
Instead of only using the MLS, we create quality content to market your home through various social media and advertising channels. We then target buyers interested in moving to Pagosa Springs, Colorado. This is our way of ensuring you receive more exposure than your competition.
The real estate industry is changing. But we’ve always been ahead of the game. We’re innovators. We’re leaders. And we’ll guide you through this complicated process.
Ok…so overall, what does this all mean for the values of homes in Pagosa Springs. I think for the rest of the year, prices continue to remain stable. Both buyers and sellers have become accustomed to these higher interest rates. And they’re more comfortable jumping into the market now that they realize that rates will never go back down into the 3’s. Because at some point, you just have to make your move. You can’t wait forever to make a change in your life that you desperately want. And come summer time when Texas is 110 degrees every single day, people will want to retire or make the move to beautiful and comfortable Colorado. And while affordability is relative, there’s not a better deal in Colorado near a ski area than what Pagosa Springs has to offer.
So both supply and demand will slightly increase throughout the year. And then as we approach the election in September, activity will quiet down. Going into 2025, activity will pick up again. And if interest rates do start to fall, look out. Prices could start to march up again.
So there you have it…what to expect as we head into the summer. If you have any interest in buying or selling real estate, hit us up. We’d love to have a beer with you and chat about this amazing area we get to live and play in. Till next time…cheers!
