Q2 2024 RE Recap

Matt Martin - Realtor, Pagosa Springs
All content is created and crafted by Matt Martin, a local realtor with Team M-Squared, Sherpa Real Estate. He guides clients by utilizing unique marketing skills that get listings and offers accepted.

So…there could be some cracks starting to appear in the real estate market here in southwest Colorado. More on that in a second. But first, let’s remind ourselves why we choose to live and vacation here in Pagosa Springs.

Summertime in Pagosa is my absolute favorite. Hey, after suffering through years of hell in Texas, this place truly does feel like heaven. And I know many of you watching are looking to escape hell as well, so let’s chat about the real estate market and where it’s headed. So let’s get it.

Alright, like I said at the beginning, there does appear to be some cracks appearing. But…let me state this up front. Just because there’s some cracks doesn’t mean that prices are gonna crash. And there’s a key reason for this.

Take a look at this chart. This compares the Case Shiller Home Price Index to the United States Money Supply. 

The M2 money supply is a measure of the total money supply in the US. Whereas the Home Price Index measures the change in value of single-family homes on a monthly basis.

As you can see, the home price index is tightly bound to the money supply. So long as the money supply continues to increase, so will the home price index. And when the home price index gets out of line, like during the Great Recession, it falls back down to reality and lines back up with our money supply.

And right now, the price index is in line with our money supply. As inflation rises, so will home prices.

So no, our market will not crash. But there could be some speed bumps along the way that cause some price corrections here and there.

So let’s chat about what happened in Q2 2024 and if some of these corrections could possibly happen.

As we’ve stated over and over the name of the game is supply vs demand. Q2 - April, may and June - are the three months out of the year with the highest number of new listings that come onto the market. Now last year had historic lows for these three months when it comes to new listings. So how do you think 2024 stacked up against it? Well, as expected, Q2 was up only 1% from a year ago.

And this is because everyone is still locked into super low interest rates. It’s hard to give up a 3% rate for one that’s in the 7’s. So people are choosing to hang onto their homes and investments instead of upgrading into something new. Unless they have…


Bank of America Report

In fact, Bank of America recently came out with a report that it may take 6 to 8 years to unwind these lock-ins from super low interest rates. Which means that it may not be until 2030 until we get back to normal pre-covid inventory.

And this is the exact reason why prices continue to remain high. The median price for a home in Pagosa hit 785 in June. Up 19% from a year ago. Price per square foot hit 376, up 11% from a year ago.

So if prices keep rising, then what are these supposed cracks that I keep hinting at? Well, two thoughts here.


Inventory is starting to increase more for Condo’s than Single Family Homes. New listings for condos are up 28%. Compare that to Single Family Homes, which are down 4% year over year. But here’s the real kicker. Active Inventory is up 94% for condos. Whereas for homes, it’s up 32%. So supply is starting to drastically outpace the demand for condo’s. And when supply outpaces demand, that’s where you can start to see some price corrections.

Second…million dollar homes.

Million dollar plus homes now make up 31% of our active inventory. Compare that to the pre-pandemic market of only 15%. So it’s more than doubled over the past five years. This price category tends to sit on the market much longer than sub million dollar homes. And the percentage off asking price tends to be greater as well.

The pool of buyers for million dollar homes is much smaller than those under a million. In fact, once you hit the two million mark, it’s tiny. Since January 2013, only 13 homes over two million have sold in Pagosa Springs. Compare that to Durango, which has 50.

So it’s my suspicion that the million plus market has the potential to become over saturated for the remainder of the year. I just don’t believe there’s enough buyers at this price point to churn through this inventory.

Which makes it all the more important when it comes to listing your home to choose a realtor that goes beyond just putting your home on the MLS. And that’s what Team M-Squared specializes in. We’re more than realtors. We’re marketers. And we spend thousands of dollars on advertising materials to ensure you get more exposure for your home than your competitors.

As a result, you’ll get thousands of more views which translates into better offers and faster closings. And if you’re looking to buy, we go deep into the data, just like this video, to ensure you’re receiving the right deal for you. We’re here to guide and protect you every step of the way. If you have any interest in buying or selling, hit us up. We’d love to chat with you over a beer.

Alright, so what does all this data mean for the future. That’s what most folks want to know…where is the market headed.

As mentioned, condo’s and million dollar properties may struggle a little bit to get to the closing table. But for the entire market, it really boils down to three things here…

1. These properties need to be updated.

2. These properties need to be clean and taken care of.

3. These properties need to be priced and marketed appropriately.

If your property does not check off these three boxes, it’s gonna struggle in this market.

Overall, I think the market remains stable. But there will come a point soon where outdated properties will drop their price enough to become value plays. And once these properties hit the closing table, it will bring both the median price and median price per square foot down. 

As we approach September, activity should slow down due to the upcoming election. This is normal and usually happens. So it should be a slow Q4.

And then as we hit 2025, depending on economic conditions, we can start to possibly look forward to rate cuts. Just how many rate cuts remains to be seen.

But listen, this is all crystal ball stuff. I don’t know for sure exactly how this will all go down. But what I do know is that real estate over the long run only goes one way. And that’s up.

Alright, thanks again for watching. If you have any interest in buying in this corner of the greatest state in the nation, hit us up. We’d love to be your guides. Or just have a beer with you. Cheers!


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