Interest rates could lower into the 5%-6% range in 2024
Only 842 homes were sold in La Plata County in 2023 compared with 1,060 in 2022. (Jerry McBride/Durango Herald file)
There were fewer homes sold in La Plata County during 2023, further illustrating a lack of inventory in the county.
According to data from the Durango Area Association of Realtors, there were 842 home sales in La Plata County in 2023, down nearly 21% from 2022.
Furthermore, prices continue to rise as the median home price in La Plata County sat at $660,450.
In almost all areas across La Plata County, there was a double-digit decrease in the number of homes sold. The most significant were Bayfield in-town homes, where there was a 30.6% reduction in the number of sales in 2023 compared with the previous year, and a decrease of over 25% in Bayfield’s rural home sales.
Rural homes in Bayfield also experienced the sole median price decrease in the county at 2.6%, which might come as a relief to potential homebuyers, considering the increasing affordability challenges in the Bayfield area.
“Record low residential housing inventory for sale or for rent continues as the primary factor affecting our local residential real estate market. Rising mortgage interest rates coupled with the high cost of construction exacerbate the challenges in our market,” said Bob Allen of Allen & Associates. “Government agencies, health care providers as well as other public and private enterprises find it difficult to hire and maintain employees due to the high cost of housing. The local housing problem is acute but not unique compared to the many other desirable places to live like Durango, Colorado.”
DAAR President Kayden Hyson said areas east Durango along U.S. Highway 160 are the best places to search for a home in the current market.
“I would look to the west of Durango they have a lot of great options coming in terms of infrastructure, you know, they have the water projects that many of those rural subdivisions rural properties have access to now,” he said.
He said the decrease in rural Bayfield homes prices was likely a result of high interest rates. He also said when interest rates are high, home prices tend to decrease in median price.
“$500,000 at a sub three interest rate is a lot more affordable than a home that’s $400,000 at an 8% interest rate,” Hyson said
This is because there is generally less demand compared to when interest rates are low, forcing sellers to decrease the price.
However, the median price for Bayfield in-town homes increased again, going from $463,750 to $490,000.
Durango homes remained among the highest in the area, with in-town prices sitting at a median price of $780,000 and Durango country homes at $870,000.
Durango country homes also saw a decent increase in median price, going from $775,000 to $870,000.
“Durango is such a strong market itself and in-town Durango, if you know you can buy in town Durango, whether it’s a condo, townhome or single family, and you have the budget and criteria for that, always go for in-town Durango,” Hyson said. “It always has such a lush premium.”
Looking ahead in 2024, DAAR foresees inventory challenges as interest rates steadily decrease to around 6.5% and industry economists indicate that interest rates dip into the 5% range over the next year.
That could open the door for a larger pool of buyers who have been waiting patiently for prices and interest rates to drop, and for home inventory to increase.
Hyson was optimistic about interest rates lowering, but said there’s such a demand for housing with very little supply that it could take about 10 years for the housing market to return to what it was pre-COVID-19.
“If you looked prior to COVID, it was a pretty healthy market,” Hyson said. “A healthy market is equally a buyer’s market equally a seller’s market. There’s good competition with buyers and sellers, and there’s enough supply for the demand out there.”