December 2016 Pagosa Springs Real Estate Newsletter
About a week ago, Indian Summer was still in full swing in Pagosa with temperatures in the low 60s. We’ve now returned to more traditional weather with temperatures in the low 30s. The ski area opened on Thanksgiving Day with only marginal snow. Over the past week, they received an additional 28 inches. We still need more snow, but right now we have the best ski conditions in the State. Personally, I’m not a big fan of the white stuff, but snow is essential to fill the hotel beds, restaurants, and stores around town. Snow is the basis of our local winter economy, so I’ll just have to grin and bear it.
In other news around town, the much-anticipated 5th Street Bridge meeting happened Monday evening. There was a very large crowd. Don Volger, the Town Mayor, started off the meeting explaining that the Town had not made any decisions yet and was open to public comments and concerns. Next up was a traffic consultant who discussed the pros and cons of building the bridge versus expanding the existing Hot Spring Boulevard Bridge and other possible options. This was a long-range plan looking at the next 20 or 30 years. The second consultant discussed the economic impact of putting in the bridge. He discussed how the bridge could be paid for and what the tax implications would be. Both consultants seemed to be in favor of the bridge. The vocal public were a lot more pessimistic. My take on the issue is that a majority would probably be okay with the bridge if they didn’t have to pay for it. They would like the developer to pay for the bridge rather than the taxpayer. My feeling is that the cost should be shared some way. I’m sure we can come up with a way to split the cost so that it is fairly shared and everybody wins. Of course, there’s another faction out there who would prefer not to have any development and leave things just the way they are. Now the Town will review the work by these two consultants and the feedback from the public over the next 90 days. They hope to have a plan by the end of that time.
Now for the latest real estate news. A lot of the pending sales closed last month. Residential sales jumped from +11% in November to +15% this month. Overall sales rose from +10% to +12%. After looking over the stats, I see two categories showing the biggest increases. Home sales between $300,000 and $400,000 are up 51% over last year at this time. Sales of vacant lots between one-half acre and three acres are up 41% over last year. Lots in this category are usually Aspen Springs lots, with a few larger Pagosa Lakes lots mixed in. New home construction permits are up as well, with 111 this year compared to 88 last year at this time.
The other news of “interest” is interest rates, which jumped up a half percent overnight. This was a result of Donald Trump’s surprise win in the election. Rates for a 30-year fixed mortgage are now at 4.375%.
What caused the big jump? I was curious, so I spoke to three bankers and two financial advisers. This is what I’m hearing:
Rates were at historic lows around 3.5% due to concerns about the global economy including China, Brazil, and the U.K.’s pending exit from the European Union. The turnaround has been fueled by anticipation that Trump will cut corporate taxes and spend trillions of dollars on infrastructure, both of which may lead to higher corporate profits. This led to increased bond yields, which in turn increases interest rates. There is also growing concern about inflation.
I guess we’ll just have to wait and see what Trump is able to do. The bottom line is it costs more to buy a home today than it did a month ago. Is it time to buy now or gamble on the future?
I hope you all have a great holiday season with your families. Laurie and I are planning to go to Denver to visit the kids and grandkids.
A special thank-you goes out to all our service men and women who are overseas for the holidays. I appreciate their service to our country, especially at this time of year.