Lee Riley’s Real Estate Blog

I hope everyone had a good holiday season. Our family was all together – I had a great time! The weather was beautiful, especially if you don’t like cold and snow. I’m sure there are some skiers who would disagree with me, but Wolf Creek still has twice as much snow as most other ski areas. Of course, every time we have a few weeks of solid sunshine, water issues start to become a topic of conversation. Currently, snow pack is about 69% of average, but with three more months of winter to go, it is very early.

A meeting of the Town Council on January 3rd confirmed rumors that had been flying around for days: Wal-Mart is coming to town. Wal-Mart has a commercial property under contract located near the corner of Highway 160 and Alpha Drive, across the highway from the Pagosa Lodge. At the meeting, Wal-Mart said they plan to build a 93,000 square foot store with full grocery. (The Durango Wal-Mart is 150,000 square feet.) No dates or time lines have been set, and some type of public forum is supposed to happen at a later date. That’s all we know for now, but I’ll keep you posted as we learn more.

Let’s turn to real estate and look back at 2011 to see what happened. This month I’m including expanded statistics stretching all the way back to 2004. It’s a wealth of data, so I’ll just hit the high points here. Home sales were up 36% compared to 2010. Condo sales were up 54% and land sales were flat. Commercial sales rose 30%, and when combined all together, overall sales were up 27%. Residential inventory is down significantly, but vacant land inventory has ticked up. Bank repos comprised one-third of residential sales for the year, though they represent only 9% of the inventory.

Home prices fell in 2011. It’s difficult to say exactly how much, but I can make a reasonable estimate. You can’t just look at average closing prices, as this doesn’t account for the type and quality of homes sold. If you sell a bunch of mobile homes one year and a bunch of executive homes the next, the average price will rise, but this doesn’t mean that your house is necessarily worth any more than it was before. Instead, I look at a very specific size of home located on a specific kind of lot and track the value over the years. In this case, I have chosen a three-bed, two-bath home with a two-car garage. It must be stick built, between 1400 and 1700 square feet, and located in Pagosa Lakes. This is how the median value has moved over the years:

As you can see, prices have fallen to a level not seen since at least 2004. (That’s as far back as our computer system goes!) Despite the falling prices, there is reason to hope for a turnaround. Repos are by far the biggest factor driving prices lower, and repo inventory is falling. The overall number of repos is on the decline, and the mix of properties seems to be shifting more toward vacant land and commercial property.

The New Year always gives me a chance to look back, and when I look back at 2011, I feel lucky. I had the best year for business that I have had in the past several years. The bottom line is I have to work smarter in tough times. It depends strongly on having a good support staff, a great boss, and a good working relationship with my fellow Realtors (who, by the way, are my best customers.) I depend on them heavily to help me sell my listings.

I am optimistic for 2012. The economy, both locally and around the country, is improving, although slower than we’d like. Though there are still quite a few repos in the pipeline, I hope that most of them will be gone by the end of 2012. Then prices may start to rebound. The window of opportunity to buy as an investment will quickly come to a close. If you’re still on the fence, time is of the essence. I hope you and your family have a great New Year!

I hope everyone had a good Thanksgiving. We sure did. I have an extra five pounds to prove it. My wife, Laurie, and I spent five days in Denver visiting my son and his wife and other relatives. We hit a movie, a play, and Black Friday to boot. The weather for traveling was good both here and there.

It’s beginning to snow lightly now. This is good for the ski area, which has been open since early October – very good for the local economy. I called around to most of the hotels as well as the Chamber to see how business was over the holiday. Most did very well. Christmas in Pagosa starts this weekend, which is an event that encourages everyone to shop locally. There are other holiday festivities going on as well. You can visit PagosaChamber.com for details.

As far as the real estate market goes, business continues to be good with home sales up 37% compared to last year, and overall sales up 27%. Home inventory is down 20%. Repo numbers are also going down. As of December 2nd, there are 45 repossessed homes on the market, and 15 of them are under contract. This means there are only 30 residential repos available today. Repo homes are about 10% of the current inventory. The most surprising number of all the stats this month is this: out of 31 homes under contract right now, 15 are bank repos. The good news is the sooner they go away, the more quickly we will see a rebound in prices. There are still a bunch of repos coming down the pipeline, but they are being gobbled up fast. If you are a buyer sitting on the sidelines waiting for that great deal, you better hurry, especially if you want to take advantage of the unbelievably low interest rates hovering around 4%!

I send out a spreadsheet once a week via email showing all the repo properties in the county. If you would like to receive the list, just let me know. You can also see these properties on my website, ISellPagosa.com. Another great feature I have on the website is the ability to see all the newly-listed properties. You get access to all the fresh meat as it comes on the market.

So long for now! I hope you and your family have a great Holiday. It’s good to hear a lot of our troops will be home soon. Now if Congress would give us a Christmas present called “cooperation,” that would be great!

It snowed yesterday. It seems like winter is coming early. The ski area has been open for weeks. This is good for the local economy. The hunters are happy to have a fresh blanket of snow on the opening day of Third Season, as this makes the animals move down from higher ground, and it makes them easier to track. Again, good for the local economy.

Also, the real estate market continues to improve. As you will see in the stats, overall sales are up 31% over last year. Personally, I am having a very good fourth quarter, and I expect to close out the year on a high note. I have a couple of deals in the works involving properties in the million-dollar range.

One concerning sign is that repos have ticked up slightly over the last week or so, although we are not any higher than we were back in September, and we are still well below the levels seen during the spring. You can see the last several months of data in this chart:

Let’s hope that this little uptick is just a bump and not a trend! I’ve also compiled some statistics about the repos and their place in our market. You can see how a relatively small percentage of the active listings represents a relatively large percentage of the sales:

In closing, I came up with a way to solve all the problems in Washington. I’ll admit up front that I didn’t come up with it on my own. I stole it from a TV show I watch called The Biggest Loser. So here it is, a simple solution to all the partisan gridlock: Rock, Paper, Scissors! There are loads of situations where we could use this new strategy:

Should we hire more teachers? Rock, Paper, Scissors!
Should we switch to natural gas for our energy needs? Rock, Paper, Scissors!
Should we have more gun control? Rock, Paper, Scissors!
Should we spend more money to fix our roads and bridges? Rock, Paper, Scissors!
Should we raise taxes on the top 1%? Rock, Paper, Scissors!
Should we have a flat tax? Rock, Paper, Scissors!
Should we raise the minimum age for Social Security and Medicare? Rock, Paper, Scissors!
Should we do away with Obamacare? Rock, Paper, Scissors!
Should we fix our schools? Rock, Paper, Scissors!
Should we do business with Cuba? Rock, Paper, Scissors!
Should we lower corporate taxes? Rock, Paper, Scissors!
Should we crack down on immigration? Rock, Paper, Scissors!

Finally, should we work together in Washington for a better America, or should we do what is most likely to get ourselves re-elected? Rock, Paper, Scissors!

I was thinking about sending this list to David Letterman for his Top 10 List. This would probably get a good laugh, but what a sad story.

I hope everyone has a great Thanksgiving!

As we enjoy another spectacular Fall in Pagosa, I have a couple of promising items to report. First, the local Chamber of Commerce tells me that the number of visitors passing through the visitor center reached a 10-year high in July and August. I attribute this success to the many wonderful festivals and events held around town. From the Folk Festival to the Fair, it seems like there is something going on every week! Many thanks go out to all the hard-working individuals, businesses, and organizations who make all this possible. Sales tax receipts indicate that we were able to translate increased foot traffic into increased sales, as local businesses report an increase of 6.6% through the end of July.

On the real estate front, the number of residential bank repos continues to decline. Looking back to May of this year, 52% of all residential sales were bank repos. In September, only 29% were repos. As I write this, there are only 44 residential bank repos listed in all of Archuleta County, and 10 of them are currently under contract.

The median closing price on a home in Pagosa has fallen to $175,000. This is bad news for sellers, but it is great news for potential buyers. This is a level not seen since at least 2004, which is as far back as our current record-keeping system will go. Additionally, the number of home sales is at a 5-year high.

Another piece of good news for buyers is that mortgage rates continue to reach new historical lows. As of this writing, the national average for a 30-year mortgage was 4.00%, and the average for a 15-year was 3.37%. These are tremendous rates, and if you are in a position to take advantage of them, I encourage you to do so.

Speaking of banks, there has been a lot of news recently about new fees at the big banks for everything from debit card use to bounced checks. I talked to a local banker about all of it. The way he explained it, there were a lot of new rules and regulations that came down as part of the Dodd-Frank financial reform bill. The new rules are meant to protect the consumer and the financial system as a whole. Whether they are going to be effective is a political issue that I am not going to take a position on here.

In any case, the new rules have added costs, in both time and money, to the way that banks do business. The new rules also limit how much banks can charge for certain services and fees. So the banks now have higher expenses and lower revenue. We should not be surprised that the banks are trying to make up the gap with new fees on checking and debit cards. You can pay now, or you can pay later, but the banks are going to get paid eventually, one way or the other.

Here are two tremendous values that have recently come across my desk. The first is 35 acres for the unbelievable price of $59,900. You get river access and National Forest access to sweeten the deal. This is the lowest price for 35 acres in our market.

The second is a brand new listing that is just coming in as I write this. It is a 2-bedroom cabin of about 1100 square feet on acreage that seems to have a good well. The price will be $104,500. The listing is so new, I don’t have an MLS number or many details yet. If you are interested, please give me a call at 970-946-3856 or e-mail me at LeeRiley@ISellPagosa.com.

I want to apologize to anyone who has had recent technical issues with my website or my email address. The explanation is dull, so I’ll just summarize by saying that we have just switched to some new companies, and the change has had unfortunate side-effects. My office is working diligently to chase down all the loose ends, and we hope to be back to normal soon. Thank you for your patience as we wrestle with our technology.

Finally, I want to wish a hearty “Good Luck!” to all the hunters who are coming to town for elk and deer season. The first elk season opens October 15. Everyone is looking forward to the excitement and activity that hunting season always brings, and the shops and restaurants are looking forward to some increased traffic.

Well, summer is about half over. The fishing has slowed down quite a bit due to warmer waters. The monsoons have just started doing what they are supposed to do, which is to give us a shower in the afternoons. It had been pretty dry for a long time, and the last several days of rain have been nice. I hope it rains again tomorrow!

It seems like every weekend we have some kind of festival or event going on. Up this weekend is the 60th annual Archuleta County Fair. It’s lots of fun – especially the livestock auction and the rodeo. You can visit ArchuletaCountyFair.com for more details. I will be in a dunking booth if you want to get even with me for anything or come out for some good laughs.

The local economy is doing reasonably well. I read last week in our local newspaper that sales tax revenue is up 24% compared to last year, and the local unemployment rate has recently fallen to 9.9%. Now, if we can get the politicians in Washington to do what we sent them there for, rather than worrying about their job security, we will all be better off.

So much for small talk. The real estate market is improving. Overall, sales are up 32%, with home sales leading the way, posting a 46% gain compared to last year at this time. Land sales continue to be flat. Condo sales are up slightly, but remain a tough sale. With home prices at an eight-year low, many buyers are asking, “Why buy a condo with monthly fees when you can buy a home for just a little more?” Homes are typically a better value, and extremely low prices have convinced a lot of would-be condo buyers to purchase a home instead.

I see two big changes in the market right now. First, the number of homes currently on the market is down by about 100 compared to the same time last year. Second, the bank repos are at their lowest level in a long time. When a new foreclosure comes on the market, they are gobbled up quickly because the banks have been pricing more aggressively than they were in the past.

For example, I recently listed a very nice 3 bed, 2 bath, 1400+ square foot ranch-style home for $132,900, and I had five offers right away. I had told the bank to list it for $175,000, but they didn’t take my advice. The result was a very quick sale and a tremendous deal for the buyer.

The big question in my mind is “How much inventory is still in the repo pipeline?” It’s very difficult to tell how many foreclosed properties are just sitting out there waiting to be listed. The repo inventory is the key to a turn-around in the market, so we can finally see some appreciation. Indicators point to light at the end of the tunnel.

One other trend I want to mention is the big jump in the very high-end and low-end of the market. While much of the middle of the market shows mixed results, we’re seeing big gains at the extremes. Home sales under $200,000 are up 78% this year, and sales above $1,000,000 are up 150%.

Finally, don’t forget to come out to the fair this weekend. I hope to see you there!

Happy 235th Birthday, USA!

Pagosa celebrates Independence Day right with a parade, a carnival, an arts & crafts fair, and the Red Ryder Rodeo. Of course, we always have music and fireworks to finish off the day. I watched the parade from the sidelines for a change; quite often I’m in the parade on a float or in my moving truck for marketing purposes. But this year, both of my kids, Patrick and Heather, and their spouses were here to share in the festivities. Of course, we had two Labs along for the ride, who had a great time in the river. Fun was had by all. The town seemed very busy, but we have to wait to see tax revenues before we keep score.

What about the real estate market? It’s good but not great. Home sales are up 32% and total sales are up 27% from last year at this time. Repos are still the buzzword affecting the sales. 47% of all home sales were bank owned. Some good news is that the number of new residential repos on the market is on the decline, at least for now. I listed a Bank of America-owned property a week ago and it had five offers almost immediately – a sign of the times.

Over the first half of the year, I’ve noticed a couple of interesting trends in the stats. Of all the sales this year, just 9% sold at or above their original listing price. 60% of properties required a reduction in asking price before they sold. 80% of all properties sold below their latest asking price, so very few sellers are seeing full-price offers. On average, a home sells for 93% of its listing price.

In general, we are seeing a shift in demand toward lower-priced properties. As I write this, there are 47 properties under contract to be sold. Of those, 66% are listed under $200,000. Among the current pending sales, only 5 are vacant land. There are one each of commercial and multifamily properties, and the vast remainder are homes or condos. Conversely, we have had three million-dollar sales this year, with one of them selling for over $2 Million. Buyers with some money are realizing that there are great deals to be had in the high-end market as well.

Interest rates today are 4.75% for a 30-year and 3.875% for a 15-year loan. The Jumbo rate which covers sales above $417,000 is 5.25% for a 30-year note.

What will affect the market for the rest of the year? My best guess is there will be several factors. The main issue is consumer confidence which is reflected in jobs, the stock market, and gas prices, to mention the main ones. Another factor will be if we see the interest rates start to rise. If repos start to dry up, this may make buyers who have been waiting on the sidelines for the bottom jump on board so as not to be left behind. As I look at the numbers, it looks to me like you can buy a home at the same price as you could eight years or so ago.

If you are a buyer, the world is good; it’s time to pull the trigger. If you are a seller, get involved in helping your Agent! Do some of your own advertising. Hold an open house. Stage your home. If you’re not getting any showings or lots of showings but no offers, adjust your price. Selling is a team effort.

I’d like to note one Coming Attraction on my website, ISellPagosa.com. We are currently working on a new online feature which will allow you to see all the newest listings and the latest price changes for all of the Pagosa Springs market. This new feature is still in the works, but it should be available in the near future. I’ll let you know when it goes live.

Well, so much for the first half of 2011. So far the numbers show we are moving in the right direction. I try to think positive; it makes me feel better!

So long for now, I hope you and your family have a great summer.

After some brief signs of a dry year, Mother Nature brought us one of the coolest, wettest Springs of the last couple years. The snowpack currently stands at 149% of average, and one of my fellow Realtors, Kalei Pitcher, spent an afternoon in late May snowboarding on fresh powder! The skies have been alternately sunny, cloudy, rainy, snowy, and windy – sometimes all in the same day. As they say, if you don’t like the weather in Colorado, just wait 10 minutes.

In contrast to the weather, our real estate stats have been holding pretty steady over the last couple of months. The residential market continues to improve over last year while the vacant land market stays flat. If current trends continue, this will be our best year since 2007 if you measure number of transactions closed.

In terms of pure number of transactions, we seem to have hit a bottom in 2009. Two years ago on this date, we had closed just 80 transactions in the entire county. This year we’ve done more than twice that many. The question on everyone’s minds, however, is when will prices hit a bottom? Unfortunately, I can’t answer that question, and to be honest, I don’t think anyone else can either.

I can tell you that prices are still being driven by bank repos, and until they start to dry up, it will be very difficult for prices to make a rebound. So far this year, bank repos have accounted for 45% of the residential sales and 38% of the sales overall. Many banks will reduce their list price every 30 to 90 days, so it’s simply a race to the bottom out there for as long as the repos hold out. How long will that be? The only thing I know for sure is that it can’t last forever.

The absolute bottom on prices may have already past, or it may be yet to come. Regardless of the exact timing, the fact remains that Pagosa Springs is “on sale” right now in a way unmatched in recent memory. Given all the beauty and amenities in our little town, and considering these unprecedented low prices, Pagosa Springs is the best deal in Colorado. With interest rates once again at historical lows, this is a tremendous opportunity for buyers to own a piece of the Colorado Dream.

Finally, I’d like to remind everyone that I have a moving truck available for my clients’ use. If you buy or sell with me, you move for free, as long as the truck stays within a 100-mile radius. The truck is also available for free to local non-profits, churches, and charitable organizations. If your group would like to reserve the truck, just give my office a call to set up a reservation.

If you own property in Archuleta County, you’ll soon be receiving a Notice of Valuation from our County Assessor’s office. This valuation will be used to determine your property taxes for the next two years, and there is always a lot of confusion and misunderstanding about the valuation process. I get dozens of phone calls in my office every two years from people who think their valuation is incorrect. They’re mad and they want to protest. Some of these people have a legitimate grievance, and some do not. I want to help you figure out which category you belong in. We have a lot of ground to cover in this newsletter, so let’s jump right into it.

The County Assessor’s Office is charged with setting a value on every piece of real estate in our county. The process by which this value is determined is set by the State of Colorado. The local Assessor is required to follow the State’s rules.

As required, the Assessor’s Office looks only at sales that occurred during the “assessment period.” The current assessment period is July 1, 2008, through June 30, 2010. The county will not consider what your neighbor’s house sold for last week, nor are they allowed to take into account what your lot is listed for right now.

The county values land and structures separately, and then combines the two for an overall value. The county attempts to account for the property’s location and size along with variables like water frontage, mountain views, and other factors that can significantly change the value of the property. For structures, the county considers building type, condition, size, and several other variables. Additional buildings like detached garages, workshops, and storage sheds are also taken into consideration.

Once the valuation process is complete, the county mails everyone a Notice of Valuation. By law, these notices must be in the mail by May 1. Once you have received your Notice of Valuation, you’ll have the chance to appeal your valuation if you believe it is incorrect. Your Notice of Valuation will contain a form to fill out if you want to protest. If you are going to appeal your valuation, you must file your appeal no later than June 1. After June 1, you lose all rights to appeal the valuation.

I have dealt with many, many friends and clients who have appealed their valuations, and they have had varying levels of success. According to statistics provided by the Assessor, about one in three protests has been successful over the past couple of years.

Sometimes the county will make a simple mistake about what kind of property you actually own. If you are one of these people, you should definitely file an appeal. (Unless the mistake is in your favor; then you should probably keep your mouth shut!) Maybe the county thinks you own a 3000 square foot house, when your house is actually 2000. Maybe the county thinks you own 5 acres instead of 0.5 acres. These things happen, and the mistake will be easily remedied if you will play by the rules and follow the appeal process.

If you are going to appeal based on comparable sales, you’re going to have to do some research. The Assessor’s Office will be able to tell you what your valuation is based on. If you call or visit them, they can show you the details about your property that have contributed to your current valuation. They keep a list of all the comparable sales used to form your valuation, which you can examine upon request.

If you are planning to use your own comparable sales in your appeal, you need to remember that there are rules about what sales can be considered. The sale must have closed within the “assessment period.” The sale must be an “arms-length transaction,” which means that the buyer and seller must not have any prior relationship. If you have a copy of a fee appraisal performed on your property during the assessment period, it can be a useful tool in an appeal.

I always get quite a few requests to personally attend property tax hearings with some of my customers. Unfortunately, I am unable to do so. I simply have too many properties under my care. I am working very hard to bring buyers and sellers together, and I just don’t have the time to personally attend every appeal meeting.

If you appeal your valuation, the county has until the last working day in June to make a decision regarding your appeal. If you disagree with that decision, you have until July 15 to file an appeal with the County Board of Equalization. From there, you can continue on appealing all the way up to the state court system. I’d suggest you carefully consider the cost/benefit ratio before taking your case up to the Colorado Supreme Court.

The Assessor’s Office has reported that overall property values are down about 25% from two years ago. (This doesn’t mean that your property value is down 25%, or even that it is down at all. It’s just an average.) There are many, many bank repos in the mix for this assessment period, which are counted as comps and drag the values down. The property value you receive in May will be used to set your 2011 taxes. Property taxes are paid “in arrears,” so you’ll see a change in your tax bill during 2012.

One factor that will affect your actual tax bill is whether your property is residential or vacant land. Independent of the assigned value, vacant land is taxed at a rate approximately 3.5 times higher than residential property. This is due to a Colorado Constitutional Amendment which fixes the ratio of taxes paid by residential property owners. So, if you have a home valued at $100,000 and a vacant parcel valued at $100,000, the taxes will be wildly different even though the valuations are the same. Your taxes will be about 3.5 times higher on the vacant parcel.

If you have further questions about your property, your valuation, and your property taxes, I suggest that your first call be to the Assessor’s Office. You can reach them at 970-264-8310. They can show you the details and comps for your particular property. You can also click here to visit the County Assessor’s Website for most of this information. If you still have unresolved questions or concerns, please don’t hesitate to call my office. We have access to a great deal of real estate data, and we would love to help in any way that we can.

Hello From Padre Island, Texas!

Laurie and I are traveling this week. Laurie has the week off for Spring Break, and we are enjoying some time in the surf and the sun. It was 66 degrees and sunny the day we left Pagosa. It’s sunny here, too, but the temperature is a bit higher!

2011 is off to a strong start in the real estate market. The stats are up across the board with an overall increase of 15% over last year. The buyers and bottom-feeders are out in force. They’re looking for deals and finding quite a few. My office has been positively bustling with activity in what is traditionally a very slow time of year. We’re now gearing up for the big crush of Spring listings and the arrival of the summer selling season. I’m excited to see what this year brings to the Pagosa market.

I mentioned last month that I’m going to be dealing with water issues in the next several newsletters. My thanks go to Joel Hellwege at Justice Water for his efforts to enlighten me on these issues. This month I want to talk about gallery wells. Most people think that all water wells are holes dug deep into the ground. These drilled wells are common, but they aren’t the only kind of water wells. In fact, some drilled wells in our area dig into oil-bearing shale deep below the surface. The water from these wells often has a rotten-egg smell, and is laden with bad-tasting minerals. In some situations, it is better to install a “gallery” well, also known as a culvert well. A gallery well is located near a river, stream, pond, or spring and is buried about 15 feet below the surface. The gallery well collects water from the saturated ground near the surface-level water source. Sometimes, a gallery well will produce perfectly good water, while a drilled well will produce stinky water from hundreds of feet deep! To decide what kind of well is best in your situation, I recommend you have a professional take a look.

In about a month, those of you who own property in Pagosa will receive your new notice of valuation from Archuleta County. This valuation will be used to determine your property taxes for the next two years. After you receive the notice, you’ll have the opportunity to challenge your valuation, if you so choose, but these valuations and challenges are governed by strict rules which come down from the state and are implemented by the local Assessor’s office. In next month’s newsletter, I’m going to explain how all of this works. I’ll cover the evaluation process, the challenge process, and all the other information you’ll need to ensure you get an accurate, fair property valuation from the county.

Now, it’s time for a little relaxation, because next week, it’s back to work!