Western Colorado Faces Historic Lows in Real Estate Inventory

By Gary Hubbell
January 31, 2022

By Gary Hubbell, ALC

Broker/Owner/Auctioneer, Accredited Land Consultant

As the Coronavirus pandemic grinds on and urban dwellers seek their escape from the city, many thousands of people have embraced a return to rural living. Western Colorado, in particular, is one of those destinations that real estate buyers have targeted for their dream place to live. In the days of fast broadband connections, zoom calls, and telecommuting, many workers don’t need to show up at the office anymore. People can live anywhere, and Western Colorado is looking pretty darned appealing, with its famous ski resorts, Gold Medal trout streams, snow-covered mountain peaks, wineries and vineyards, cattle ranches, and rimrock canyons to explore.

Colorado is one of the most popular states in the country to relocate

As of August 2021, Colorado had grown to almost 5.8 million people, a 15% increase over 2010, and those numbers are in the rearview mirror. Colorado has almost certainly passed 6 million residents in the intervening few months. It is one of the fastest-growing states in the country. The real estate market in the Front Range cities of Denver, Boulder, Colorado Springs, and Fort Collins has been red-hot for several years, with home sellers experiencing dozens of offers and final sales prices far above the original listing price. Not to be outdone, the Western Slope, which is naturally on the western side of the Continental Divide, is growing at a record pace. Grand Junction, the largest city on the Western Slope, is practically out of building lots, and housing prices have accelerated quickly over the past two years. Modestly sized building lots that would have sold for $50,000 or less three years ago are approaching $100,000—if they’re available.

Western Colorado Real Estate Inventory is at Record Low Levels

Today’s sales activity far surpasses the previous high-water marks of 2005-2006, which recorded the highest prices and fastest sales activity since the mining camp days of the 1800’s. It came tumbling down in a hurry with the real estate crash of 2008-2009, and then the doldrums hit. In 2010, the market was at its absolute lowest point of the 2000’s, with many thousands of unsold units on the market. In the Delta County MLS, for example, there were 650 homes on the market in 2010 and the average duration on the market was over a year. Today there are 100 homes on the Delta County MLS and the average duration on the market is a month and half—which is about how long it takes to get a loan approved.

In Grand Junction, there are 241 single-family homes on the market—many of them trailers and double-wides—and there are 843 agents and brokers in the Grand Junction MLS, or almost four agents for every home. In the Colorado Real Estate Network (CREN) MLS, there are typically anywhere from 15-20 and as many as 50 or 60 expired listings. CREN covers most of Southwest Colorado, including major towns such as Durango, Pagosa Springs, Alamosa, Gunnison, Crested Butte, Montrose, Ridgway, Delta, Hotchkiss, and Paonia. On many recent days there have been no expired listings at all and sometimes only one. The Aspen-Glenwood MLS and the Grand Junction MLS are showing similar numbers. In the CREN MLS, there are 1,839 active agents and 631 residential listings, or about 3 agents for every single-family home.

Western Colorado Home Prices Accelerated Rapidly in 2021

In Delta County, which has traditionally been one of the lowest-priced counties in Western Colorado, average home prices accelerated 24% from December 2020 to December 2021, jumping from an average price of $324,900 to $404,000. That was after a similar jump from 2019, when the average home sold for around $280,000.

Ski town real estate prices went through the roof in 2021

In the Aspen-Glenwood MLS, the average sale price was over $2,500,000 for December 2021, and days on market is down to just 45 days on average. Keep in mind that these stats are for the entire valley from Aspen to Basalt, Carbondale, Glenwood Springs, and down to Rifle and beyond. The average sale price in Aspen for single-family homes and condos in 2021 was $12.95 million. 2021 inventory was down 70% over 2020, total sales in Pitkin County were over $4 billion, and the average sale price was up 44%. WOW. The average price per square foot for Aspen single-family homes was $2,195.

We have investors who are actively seeking short-term rental properties in ski town settings. Their goal is to make passive income on the properties while watching the property appreciate in value, then sell in a couple of years. They’re betting that they can come close to doubling their money in two years.

Similar inventory shortages exist with ranches, mountain land, and commercial propertiesWe recently attended the annual Denver Stock Show meeting of the Realtors Land Institute, where 60-70 of the best farm, ranch, and land brokers in a 10-state region get together to network, present properties, and share buyer needs. One broker pitched a buyer who was looking for a 40-acre mountain parcel with aspen trees and a meadow. Normally that property would be easy to find somewhere in Western Colorado for around $300,000. The broker set his buyer’s upper price limit at $500,000, and not one of the brokers in the room knew of a property that fit the bill. Many of the brokers didn’t have any properties to present. Every broker had buyers looking for various properties, and many of the buyers were in the $10-$30 million range. Buyers were searching for RV parks, apartment complexes, hunting ranches, mountain resorts, vacation homes, working cattle ranches, and income-producing properties. Every broker noted the shortage of inventory, high prices, and strong buyer interest.

It's the best seller’s market in the past two decades

So what’s the takeaway? If you have property to sell, it’s an ideal time to list. Many sellers have been hanging on to their properties, wondering if the 1031 exchange would be torpedoed by the Biden Administration, making them pay massive capital gains taxes on their proceeds. In my view, the Democrats—who hate the 1031 exchange because sellers avoid capital gains taxes—don’t have enough political capital to take away a popular wealth planning strategy before contentious 2022 mid-term elections. I believe the 1031 exchange will remain intact. Despite rising building costs, it’s also a great time to build, as housing inventory has never been lower.

Unusual and difficult properties are also selling—great time to get rid of dead weight

There are some properties that are just hard to sell. Maybe it’s poor ground, it has obstructed views, or you have a messy neighbor. As inventory shrinks even further, even the hard-to-sell properties are finding buyers. It’s a great time to get them off your books, quit paying taxes and maintenance costs, and turn a dead asset into cash.

Call us for a free listing consultation!

We can conduct a market analysis for you, at no cost, to see what your property might sell for. Whether it’s vacant land, a commercial building, vacation home, single-family residence, or apartment building, we can value it. Call us to make an appointment and we’ll go over the options!

Gary Hubbell, ALC

Broker/Owner/Auctioneer

Accredited Land Consultant

970-872-3322

Scott Reece

Roaring Fork Valley, North Fork Valley

970-987-7225

scottreeceproperties@gmail.com

Loren Williams

Loma, Fruita, Northwest Colorado

970-314-0324

loren.williams.co@gmail.com