With the coronavirus pandemic giving urban and metropolitan residents a reason to relocate, families and individuals who had been looking to make the move are flocking to rural areas.
Montrose County Clerk and Recorder Tressa Guynes told the Montrose Daily Press in late August that a flood of people who moved to the area from Arizona, California, Denver and Utah had registered vehicles, leading to record highs in collected auto tax.
Though one could assume such a development would lead to a flourishing real estate market, the numbers, much like the pandemic, paint a fluctuating picture.
According to data provided by the Colorado Real Estate Network (CREN), closed sales through August are down 3.7% in Montrose County for single-family homes compared to 2019. Townhouse/condo closed sales are also down in the county, with a 33.3% drop from the year prior.
Data provided by the Colorado Association of REALTORS (CAR) has similar findings for Montrose County. Closed sales were down 4.5% for single-family homes, and down 29.4% for townhouse/condo sales. Pending sales, though, were up nearly 60% for the month of August for homes that were under contract, CREN data shows.
Although data from CREN showed a 35.5% increase in closed sales for the month of August, for single-family homes, new listings dropped 21.1%, and inventory of homes for sale decreased 43.6%.
“The million-dollar question is, where is all this going? Will it stop or not,” said Jeff Keehfuss, real estate agent and broker/owner at Berkshire Hathaway HomeServices Western Colorado Properties.
Late trends represent a strong market in Montrose due to the influx of homeowners moving to the area, but questions remain on if the trend will last, especially if inventory decreases at high rates.
“You look at the people in markets and big cities that are coming here, at some point, when those markets start to get soft, and people are moving out, our market here will slow down, and it could be dramatic,” Keehfuss said.
Keehfuss, who serves Montrose and surrounding areas and with more than a dozen years of experience in the field, wonders what the next several months might hold for real estate and everyone involved in the industry.
“I’m not saying the sky is falling, but I can tell you, there are all kinds of things coming out where people are like, ‘wait a sec,’ and there’s a lot of uncertainty on where everything is going,” he said.
Affordability becoming a concern
According to CREN data, the median sales price for single-family homes in Montrose has reached $271,823, a 7.5% increase from the same timeframe last year. Townhouse/condos have plateaued at $225,000 on the year-to-date numbers, but in August, the median sales price were listed at $256,975, a 35.3% increase from August 2019.
Data from CAR are fairly similar, revealing a 7.1% increase for single-family homes in Montrose at $279,900.
Although high-dollar properties are still a good bargain, Keehfuss said, the continuous rise in prices could scare away those interested in taking advantage of a popular market, with building costs also a factor.
“If median price outpaces what the average household income is, unless they have enough money, you’ll only have so many people that will move here that will pay the higher prices,” he said.
Additionally, if markets trend downward in metro areas, the ability to sell and move to rural areas is further affected. And though it’s possible some people will sell and cash out, others can’t afford to, Keehfuss said.
The pandemic has largely contributed to the spike in home prices and the severe drop in new listings. Those interested in selling have decided to lift their listing and shy away from selling.
“It’s down 20% what you look at for a healthy real estate market,” Keehfuss said.
Finding a balance for affordable housing, combined with potential building cost, has been one of the biggest challenges, Keehfuss added.
Surrounding counties seeing uptick in single-family home sales
Delta, San Miguel and Ouray counties are all enjoying fruitful years despite much higher home prices. Through August, closed sales in San Miguel County are up 86.7%, according to CREN data. Delta County is up 0.5% with Ouray County up 24.1% in closed sales. However, all three experienced similar trends with reported decreases for the month of August in inventory of homes for sale. Delta experienced the largest decrease at 42%.
The median sales price has increased in all three counties, with San Miguel reaching $626,577 for the year-to-date, an 8.2% increase from 2019. In Delta, the prices have increased by 8.7%, and 12.2% in Ouray.
Additionally, buyers are purchasing closer to asking price with a few multiple offer situations Keehfuss said.
Is a potential market nosedive on the way?
Since the effects of the COVID-19 pandemic offer more uncertainty than clarity, it’s difficult to predict what the forecast looks like for the real estate market, Keehfuss said. There will always be a brisk market, usually in the median price and under. But anything of higher price, there’s little to no certainty of which way the market will go in that range for the next several months — Keehfuss himself is surprised at how busy the market has been since the pandemic started, especially considering the effects the pandemic has had on many with unemployment, unemployment relief and PPP loans as central talking points the past few months.
Keehfuss is hopeful that this is a situation where the market doesn’t completely stall all at once and anticipates that “something has to give here pretty soon.”
Despite the industry’s steady rise since 2012 and the busy market, for Keehfuss, there’s concern that the recent trend and the industry could be headed in a different direction.
“Like anything, what comes up must go down,” Keehfuss said.