Dan Korman of Alpenglow Properties, LLC discusses commercial and residential real estate in this installment of The Durango Real Estate Update.
Hey, Southwest Colorado. This is Dan Korman here, owner Broker of Alpenglow Properties, a full service real estate firm right in downtown Durango, Colorado. This is The Real Estate Update. Without going into too much detail and I don't want to bore you, it is important to point out that the consumer price index only rose 0.1% in May according to the data release yesterday by the Bureau of Labor Statistics. At 4%, the annual increase in CPI for May was less than half of the 8.6% annual increase seen during the same month a year ago. This is the lowest annual rate and increase in over two years. This is good news as the CPI hit a peak for this century at 9.1% annual increases in June of 22 and has fallen gradually since then. So, that could mean a softening of prices with evidence right here in our local real estate market. May's statistics with an average sold price of a single family home in Durango City limits dropped almost 12% for the month of May year over year, putting the average home price at just under $867,000. That average was calculated using 12 home sales in May which was four less than how many sold in May of 22, or a decrease of 25%. As you can see here, the pricing trend line negatively correlates with the supply trend line. Supply still constrained and it's been difficult for sellers that may have otherwise sold to relinquish their three to 4% interest rates for a larger price tag at an interest rate that's almost double what they currently have. There are many buyers waiting in the wings and with inflation continuing its march downward, the market is likely going to see an increase in mortgage applications over the next six months. Let us hope. As many of our clients know, we specialize in both residential and commercial real estate right here in Durango and I'm often asked if commercial real estate is softening. While that's kind of a loaded question, given all of the national headlines, the answer is quite nuanced given Durango's location, demographics, and population size. The short answer is that commercial real estate continues to be robust and it really comes down to product, location, and price. We recently had the opportunity to list a 12,000 square foot industrial property for lease in Bodo Park and it leased up at list price with multiple letters of intent on the table in less than a month. This is due to our serious lack of supply in the industrial market. But it was also slightly below market from a price per square foot perspective, making it very attractive to anyone looking for space in our region. Juxtaposed to industrial, larger office spaces at high prices per square foot and properties with difficult zoning overlays tend to sit on the market much longer. So, the number of commercial properties that sold in Durango City Limits year to date as of June 14th, is down 29% from the same period last year, mostly due to inventory. A similar dip was seen in the number of properties leased with 20 commercial properties leased year to to date down from 24 leases signed last year, a differential of 16%. As with all the Durango stats, percentage numbers are big and sample numbers are small. So, overall, we remain in a seller's market with a continued hope of an increase in supply throughout the summer, and we're hoping that there is a reduction in interest rates on the horizon. We'll do a full second quarter recap next month so be on the lookout for that video in July. Be sure to say hi to your mailman this week and have a wonderful summer. Thanks for watching.