Pagosa real estate capitalizes on savvy marketing strategy
PAGOSA SPRINGS – Real Estate prices in Pagosa are leaving long-time residents and a few newcomers reeling. The stories seem incredible. Five lots in Twin Creek Village that sold a year ago for $75,000 are now $75,000 each. A house in Lakewood Village that two years ago was $150,000 is now on the market for more than $250,000.
The simple cause? Supply is down, demand is up and prices are on the rise. According to local real estate agent Lee Riley, comparing sales figures for the first six months of 2004 to the first six months of 2005, there is a 32 percent increase in the number of single family homes sold and a 31 percent decrease in available inventory. More dramatic are the numbers for vacant lots (a quarter acre to 35 acres): an 89 percent increase in lots sold and 41 percent decrease in the number of lots available.
Buyers seem frantic to purchase something in Pagosa Springs while they still can. Some feel that it might be too late. The great deals are gone. Yet many are just discovering Pagosa Springs as a relative bargain compared to other Colorado resort areas.
The average sale price for a three-bedroom, two-bath, two-car- garage home in Pagosa Springs in September 2005 was $270,652. Compare that to the average sale price for the same size home in September 2004, which was $230,441. A year ago, a home was on the market for an average of 142 days. Today, a home is on the market for an average of 68 days and the average list price for all residential properties is $454,248.
The question is, why the sudden increase in demand and decrease in supply?
A recent study by Economic & Planning Systems seems to have stated the obvious. “Housing prices are expected to undergo rapid price increases due in part to recent land speculation activities and greater marketing of local real estate, particularly on the West Coast.”
According to the EPS Economic Development Plan for Pagosa Springs, between 1999 and 2004, residential lot prices in the Pagosa Springs area increased by an annual average of 22.6 percent, far in advance of home prices which increased at an annual rate of 4.0 percent. However, EPS expects that these land price increases will translate into housing value increases in the near future.
The future is here. In the past year, home prices have increased 17.45 percent.
It’s a Pagosa land rush.
A rush propelled by the nationwide coverage of the proposed Village at Wolf Creek and the extensive marketing local real estate offices are doing to capitalize on the trend.
“Pagosa is showing up on radar screens,” Mike Heraty, broker at The Source said. “Relative to some of the more well-known Rocky Mountain getaway destinations, Pagosa Springs is an outstanding value, has beautiful scenery, available land, rivers, the hot springs, and we are a small and safe community.”
Heraty’s downtown real estate office is leading the trend by advertising properties in major magazines like Cowboys and Indians and Robb Report directly comparing Pagosa property to Aspen, Telluride and Vail. The savvy buyer can choose from a two-bedroom starter home in Aspen for $1 million or a hilltop home on 5 acres in Pagosa Spring for $625,000.
“We just happen to be one of the last towns to have this type of growth happen,” Jim Smith of Jim Smith Realty said.
“What is interesting to me,” Lee Riley said, “is that a lot of people are looking at the larger tracts of land. That’s been a softer market the last couple of years.”
Softer because a few years ago the Pagosa Area MLS had more than 1,000 lots for sale, mostly in the Pagosa Lakes area. Then, in the fall of 2004, National Recreational Properties, Inc., came in and bought 250 improved lots in Pagosa Lakes and 83 unimproved lots in Chris Mountain II.
“NRPI is a late arrival here, but took what was left,” Smith added.
NRPI is a real estate acquisition company founded eight years ago by Robert Friedman and Jeffrey Frieden. Based in Irvine, Calif., NRPI has various operations in California, Washington, Florida, Arkansas, Arizona and now Pagosa Springs. Friedman and Friedan are also the co-founders of LandAuction.com, Land Disposition Co. and Real Estate Disposition Corp.
From slick websites to television infomercials featuring Erik Estrada, NRPI typically has potential buyers pay a $295 travel deposit, which is put into a real estate trust account. The deposit is then applied to a purchase or refunded after a fly-before-you-buy trip to the property, paid for by NRPI. A buyer selects their lot from a licensed real estate agent. After signing a contract, the buyer has 72 hours to back out of the deal. NRPI provides the financing. In many cases, NRPI sells the lots, flipping them to new buyers if an owner defaults, usually at a higher price.
“People around here have been spoiled by the supply and demand; an over supply means that value stays down. Now that those property values have gone up, those who purchased lots in Pagosa Lakes 10 or 20 years ago, might break even,” Jim Smith said.
“The purchase prices for lots in Fairfield were higher between 1979 and 1983,” JoAnn Laird with Galles Properties concurred. “The prices are just now catching up to where they should be. Raising the pre-owned home prices is good for sellers.”
Not everyone agrees. “The average price for a lot that NRPI purchased was $15,000. Jim Smith put all of the lots back on the market and the average price was $40,000.” Lee Riley said. When NRPI opened their office, the average price of those lots increased to $60,000. “I think they are overpriced.”
A few months ago, real estate agents didn’t know what these prices would mean. Would buyers still buy lots for $60,000 that were priced at $15,000 a year before? The answer is yes. There has been no slowdown for local real estate agents.
“The days of millions of transactions are gone. The $4,000 lots are gone. In the future there will be fewer transactions, but the dollar volume will be higher,” JoAnn Laird said. “If you are going to buy, buy now; it’s not going to get any cheaper. Right now the prices are fair and equal for both the buyer and the seller, but I don’t know how long that will last.”