If you own a home in Montrose, congratulations! While the National real estate market continues to see drops in prices in many markets, prices in Montrose remain steady. Hopefully, the last time you looked out your window or walked down your street to admire the San Juan Mountains wasn’t that long ago. Those views are one of, if not the biggest contributing factors to the reason your home continues to appreciate and hold its value even in a real estate recession. And while there certainly isn’t blood in the streets, the numbers don’t lie – we are on pace for the slowest real estate sales year in nearly 30 years.
With that in mind, why are prices still remaining strong in the midst of declining sales and a prolonged real estate slump? Additional factors beyond mountain views and quality of life contribute to this, one of the main being a lack of available inventory. A colleague in the commercial industry who owns a large-scale contracting company recently shared with me that the average age of a construction worker in our area is in their mid-50s. And there is an ever-increasing shortage of younger laborers entering the workforce. This fact combined with many developers and builders feeling cautious about the future of the housing market has caused Montrose to suffer from low inventory for most of the last 10 years. So, even though home sales have been down the last few years, you’re still seeing prices hold firm due to low inventory across nearly all price ranges.
In speaking with colleagues in the industry over the last 1-2 months and conducting our own research, it is clear that the already anemic housing market in 2024 only got worse as the election came and went. Again, if you’re alarmed – remember we are talking about unit sales, not prices. Many buyers and sellers have put off real estate plans due to ‘being unsure about the results of the election.’
In a rosy forecast, the National Association of Realtors President seems to remain optimistic about the real estate market, predicting that home sales and prices will increase as we get further into 2025. However, he also forecasts interest rates to remain in the 6%-6.5% range for most of next year. If both of those scenarios are true, then wages are going to have to shoot through the roof for many buyers to even have a prayer of purchasing a home.
While all of this may be true and we certainly hope for the deep winter to recede, there is no question that it is a very challenging time to purchase a home if you are a first-time home buyer or don’t have much cash to put towards a down payment on a home. Rates still hover in the high 6%, and that combined with a low down payment (3.5%) with our average sales price in Montrose of $450k is going to set you back around $3,600 a month. An average buyer with no debt would need to be reporting north of $120k/year to qualify for this loan. And remember, this is for a starter home. You can see how many young people are discouraged when they think homeownership is a pipe dream currently, and I don’t need to tell you that the vast majority of jobs in the valley are not paying anywhere near this.
In conclusion, if you own a home, be thankful for it! So many people in our country and our valley do not and many don’t have hope that they ever will. However, real estate moves in cycles and this is a season that we’re in. As my mentor once said to me, “don’t jump to major conclusions or make generalized, sweeping assumptions about the world when you’re in ‘the wilderness’. It won’t last forever.” The industry is certainly in a ‘wilderness’ of sorts right now. Possibly my favorite aspect of what I do is to see a first-time home buyer cross the line into home ownership. To that end, we pursue excellence in all seasons, helping people jump through hoops and achieve what is for most Americans the main way to build wealth for their future – home ownership!
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