2008 Durango Real Estate Sales Part 2

In Durango real estate, the number of days on the market gives us a pretty good idea of how properties are selling. In a slow market or buyers market, homes stay on the market considerably longer; while in a seller's market, properties tend to sell much more quickly. In 2008, average days on the market for all residential sales in La Plata County was 178 days. The median days on the market was 125 days. The two market brackets with the lowest
number of days, were for homes priced between $100,000-$199,000 as well as homes from $200,000-$399,000. The lower price range was 143 days, while the higher price range was 164 days. Days on market actually increased with each price bracket, so by the time we get to the $1,000,000 and over priced homes, days on market grew to 284. Please review the spreadsheet for additional information. Click Here!

Absorption rate is a function of the number of homes on the market and the number of units sold expressed in the number of months it will take to sell all of the property that is currently available. Just like average days on the market, the absorption rate increased as the prices climbed. These increases are fairly dramatic. In the $100,000-$199,000 price range, it will take 11.15 months sell all of the current inventory. Contrast that, to the $1 million dollar and up home where we currently have a 10 year 4 month supply of homes! Every price range from $400,000 and over has an absorption rate of 1.5 years or greater. That said, what a person needs to do is look at the absorption rate compared to the days on the market for each particular price bracket that they are interested in. Let's look at a $450,000 house, for instance. While the average days on market is 195 and the mean days on the market is 147, note that the absorption rate is 17.8 months. What that shows is that the houses that did sell took just over six months to sell. In order for that to have happened, the house clearly had to have been in good condition and well priced as 2/3 of the homes did not sell. A seller wanting to "test the market" only drives down prices and will only have their home remain on the market as an unsold, or market rejected property. Homes must be well priced and in good condition to get any kind of activity. There are still sellers out there that need to sell and in order for that to happen those sellers are being very competitive with their price. Similarly, there are still buyers that need to buy because they have been transferred or perhaps they're just moving to Durango to retire. Every buyer that walks through the door is always looking for a deal


Continuing in the analysis, let's discuss the number of transactions that were for all cash... that is, the buyer did not get a loan on the property being purchased. My theory is that more and more people who have been burnt by the stock market are taking their money and putting it into real estate because of the increased utility of that type of asset. As can be seen by the spreadsheet, 16.7% % of all transactions were for cash. Unlike the previous two trend lines we looked at, the percentages of cash sales by price bracket varied quite a bit. The lowest was the $400,000-$599,000 bracket where 11.5% of the sales were for cash. The highest percentages were in the $800,000 and up price brackets where we saw 31 and 40% of all sales were for cash. All of the percentages in 2008 were within 1.5% or higher than in 2007. That statistic would seem to prove my theory mentioned above.

Analyzing the Durango real estate market can't really be done in one or two sittings. This is the second of my blog posts and there'll be several more to follow. To view the full spreadsheet of my data, please visit my main website at http://www.BuyDurango.com and click on the statistics page. I collected all of our data from La Plata County only, as it is certainly the main real estate market in the Durango area. The next blog will be on Where Did the Buyers Buy? In town? Out of town? Bayfield? I will also discuss the timeshare and fractional sales in that blog. Durango real estate is certainly still a good market and I think one of the good indicators of that is the number of all cash sales.