2022 a complicated year for Western Slope real estate | Business

Ron Sechrist, a broker associate with Bray Real Estate, sat down with The Daily Sentinel to discuss some of the data from the report, including the decline in overall sales.

“I think people went into shock,” Sechrist said. “In my history, I’ve never seen interest rates go from like a 3, 3.5 to 6.5 overnight. We warned people about this, those of us who have been in the industry and have been through three or four of these downturns in our career. We told people, ‘Look, these interest rates aren’t going to last,’ but they lasted because they’re manipulated.

“They’re not a market rate; they’re manipulated by the Fed. They kept interest rates artificially low and then, all of a sudden, you had inflation hit, the downturn of the economy, so we’re going to try to correct the inflation by jacking interest rates from 3.5 to 6.5 overnight. … If you’re only looking at interest rates, people are going to pull back because they’re in shock.”

The median home price in Mesa County peaked at $416,000 in 2022, but the final median home price was $370,000, up 6% from the end of 2021 ($350,250).

Last year saw a bounce-back for inventory from a pandemic-induced slump. In July, Mesa County inventory surpassed 500 properties for the first time since May 2020. As of the end of December, there were 523 residential properties on the market.

However, building permits fell from 911 in 2021 to 720 in 2022, the fewest since 2017. Sechrist offered a few factors into why he believes that happened.

“The last two or three years, builders and contractors have just been going crazy; no days off, seven days a week, their subcontractors, their plumbers, their roofers are working Saturdays and Sundays,” Sechrist said. “You can drive through these subdivisions and see guys putting on roofs on Sunday afternoons. I think what’s happened is prices got up and the market shrunk, so some builders pulled back. One of the reasons they pulled back is they were unsure about the market. I think there’s still that unsurety.”

Additionally, Sechrist said if builders don’t start building a new home by October or November, they will often wait until February to begin the project to avoid the increased costs of winter construction from using heaters, covering everything to avoid any damage from snowfall and an overall slowed construction process.

He also cited builder burnout as well as a labor shortage of framers, roofers, stucco masons, plumbers and electricians. He said he knows remodelers who are booked through June and July.

In 2022, there were 254 properties sold in Mesa County for $199,999 or cheaper and 72 sold for $1 million or more. Additionally, 182 properties sold between $750,000 and $999,999.

However, at the end of December, there were more $1 million properties on the market (37) than sub-$200,000 properties (26).

“The higher the price goes in the market, the fewer the buyers, and that’s Grand Junction,” Sechrist said. “A lot of the buyers in the upper-end — let’s call the upper-end $750,000-plus — could be custom home buyers whose house never hits the market, they’ve contracted with a builder and they build a house and close on it and move in. Same thing at a million-plus. The lower the price, you’ve got more buyers in that income range to purchase that type of house.”

December 2021 featured a more active real estate market than it historically has, with 352 properties sold. This past December featured a return to normalcy, with 173 properties sold in the month, a 51% decrease.

Sechrist said that this signifies the county’s return to its usual seasonal market — an expected dip in activity during the holiday season as well as July — instead of the “stupid market” of 2020 and 2021 that can be largely attributed to the COVID-19 pandemic.

“I think 2021 was a little high, but I think we’re a little more toward what we call a seasonal market,” he said. “A seasonal market, in the history of real estate, means that come Thanksgiving or somewhere around there, people will pull back. If they don’t have to move during the holiday season… they aren’t going to sell or they aren’t going to buy a house.”

HOW OTHER COUNTIES COMPAREIn Delta County, the overall median price of homes dipped 11% from 2021 to 2022, with a year-end median home price of $319,500. In total, 549 residential properties were sold in the county, down 22% from 2021 (705).

Montrose County also saw a decrease in its sales and median price. There were 885 residential properties sold in the county in 2022, down 15% from 2021 (1,038), and the median price at the end of the year was $354,900, down 7% from 2021 ($381,200).

Trends were far more dynamic in Garfield County, however. Sold listings decreased substantially in each of the six major markets in the county, ranging from a 15% dip in New Castle (148 properties sold) to a 53% dip in Parachute (26 properties sold). However, Parachute was the only city in which the median home price decreased in 2022 (down 3% to $243,000).

Carbondale, Glenwood Springs, New Castle, Silt and Rifle all saw their median home price increase in 2022, with Carbondale’s rising 40% to $1,175,000. New Castle’s rose 15% to $534,344 and Rifle’s rose 15% to $407,500.

Sechrist said the disparity in some trends across the Western Slope is because Montrose can be a “feeder” city for the San Juan Mountains and Glenwood Springs and other Garfield County cities can be feeder cities for Aspen while Grand Junction and Delta are “feeders for themselves.”

However, overall, he believes real estate is heading the same direction not only across the Western Slope but across Colorado and the nation.

“From the standpoint that you’ve got low inventory, every market’s got low inventory, every market’s seen their median price go up, every market’s seen the last six months of the year affect their year-end closings so that’s dropped,” Sechrist said.

“If you look around the state, the same thing has happened. I don’t know if there’s a pocket in the state that’s just skyrocketed; it’s stayed up without having some adjustment. I also think some of this adjustment in these prices that we’ve seen and are seeing is we’re taking the fluff out of the market where sellers are like, ‘Hey, my neighbor got $525,000, so I’m going to ask for $575,000 or $550,000 for mine.’ Look, your market value is $525,000, so if you price it at $550,000, you’re not going to get it. Now is the time to take the fluff out if you need to sell and sell for $525,000.”

Sechrist offered some predictions for Mesa County’s real estate market in 2023 based off what he saw and heard late in 2022 and early in the new year.

“I think we’re going to see interest rates come down slightly,” Sechrist said. “I think we’re going to see listings increase because, historically, seasonally, people put their property on the market in February, March, April. We’re going to see listings increase, and if listings increase and rates come down just a little bit, you’re going to get an increase in activity, and we’re already seeing it.

“We’re seeing activity increase right now. I’ve talked to a couple of good lenders that I work with in town and they’re saying their applications are up, their calls are up. We’re starting to get a little air breathed into the real estate market.”

Sechrist also offered a warning to buyers: if they want to buy, they shouldn’t “sit on the sidelines” and wait for particular shifts in the market.

“It sounds like a sales pitch, but don’t wait for prices to crater, don’t wait for foreclosures to increase dramatically, don’t wait for interest rates to drop from a 5.5 or a 6 or a 6.2 to a 4 because they’re probably not,” Sechrist said. “None of those things are probably going to happen in our local market.”