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May 30, 2023

GROWING PAINS: Price Reductions on Unsold Homes

I keep receiving emails from Realtors in Pagosa Springs, advertising significant price reductions for unsold existing homes. One example is an Archuleta home originally listed in May 2022 for

I keep receiving emails from Realtors in Pagosa Springs, advertising significant price reductions for unsold existing homes.

One example is an Archuleta home originally listed in May 2022 for $695,000. After six price reductions, the home was taken off market in August 2022 at $550,000. In July 2023, the existing home was listed again for sale for $450,000, and price reductions continue. The current list price is now $440,000… which is more than a 36% reduction off the original May 2022 listing price.

Price History

04/14/2015 Listed for Sale $289,90006/25/2015 Sold $288,90005/17/2022 Listed for Sale $695,00006/02/2022 Price Change $685,00006/15/2022 Price Change $675,00007/04/2022 Price Change $645,00007/21/2022 Price Change $615,00008/05/2022 Price Change $595,00008/19/2022 Price Change $550,00007/12/2023 Listed for Sale $450,00008/25/2023 Price Change $440,000

I wonder if this existing home property, located on Bob’s Place, is a forced sell investor-owned STR property? I have read many real estate articles that speculate that rental prices, including short-term rental (STR) prices, is a forward indicator of where the existing home prices might be going within a particular “hyper local” market. Given the number of STR properties available for rent within the Pagosa Lakes Property Owners Association (PLPOA), I looked on Airbnb to find some great STR deals … as possible examples of where Average Daily Rates (ADR) might be going in 2023. One example STR found is an entire home hosted by Evolve vacation rental property management. The property is description as an “Elegant Lake Pagosa Refuge with Kayaks and views”, and the ADR was $336.00 per night. Fortunately, Airbnb is now advertising a price reduction from $287.00 per night down to $191.00 per night. Better yet, Evolve is now advertising a price reduction from $336.00 per night down to $176.00 per night. According to Evolve, the listed STR rental price is down by more than a 47%, a whopping $160.00 reduction in the per night rate. I suspect a current per night lodging rate dropping by more than 47% might indicate the ADR is doing the same? (Airbnb, Evolve, and other STR websites attempt to hide the address for short-term rentals.) In the 2022 municipal budget document, the Town of Pagosa Spring (Community Development) advertised a 2021 Accomplishments (page 36 of 94):

Maintained the Town’s ARC GIS online platform and incorporated a short-term rental mapping layer and have started populating ownership and management contacts and allowable occupancy information. This STR layer will be available for public access… Unfortunately, Pagosa Springs does not provide local taxpayers with a free portal (public access) interactive STR Status Map … like the one available in, for example, Ouray, Colorado.

Click the map below to visit the City of Ouray website.

After a little research on Zillow, the “Elegant Lake Pagosa Refuge with Kayaks and views” STR was located, on Park Avenue. A private STR investor was able to take advantage of a homeowner’s forced sell (Zillow described as “due to health issues”). The single family residential (SFR) property was listed as “this house is going below market if I can sell before the new year”. The property was listed for sale on June 26, 2020 for $669,000, purchased for $665,000 on September 11, 2020, and converted into an STR to create passive income. Unfortunately, it appears that other SFR neighbors within the PLPOA “hyper local” market had Fear Of Missing Out (“FOMO”). The next door neighbor (on Park Avenue) listed their home less than a month later (on July 23, 2020) for $690,000. A few weeks after “Elegant Lake Pagosa Refuge with Kayaks and views” STR was created, the next door neighbor’s home also sold (on September 29, 2020) for full asking price of $690,000. These last few years has been like playing a game of Monopoly for local homeowners, and (out of state) investor-owned landlords. Properties located on “Bob’s Place”, and located on “Park Avenue” experienced rapid price increases as homeowners struggled to find affordable shelter, and as investors gobbled up inventory to create passive income. Everyone now paying higher property taxes (and not provided access to an STR Map to help explain why) might consider the current cause and effect to be growing pains directly caused by a lack local government oversight.

Hank Lydick took ‘early’ retirement to build a home in Austin, Texas, and a cabin in Pagosa Springs, Colorado.