A recent decline in real estate transactions has some La Plata County brokers questioning whether the residential sales slump in October has anything to do with the mine spill that occurred north of the city this past summer, polluting multiple regional watersheds.
“I guarantee there is something to be said for that,” said Jerome Bleger, board president of the Durango Area Association of Realtors.
On Aug. 5, a breach at the portal of the abandoned, Silverton-based mine sent about 3 million gallons of heavy metal-laden sludge into the Animas River. The vibrant orange coloring didn’t last, but the implications did, which spelled disaster mainly for farmers afraid to irrigate with the water and those in the rafting and water sports industry. However, local real estate agents weren’t worried when contacted by The Durango Herald in the weeks after the spill. Few expected any long-term effects from the incident and reported buyer interest was as strong as ever.
But last week, the Herald published a column by The Wells Group broker Don Ricedorff, who speculated about connections between the spill and comparatively low residential sales in October.
The month of October took La Plata County’s residential sales off its nine-month track for best year since 2006. The month’s transactions lag behind those reported in October 2014 and declined by 42.7 percent for homes less than $500,000. Due to the 45-60 day duration of contracts, October was the indicative month in relation to spill impacts, Ricedorff argued.
In October 2015 compared to October 2014, sales in Denver were down three percent and 11.5 percent in Grand Junction.
“That’s a significant mark, but when we look at the Durango area, I think it still makes the case that it was beyond what was happening in other markets,” Ricedorff said.
If, in fact, there is some correlation, it’s too early to tell, but the anecdotal evidence suggests the blowout is a potential and at least partial explanation. A broker employed with Coldwell Banker reportedly encountered some interested buyers this past summer, agent Gina Piccoli said. After the spill, they said “no thanks” to Durango.
But the waters become muddled when factoring in the stock market plunge, paired with the natural gas industry’s decline and other components. Fort Lewis College Professor of Economics Tino Sonora believes the macroeconomic elements are far more significant than the Gold King incident alone.
“(The spill) got some bad press, and the people on the ground have a better sense, but I don’t know,” Sonora said. “The spill itself might not be a big factor, but what might play into the market more is the potential for other spills. There are many more mines around (Silverton) that are so much more questionable. I think this particular episode has zero impact.”
A downturn in transactions as the year ends is typical for the area, and the Durango Area Association of Realtors actually reports sales trending upward for the year to date.
“I suspect part of it is the seasonal fluctuation,” Sonora said. “But until we have more data, I don’t think you can make an inference.”
Heather Erb, who heads the sales team at Durango Mountain Realty, said most of the company’s business is with second-home buyers from out-of-state, many from Arizona and Texas.
“I thought that might be the case, but we’re not hearing about it up in the resort area,” Erb said. Durango Mountain Realty is down only five sales in October compared to last year, she said.
“In the whole office with all our business, we had a couple people call and ask questions. They were more curious than anything. The stock market probably has more to do with it.”
Still, transaction numbers cannot account for all the potential buyers who might have crossed Durango off their list after the river temporarily flowed orange. And if past environmental mishaps are any indication, the spill, or at least the stigma attached to it, could certainly have impacted sales. The catastrophic Missionary Ridge fire of 2002, for example, shook the market that summer.
The chances of long-term market impacts are very slim, industry officials agreed, but questions linger around Gold King nevertheless. “Once the spring runoff happens and (the sediment) gets stirred up again ... this topic is not going away,” Bleger said. “We haven’t heard the last of it.”
