It almost goes without saying that the real estate market since 2020 has been crazy. Real estate values soared across the nation, and interest rates correspondingly matched the rise in real estate values. Almost counterintuitively, the rapid rise in real estate values was not always seen as a good thing by sellers of homes. âWell, when we sell, the prices where we wanted to buy have also risen,â this is what many sellers fretted over during the past five years. True, this was more of a problem for those living in their home locally as their primary resiÂdence. Those with secondary homes who decided to sell often saw handsome profits that could be stashed away, earning meaningful interest for the first time since the Great Financial Crisis of 2008.
Buyers, by comparison, had even more issues and concerns during the chaotic real estate years. Bidding wars for the dwindling supply of homes were omnipresent, and interest rates went from the best rates in history at 2.5% or below to 7% in less than 12 months. Building a home on vacant property was often pursued, but the waitlist of local custom home builders started to reach years into the future. The desire to move to the Wet Mountain Valley remains high, but the ability to do so was often limited to the realities of what the small local market could tolerate.
It is interesting that the feared real estate crash, which occurred when interest rates were raised at the fastest rate in modern history, never appeared locally. Generally, when long-term interest rates rise, the prices of homes tend to fall. But this did not happen locally or nationally. The sudden rise in interest rates did have the intended effect of hindering the value of homes from rising at the rates they had before, but the prices of real estate did not drop as was feared by many locals. Instead, the local real estate market has now entered an equilibrium that is beneficial for both buyers and sellers.
With the election cycle over and the fears of an economic recession due to the possibility of crippling tariffs now receding into memory, sales have become brisk for many of the real estate agents listed in this guide. In addition, the selecÂtion of real estate has also become very attracÂtive, with options for every age, budget, and goal. From cute tiny homes located within the town to the premier pinnacle of luxury custom mountain chalets, the options have never been better in the Wet Mountain Valley.
One unique aspect of the local housing econÂomy is that almost 60% of the homes built here are not the primary residence of the owners. This is a fact that has existed since the 1960s when the first vacation cabins were constructed in pockets of the Wet Mountain Valley region. The cool mountain air, stunning scenery, and the fact that there is not a single stoplight in all of the region draw those looking to get away. These secondary homeowners are dubbed âsnowbirdsâ by the Tribune, and many stay in the area for the fine summer and autumn seasons and head to warmer locations when the snow and wind arrive. Of course, we also have reverse snowbirds, but they are a much rarer breed as the region lacks skiing but is home to some of the best winter hiking in the state.
This article is part of the FREE 2025 Real Estate & Builder’s Guide. Click the image below to read the complete guide.
These secondary homeowners have often seen the value of their property rise over time, and the summer vacations here are usually great investment opportunities that build wealth year after year.
This brings us to a key point about buying real estate in the Wet Mountain Valley region, parÂticularly within Custer County: there is a limited supply of lots available. This limited supply means that real estate prices tend to rise over time due to the lack of significant housing developments appearing in the region.
Custer County agriculture leaders in the 1970s saw what was happening along the Front Range of Colorado, where large blocks of suburban âcookie-cutterâ housing developments sprouted from the prairie like weeds. While this was often beneficial for the ranchers and wheat farmÂers who chose to sell their land to developers, it was difficult for the agricultural communities. After several such projects were proposed in the Wet Mountain Valley but failed due to the weak 1970s economy, local ranchers worked together to pass some of the most unique and restrictive zoning laws in the United States.
By the early 1980s, these zoning rules were well established. They were strengthened even more when the proposal to build a giant airport, shopping mall, and suburban develÂopment on the pristine hayfields of the Valley Floor was defeated by locals angry at the sheer scope of the disruption being proposed. The rules stripped most of the properties in the parts of the county that sit outÂside the city limits of their developÂment rights, leaving only agriculture and single-family homes as acceptÂable uses of the land.
In addition, and more critical to the discussion of real estate value, are the rules that impose a minimum lot size on each property, dependÂing on its location within Custer County. Any lots that are in the prime agricultural zones on the Valley Floor are required to be a minimum of 80 acres. Most of the remaining mounÂtainous areas of Custer County have a minimum of 35 acres.
Of course, some places were grandfathered into the new rules, allowing 5- to 10-acre size lots, but the main point is that land in the county is limited in how much it can be subdivided in the future.
There are around 9,000 parcels in Custer County and just under 4,500 homes. While this still leaves plenty of room for growth in the future, which will keep the regionâs great custom home builders busy, it does prevent a sharp rise in the number of homes that can be built within any given timeframe. The most significant driver of declining real estate values is the rapid influx of supply onto the market through the process of subdividing property and building tract homes that are nearly idenÂtical to each other. Outside of the limits of the towns of Silver Cliff and Westcliffe, such significant developÂments are no longer possible.
This does mean that homeownÂership for those starting out is often out of reach in the rural parts of the Valley. It also means that any investment in real estate will experiÂence constant upward pressure on value due to the scarcity of other available lots that could be develÂoped. For buyers who can afford a second home or are in the process of retiring to their dream mountain abode, this stickiness of value has long been an attractive feature of the local real estate market.
In addition to the unique county rules, there are now many state restrictions on water wells. Often, land that is five acres or less cannot accommodate new wells, and existing well rights are limited to indoor use only.
This means that water from those small acre lots cannot be used for outdoor irrigation, such as for lawns or agricultural use. While there are options available through organiÂzations such as the Upper Arkansas Water Conservation District, state rules on wells also limit how many new lots can be subdivided out of existing land.
Lastly, around 50,000 acres of land in the region is now under what is known as conservation easeÂments. The topic of conservation easements far outstrips the scope of this article. Still, in short, landowners give up the development rights to their large tracts of land forever to a conservation group. In return, the state of Colorado provides substanÂtial one-time tax credits to offset the value difference. This means that of the 9,000 parcels in Custer County, many cannot be subdivided into 80-acre or 35-acre lots, further limitÂing the supply.
Wrapping up this brief introducÂtion to the unique dynamics of the local real estate market, it is worth noting that sellers have the option to sell at good prices, with prospects of being able to predict where they want to buy next. Buyers have one of the best selections of properties seen since at least 2018, with the comforting knowledge that real estate values here are historically stable due to the rules that prevent mass development in the region.
â Jordan Hedberg
