River-water demands can affect Grand County property values, study says
July 26, 2013
With growing population and short water supply, sections of the Colorado River could dry up by 20 percent in the decades to come, which doesn't bode well for riverfront real estate.
A recent property survey has found that Grand County is poised to be hit particularly hard.
The survey, sponsored by Protect the Flows, investigated four geographical areas along the Colorado River and its tributaries. The communities included Grand County, Aspen, Sedona, Ariz. and Farmington, N.M. Real estate professionals from each area responded to a survey about projected property value gains and losses for homes as the river recedes. Grand County had the largest projected losses. Sales prices for river frontage homes in the county are predicted to decrease by 16 percent in the county by 2060, compared to a 9.5 percent decrease overall in the areas studied.
"Across the board, no matter where you're at in Grand County, water is by far the biggest value driver," said Dennis Saffell, a local realtor who participated in the survey. "If you take a 200-foot river and reduce it to a 100-foot river, there's no doubt it will cause a big loss in value."
“Across the board, no matter where you’re at in Grand County, water is by far the biggest value driver.”
— Dennis Saffell
broker who participated in Protect the Flows real estate survey
The study based its water loss model on the U.S. Bureau of Reclamation's Colorado River Basin Water Supply and Demand Study, completed in December 2012. The study found that in the next 50 years, flows in portions of the Colorado River system could decrease by an average of 20 percent.
Riverfront and river view properties in Grand County carry higher price premiums than the other three study areas. Homes along a river sell at 134 percent higher than homes without a river view in the same general location. Homes with river views sell 24 percent higher than homes without views. As a comparison, price premiums in Aspen are 52 percent for river frontage and 25 percent for river views.
If the Colorado River shrinks, home values throughout the county are expected to take a hit, river view or not. A loss of revenue in the form of property taxes could bring tough economic consequences.
"Our studies show that without water in the Colorado River and its tributaries, our communities stand to lose major economic resources that impact everything from tourism spending to real estate markets," Protect the Flows' Molly Mugglestone said in a statement.
Beyond property value, Grand County is dependent on income generated from tourists who come to fish, raft and kayak in the Colorado River and its tributaries, like the Fraser River and St. Louis Creek. Tourism has grown to become the county's primary economic driver, according to a 2007 Economy and Water Resource Study prepared for the county.
In May 2013, Colorado Gov. John Hickenlooper signed an executive order directing state water agencies to work on a "Colorado Water Plan" addressing gaps between water supply and demand. Protect the Flows, a network of over 800 businesses in seven states dependent on the Colorado River, also called for Congressional oversight to produce water efficiency goals and maintain healthy flows.
"Real action on this front is needed for the sake of the economy in the West," Mugglestone said.
But real estate broker Dennis Saffell isn't so optimistic. Having specialized in riverfront properties in the county for 31 years, describing himself as an avid fly fisherman, Saffel said he has watched the county's rivers and creeks being "sucked dry." Water demands in urban areas continue to grow, and the Colorado River might not have the capacity to keep up.
Discussing Front Range water firming projects involving Denver Water and Northern Water Conservancy District, poised to continue diverting flows from the area's rivers, Saffell said, "We've kind of lost hope, what's happening is going to happen…They're just too big to beat."
Reporter Leia Larsen can be reached at 970-887-3334 ext. 19603