Local Real Estate Inventory Rising…Slightly
The number in the monthly chart of biggest concern in recent months has been that of inventory. The total active single family listings in Longmont is starting to climb, as it is in the BoCo Plains and the Carbon Valley. Attached dwellings in Longmont dropped a bit, but this is common when prices begin to creep up because these properties, and their associated price point, now represent the affordable sector of the market. Average days on market has remained consistently low in the region over the past four months. I think we will remain on a precarious ledge if sales volume continues to climb through the summer and listing volume doesn’t continue to crawl upward.
This month’s chart was a lot of fun to put together. Yes, I’m a bit geeky that way, but what it shows is even more interesting. Take a close look at it before delving into the information below, it will surely help you follow my ramblings.
July of 2007 is the baseline for the chart since that’s as far back as I have complete data for all three trend lines. The trends here are obvious and the relationships are interesting. For instance, the yearly peak in monthly sales (blue line) is about every July and the trough, or low point, is every winter (Nov-Feb). The trend line for inventory was a chart I presented here a few months ago and it raised a lot of eyebrows around town. It’s amazing that today’s sales volume is nearly the same as it was in 2007 and we are doing it with just 40% the level of inventory.
We can continue to talk about inventory and sales volume until I’m blue in the face, but buyers and sellers seem to focus on average price. As a former appraiser and stat geek, I think this is a misguided focus, but here it is…represented by the red line in the chart, so let’s talk about it.
- Monthly Sales Volume UP 14.7%
- Tied record LOW Days on Market – 52!
- Average Sale Price OVER $300k for 4 straight months!
- Longmont Attached Average Sales Price $214,337.
- Carbon Valley Median Sales Price UP 20.9%
This chart is a comparison of monthly results against that which existed in July of 2007, so that date becomes our baseline. This approach works well to show trends. But, was July of ’07 high, low or special for any particular reason? No. It’s just a starting point that happens to be when business was still pretty good and the trend lines are relative to that point in history. If you understand this you will get the fact that there are some inherent limitations to this, but the data is valid and so are the trends.
An interesting trend line validation is the fact that November of 2008 shows the lowest point on the graph for average price (red line), which happens to coincide with the lowest monthly sales total (blue line), which also coincides with the mortgage meltdown that occurred the month before in October of 2008. So, relatively speaking, it doesn’t matter where the trend lines start, they are still representative and valid.
Since this chart takes monthly data and plots it against one particular month in the past, single month spikes and dips don’t matter too much. However, if we can see consistent movement in a general direction we have a trend. Here, I’d like you to refer to the chart and the general upward trend of the red line from about February 2011 until now. This tells us that we have had advances in sales price over the past two years. I would also like to point out the recent level of the red line above the our horizontal baseline since March 2013. I’m thinking that price increases are a good thing for most people. Possibly not the best for buyers, but it is obvious by the action of today’s market that buyers would rather be buying into an up market than a down one as evidenced by the general downward slope of the graph between 11/08 and 2/11.
Last thing here. Please refer back to the predictive dips in the blue line (monthly sales) as you do your business planning and budgeting each year. Just as the high volume of today is predictable, so is the shortage of business in the winter months.
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