Where is this Market Headed? Up for Now.
There are a number of things happening in the real estate business right now that I’d like to bring up here. I’m not positive how they will all come together to makes things better, worse or more of the same. I’m fairly good a reading the proverbial tea leaves, but I think these things will have to marinate a bit before we know their real impact.
First, a quote. This is from Steve Murray, Publisher of Real Trends, a local, industry-leading publication and a 40-year industry veteran. This is from the lead story in their May 2017 issue. The article is titled “Will We Run Out of Housing?” And the quote is: ”The problem is not just affordable housing; it’s that unless home building of all kinds increases back to near its historical norm of above 1.4 million homes a year, we may simply run out of places to live and homes to sell.” He gives several great numbers to back up this claim and it is very compelling.
The biggest recent news item is the passing of a reformed construction defects law here in Colorado. It was a solution liked by both builders and the attorney’s for HOA’s, so it surely can’t be perfect. It would have been nice to see our governor and others who were voted into office to take the lead on this, but nonetheless, we have something that may spur condo construction. It’ll take at least two years (and probably longer) before any of these condos are completed and ready for sale, so don’t look for any immediate relief. Just know it’s on the way to hopefully coincide with the increased housing needs of a growing population.
Between now and when those condos get built, there will be a lot more of the same: low inventory and increasing prices. This month’s chart was trying to depict the current inventory situation versus the past. Everyone knows inventory is low and the chart shows it’s nearly the same as the past 3 years, as evidenced by those four lines being almost on top of each other. Well folks, that’s why we go through this every month. There are 263 unsold listings in the MLS, but 57 of them are under construction. They are new construction homes and there is no way there were that many in there last year. I don’t have that number because we can’t go back in time to see the actives at that time, but I’d bet there were only a handful. If we eliminated all the new construction, we’d be at an all-time low for April.
April 2017 Longmont Area Stats
Click here for .pdf file
New construction is happening in the attached home inventory as well. Of the 90 unsold listings of attached homes in Longmont, one-third or 37 of them are under construction. We need this new construction in both single family and attached to serve both people moving into the area and for people looking to move across town. There are 1,800 apartments being built in Longmont right now. How these new rentals will affect the prices in its closest cousin – the attached home – isn’t certain, but my guess is that for the time being, attached homes will stay in high demand because they represent the most affordable housing segment in Boulder County.
Now, check out the average sales price of $956,088 for the Boulder County Plains area. I remember back when the City of Boulder averaged just under a million dollars. Nobody thought it would keep going up…little did we know. This one’s different. Last month there were 11 homes that sold in this area for over $1M and one sold for over $5M. That isn’t a typical month for this area. And, I’m starting to hear that the $1M+ price range is starting to slow down a bit. Let me know if I’m wrong on this.
The numbers for the Carbon Valley are the ones most affected by our recent loss of data share. Interesting tidbit, this area has 38%, or 63 of its 169 actives, under construction and those are just the ones listed in the MLS. These builders are pretty smart and they all learned a serious lesson back in ‘08/’09 when they got caught holding a lot of land and inventory homes that they couldn’t sell. Things aren’t slowing any time soon. Another example are the 1,800 homes platted in Berthoud (particularly around the new golf course) with about 2,300 more in the works. Activity will continue out there and now you are going to see a lot more construction along I-25 between here and Denver…
Last thing to mention: Longmont set another all-time high average sales price in April at $422,475. As far as streaks go, this one is pretty solid because it’s our fourth straight month with a higher high and a new record.
Hit ’em straight