Lack of Inventory Continues to Fuel Price Increases
Another month and another record setting average sales price. I’m guessing that at least once this year we’ll see the average Longmont single family home break the $450k price mark. It has to happen if we can post an average of nearly $448k in January. Additionally, I predict we’ll see the average attached home exceed $350k. While I’m on a roll, I’ll go ahead and throw this one out there too: the Carbon Valley will see its first $400k monthly average. I’d like to say these are bold predictions, but they aren’t. The two I made for Longmont are only a smidge away in the slowest month of the year and the median price in the Carbon Valley is at exactly $400k this month, so they will all come true, it’s just a matter of time. What would be very surprising is if none of them come true.
Speaking of predictions… I still keep up with my custom built sales predictor. For years, this marvel of mathematical engineering has been called The Predictor. Recently we named it Henrietta. And Henrietta was off by 5 sales for the entire year of 2017. One day someone will figure out how to make money with such accurate information. Let me know if you have an idea and you’ll be able to rename it.
One thing we don’t need Henrietta to predict is the lack of inventory at this time of year. If you look at the chart in the middle of the stats page, it clearly shows a dip in inventory at this time of year… every single year. We understand this is a result of the weather and holidays. If we take a peek into the current inventory numbers we’ll see there are only 60 active listings that aren’t under contract and 23 are still under construction. It’s pretty tough to find a home for a buyer to move into immediately with only 37 active listings on the market. Spring is coming and this situation will improve, but to what extent?
There are two things that give me a bit of hope when it comes to inventory this upcoming year. The first is depicted in the graph. The surge in inventory last year was higher than the previous year. This was despite higher prices, so it screams excess demand. Our current inventory situation is simply a winter thing that needn’t be over-explained. Let’s get a show of hands of who wants to move during the winter. Seeing none, we can agree that it’s simply more convenient and comfortable to move in the summer.
The other thing that gives me hope is the continued new construction of single family homes and apartment complexes. My research show there were about 250 new homes added to town last year. And of the 1,800 apartments on the books to be built, about half of them have been completed with many of the rest to be completed this year. The capacity and opportunity for turnover new construction brings to the market will result in a year similar to the past three. That’s if interest rates don’t run away from us. Fingers crossed.
Rant of the Month
When Realtors talk about their employment status they usually say they are an Independent Contractor. Technically this is true, but really, that job status is an IRS definition of how they are not an employee of their brokerage. This status gives them freedom from “reporting to work” and defines how they are taxed, but I’d argue that it’s time for a change in this thinking.
You won’t get the IRS to change your classification, but a change in mindset might be beneficial to your business and income. Try on this hat and see if it fits: Solo-prenuer. Yes, it’s a real word used to describe people who run their business single handedly and take full responsibility for the outcomes. Sound familiar? A Realtor isn’t an entrepreneur because they don’t have a marketing team and accounting team and a distribution or manufacturing system… you typically work alone. In the case of a team, it’s still typically being directed by a single person.
Solo-prenuer embodies the lone-wolf nature of a Realtor, the creative brilliance of your research, the personalized marketing and the individuality of your brand are the trademarks of your business. You put on your “me against the world” clothes every day, personalizing everything from head shots to listing presentations. You’ve already accepted the fact that nobody’s going to do it for you, your income is uneven, and both good and bad decisions rest squarely on your shoulders. So, own it! Be your own boss, reprimand yourself when you need it, reward yourself excessively if you deserve it. Your schedule is flexible and you don’t have to worry about HR reprimanding you for wearing tattered jeans. You can hire and fire clients at will and your decision-making doesn’t include several levels of management. You can pivot on a dime and you have a higher earning potential than an hourly worker. Embrace the insanity of your “job” and BE the boss you always wanted to work for.