Market Theories and the Color Wheel
The more things change, the more they stay the same. I’m not sure if that is a famous quote or just an old wives’ tale. Nonetheless, it seems to be true in a lot of things. I created a new visual aide in this month’s graph, which represents total monthly sales from January of 2016 until now. In the graph, the purple bars show just how consistent the month of January is in being the slowest sales month of the year. The yellow bars show June and August of each year. Those months are consistently the two highest months of the year. Red bars represent September and are only highlighted because that’s the month we are reporting. And, if you look closely, the pattern of the blue bars is fairly consistent.
I didn’t intend for this graph or article to be a lesson on consistency or a review of the color wheel. The point of this month’s graph was to show the nature of todays business. I hear a lot of commentary on how things are changing and slowing. The graph doesn’t show a change. The monthly sales results don’t point to any dramatic changes in Longmont single family or attached sales. So, what’s so different out there? The yearly business cycle is moving into fall mode, which generally sees fewer sales, fewer listings, softening of prices, more days on market and all those customary changes that come with the leaves turning in Colorado.
I get it. I feel it too. I can’t put my finger on it, but the frenzy seems to have left the market. Is this a softening of demand? I think that is a possibility. A new listing can’t set the new, high price in the neighborhood anymore, it can’t be any higher than the price of the last, highest sale. Days on market went from 46 to 52 and while that is only an increase of 6 days, it’s a 13% increase
and agents can feel it in the cool, fall air.
I’ve tossed a lot of theories out over the years. For the most part these theories are my own, come from my observations of the data and generally hold true. One of these theories is that our real estate market is a reaction to that of Boulder’s. The market to the east of us in the Carbon Valley is then a reaction to ours. This is only when the market is on the way up. When it’s on the way down, we see it in the east first, then us, then Boulder. It progresses in the opposite direction. My friend Glenn Fleckenstein of Hammond Appraisals and I discussed this very theory, at length, back in 2002. It is as true now as it was back then. So, let’s take a look to the east.
If we look closely at all the red colored, negative percentages in the Firestone, Frederick and Dacono area, you will see some significantly large drops. We haven’t seen anything like this in quite a while. Is this the start of reversal of some sort? Maybe, but I doubt it. Sales were down an alarming 51.8%, but if you look closely, there were only half the listings. Days on market dropped significantly, but with fewer homes for sale, one would expect this and, technically, it’s an indicator of strong demand. Lastly, the 11% decline in year-to-date sales is in line with the BoCo Plains and the rest of the Denver Metro area, which has largely been attributed to low inventory.
I guess that takes us full circle. We are back to where we started where the more things change, the more they stay the same. As many agents that tell me that they have slowed down, I have an equal number who tell me just how busy they are. It’s the start of the 4th quarter folks. Ask yourselves if you are happy with your results for the year. If not, come see me and we can talk about it, so we aren’t in the same spot next year. If you like your results, come see me and we will see how we can keep it going, or increase your success for next year. Think of me as your own, personal, small business consultant who likes to tell fun and exciting title stories.