Local Real Estate Market Prepares for Flattening of Prices
Let’s jump right in to the things I see in this months’ stats report. And to be honest, it’s nice to see things change a bit because it gives us something to talk about. This long, steady, upward march of prices and low inventory has been a little boring to write about for the past couple of years. It’s interesting to watch and participate in, but how many times can you stand hearing the same broken record? This month I may have a little different take on things.
First things first, click on one of the links to the stats report below so you can see what I’m writing about. The top one marked (.pdf) usually displays a little better. The graph in the middle has been updated from last year. It follows the monthly average sales price of single family homes in both Longmont and the Carbon Valley (Firestone, Frederick and Dacono) from January 1, 2015 until the end of October 2018. The upward arrows point to October of each of the past four years. Each October is preceded by a dip in the month or two before. That dip is the typical start of the Fall slowdown. I point this out because the current market shift, or slowdown, that many of you are feeling is normal market activity. The difference this year is that the fall dip was preceded by the highest of all-time highs, so it feels a little more severe. Additionally, this October has one of the narrowest recent year-over-year (YoY) differences in monthly average sales price (+1.1%). We aren’t used to measly 1.1% gains. Oddly enough we have become accustomed to the extraordinary. Last month our YoY monthly gain was 14.7%! So, is the market broken or is it our perception of the market?
Using this graph last year was to show the relative increases between two local markets. The gap is still widening. The trend line is a two-period logarithmic trend to flatten things out, but you can see it has kept on a steady upward pace in both Longmont and the Carbon Valley. The solid black line in the middle is simply a line connecting October 2015 with October 2018 and it’s nearly exactly parallel to the Carbon Valley average price line. I find that odd and coincidental but encouraging that it is still going in the right direction.
Look at the negative numbers that indicate a declining percentage next to each of the Average Days on Market section in all areas. Yes, it’s negative in all of them. There are very large negative numbers in three of the four areas. Total sales are way down as well in three of four areas. How are sales down AND Days on Market down at the same time? This goes a little against common sense, which would suggest that when sales drop, average days on market increases. Add to this October puzzle, the not so obvious fact that all average and median prices in the report are either slightly positive or slightly negative.
What do the three facts in the paragraph above tell us about the market? First, this information indicates that well priced properties are selling fast. Secondly, well priced homes (not low priced, well priced) make up a majority of those selling right now. In fact, a search of October sales shows two thirds of all sales last month were below the average days on market and priced from $260,000 to $977,000. In a shifting market, a listing cannot set the new high price in the neighborhood anymore. If your seller insists on playing this game, they need to realize all the buyer agents in town are reading this information too and their buyer will move on to the next available house that shows value in its pricing. The market is not rising like it was. It may again, possibly next summer, but not currently. This, my friends, is a good description of a flattening market.
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