First of all, last month I forgot to include The Predictor’s number for November. I’d hate for anyone to think I was trying to hide anything since I have bragged so much about how accurate it has been. This is especially true since The Predictor was off a bit for November. It said we should have 63 and we had 52, so it was off a bit because the winter months can be a little more unpredictable than the summer months. But that isn’t the big story in this month’s report.
Inventory….that’s the real story. When I pull active listings for this report I don’t separate out under contract properties (A/B or Active/Backup). Several reasons for this, but basically they aren’t closed. There are so many A/B that get foreclosed or fall out of contract that it just creates a mess. The 349 Active Listings in this month’s report is the absolute lowest number that I have ever published and this report dates all they way back to January 1, 2008. That’s 47 months! And if you take out the A/B listings from the listings I have counted, there are only 269 actually active listings in Longmont.
Why does inventory matter? Well, it’s this economic theory of supply and demand where the balance between the two is affected. Higher supply typically makes for lower demand and prices tend to fall during this time. Conversely, lower supply creates higher demand and prices tend to rise. When is the last time we’ve seen lower supply and higher demand around here? We have been in a high supply, lower demand, with falling prices scenario for some time. In other words, lots of houses and few buyers…sound familiar? They, whoever “they” are, has traditionally set the equilibrium on this ratio at about 6 months of inventory. With 52 sales in November and really only 269 “active” listings, we are below the 6 months of inventory number of 312. There will be a few A/B’s that fall out of contract and not close, but we are still in the ballpark of, dare I say it, a seller’s market (gasp!).
Don’t get too excited yet, but definitely feel free to bring this bit of good news to your sellers of quality homes that they are willing to part with at a reasonable price. This is just one more indicator of a recovering market. The other three areas covered in this report have decent inventory levels, but not record lows like Longmont single family homes. We may see it progress into those markets in the coming months so keep an eye out. The additional good news on the inventory front is that the supply of available homes has fallen dramatically in the Denver Metro market with a 33% (!) decline over last year at this time. Look for that report to be posted here in a week or so.
If the trend for inventory continues, look for average and median prices to begin a slow, and I’ll repeat that, a slow climb, in an upward direction. Surely it will be a bumpy road along the way. As I’m wrapping this up I am wondering what has happened out there to bring this low inventory issue about. My guess it has several factors: 1. fewer foreclosures; 2. it isn’t really the season to be listing a house; 3. moderate economic stability where people can hold on to their house; 4. and of course, plenty of people who aren’t willing to sell in this market. What else? Tell me your thoughts on why inventory is so low. I’d love to hear from you. Click on the links below to get you copy of this months report.
.pdf version: November 2011 Longmont KS
Word .doc: November 2011 Longmont KS
.jpg Image: November 2011 November KS
BTW – Predictor says 57 for December.