Last month we talked about the record prices seen in Longmont this year. A quick review for those who didn’t see the report – in 2020 we’ve experienced the 5 highest ever monthly average prices (make it 6 with this month’s results) and each of them was over $500k. Price is just one component of what drives a market, so we are going to review the impact of inventory and, boy-o-boy, we have some low inventory now.
There’s been an ongoing inventory shortage that really kicked in back in 2016. Since then, throughout the entire region, it’s considered very low. Historically low has been mentioned as well. In fact, the only three times it’s been lower than it is today are: December 2016 and 2017, and January 2018. With only about 170 active and under contract single family homes in Longmont, choices are very limited.
There is much more to this story. Months of inventory is the industry standard for measuring the health of a market. Benchmark indicators have been established to determine whether we are in either a buyer’s or seller’s market. These are rules of thumb that were established a long time ago. I’ve never seen a study done on this, so shoot one over to me if you find one. Anyway, under six months of inventory is considered a seller’s market and that is based on just active listings. The 176 listings in my report contains both active and under contract listings, but contains a mere 55 homes for sale, ones which are not under contract. With 132 sales last month, math says we have 12.5 days of inventory.
Less than 2 weeks of inventory seems unbelievable. If we apply the same inventory to last year’s pace of sales, we’d still only have 19 days of inventory. So, we are very low, but not exactly in ground-breaking territory. And as the chart in the middle of the report clearly shows, inventory levels will rise in the spring. But think about this number while you finish this article – in November of 2007, inventory in Longmont was 680.
Since I mentioned the chart, notice that every other year the summer inventory peak reaches nearly 350, and the following year it struggles to reach 300. Take further notice of this year, our peak inventory level was 282. Compare this to last year where it was 355… now tell me how we closed 141 more sales than we did last year with lower inventory. It’s called Flash Sales. It’s a term I coined a few years ago and is now being widely used to show the velocity of the market. I define it by anything that shows in the MLS as 7 Days on Market or less. In 2019 there were 113, this year 145, a 28% increase. But since we take a snapshot every 30 days when I create this report, anything less than 30 days on market could, theoretically never show up on a report.
There are a lot of crazy numbers in the charts and graphs this month including a 50% jump in sales in two markets, followed by declines in others. We have days on market dropping precipitously in all markets. Median and average prices are skyrocketing again, and the BoCo Plains hit the $1 million mark for average price. Take your time to look it over and soak it all in. You may want to share some of it over a holiday zoom call. Feel free to include some data in your monthly newsletter or Christmas card to your clients.
In each of the years where there was low inventory you can see clearly how prices climbed. In the years where we had higher inventory, they stabilized. If patterns hold true, 2021 should bring much higher inventory in the summer and our prices should stop their parabolic ascent. And that my friends, is my prediction for next year.
Merry Christmas and happy holidays to all of you. Know that I miss seeing each of you and that I pray for this whole lockdown thing to be in our rear-view mirror soon. Look for an even more streamlined and updated format next month as well as the full-year over full-year comparisons.
Peace. Joy. Love.