Quiz time. This quiz covers the past 4 months of the past 4 years. In other words, it’s the four most recent four-month periods of November through February. We are going to name those four months “The Winter Months”. Write down your guesses. The answers will be revealed later.
1. Of The Winter Months listed below, which had the fewest sales? The most sales?
2. What is February’s average Days on Market for The Winter Months? How about November?
3. Of The Winter Months listed below, which had the lowest inventory? And which had the highest?
This article is about The Winter Months. More specifically, it’s about the last four winter month periods, so if you aren’t interested, now would be a good time to move on to your other emails. Last month I made the point that “it’s just a January”. I also pointed out that we all feel some kind of slowing or shift in the market. This slowing presents itself in many ways. My newest analogy is that of the gas pedal in a car…we’ve eased off the gas a little and we’re slowing down. What you need to understand is that we were going 100 mph and now we’ve slowed it to about 85. If feels slow, but we are still exceeding the speed limit. It’s our point of reference that’s messed up. It’s not normal to go 100 mph and we’ve been doing it for years now.
The three graphs in this month’s stat sheet are specific to The Winter Months over the past four years. They all cover the same time period and the legend is the same for each graph. The data is only for single family homes in Longmont and I think you’d be surprised at what the data says. Without recreating my entire spreadsheet here, I’ll give you the most important items.
The most recent winter months had the second highest total homes sold, higher than the two that preceded it. In fact, the year before had the lowest total in the past four years. Why wasn’t anyone talking about how slow it was back then? And if you look at the graph (it’s the one in the middle), those lines are all squished together for one reason, they are almost identical. From the highest total to the lowest there is only a spread of 10 closed units. The sold activity has been nearly identical over each of the past 4 years.
Look now at the purple line in the inventory graph (the one on the right). That’s the most recent winter months and it’s higher than all the rest except for at the very tail end. If you guessed that total inventory is higher than it’s been during The Winter Months over the past four years, you’d be right, but not by much. It’s a total of 50 above the norm. This means that in general we’re experiencing higher inventory than normal. If this trend holds up, there are a lot of buyers that are going to be happy to have a few choices this summer when looking for a house.
Our last fun graph is the Days on Market. This one at least has some interesting lines that bounce around. Some people see 60 plus days on market and they think the sky is falling. Not every month is like last June when we saw 36 days on market. The 62 days on market in February 2019 is (quiz answer coming) the same as the average days on market for the past four February’s. If you are looking at days on market as an indicator for a slowdown, I can’t help you. But since you were going to ask… “What about the 148.6% increase in days on market in the BoCo Plains and the 81.6% increase in the Carbon Valley?” Yes, those are big increases, but last year those two areas were -51.9% and -45.7%, so they were down dramatically last year. If those days on market numbers were more normal instead of being ridiculously low, we wouldn’t be talking about this and you wouldn’t even bat an eye at them.
Quiz answer time.
1. The Winter Months with the fewest sales: c) last year Nov ’17 to Feb ’18 with 289. The Winter Months with the most sales: a) four years ago, with 299.
2. February’s average days on market b) 62. November’s is: c) 54
3. The Winter Months with the lowest inventory: a) 2015-2016. And the highest inventory: d) the most recent 2018-2019.
What’s the point of all this? In this market, higher inventory will produce higher days on market and more sales. It will continue to work this way until we reach an equilibrium, but our demand is way too high for that to be a problem anytime soon.