Holy smokes! The sales keep coming and the prices keep rising. After a couple of slightly below average summer months, August has us catching up to last years sales totals. It would be great to finish the year with a couple strong months with above average sales totals. I predicted the summer volume would leak into the fall months to prop up the end of year numbers. The only reason I thought this was the information I was getting from Realtor clients of mine who still couldn’t find homes for their buyers. That, combined with slightly rising inventory made for a good environment to perpetuate the summer volume push for an extra couple of months. I think there is at least one more month left.
The Predictor said we should have had 108 closings in August and we had 119…that’s a 10% bump. The Predictor isn’t perfect, but it’s rarely off by 10%, so there is still some steam left heading into the end of the year. The prediction for September is 105 and I think we should hit that number as well. So keep your foot on the gas until the end of the year.
Curiosity got the best of me this month. I know this is the kind of thing that keeps y’all up at night as well. One day I was pondering the relationship between the local unemployment rate and the average price of homes. So it was off to Google, my stats vault and the graph creator tool in Excl. It was fairly easy to find the unemployment rate for Boulder County; the data are readily available in the archives of the Bureau of Labor Statistics (www.bls.gov).
August 2014 Longmont Area Stats
- Average Days on Market – 48!
- Longmont Condos Average Price OVER $205k
- BoCo Plains Average Price UP $100k
- Carbon Valley Sold YTD UP 13.5%
Once I had all the unemployment data in hand, all I had to do was graph it against the average sales price. My approach was similar to the graph from a couple months back where I picked a point in time and called that my baseline. In this case it’s January of 2007, the same as my May 2014 graph. From there, what you see is each lines’ divergence from that point in time. For the most part, they tend to go in opposite directions. Common sense would tell you that this is a reasonable assumption, but I can’t let things go until I can prove them. Here you go. Proven.
The next reasonable assumption would be that one of these lines influences the other. Much harder to prove and I am just not equipped to go that deep. My powers of deduction tell me that the answer would be no. I’d say there is a correlation, but not a direct cause and effect. My only real argument here would be that when you look at the peak of the unemployment line, you’d expect to see a more significant dip in the average price line. There is probably a good economics dissertation relating to reasons why this didn’t happen, but I’d bet that it would boil down to the fact that most people will do just about anything to retain the key element to their survival – shelter – in tact. Unemployment benefits, mortgage forgiveness and modification, lenders delaying foreclosures and even community assistance programs are other safety nets in place to keep people safely in their own home.
Last interesting note: average prices have exceeded their beginning point, but unemployment has not returned to pre-recession levels.