Everything is For Sale if the Price is Right-NOT
We have a lot to talk about so buckle up folks. Inventory. Interest rates. Sales. Listings. Days on Market. Out of town brokers. And finally, Ft Collins. Let’s get started.
They say, “Everything is for sale if the price is right”. How true is this in real estate? If it isn’t listed, is it really for sale? If the quote above were true, we’d probably see more sales than inventory. Prices would slow down due to demand being met outside the traditional marketplace of the MLS. Since prices are still rising in double digit percentages every month, demand is not being met. But there is a change in the market and agents keep asking me to help put a finger on it. Warning: I have data, but no solution.
A question presented to me is: with the rise in interest rates, is the low end of the market starting to lag? Good question. Higher interest rates eliminate many first-time buyers, and they also take a lot of investors out of trying to buy low-price investment properties…thereby slowing the market for the low end. An additional theory is that the move-up properties are still moving fast because people with money, jobs and equity have greater ability to make their move. Let’s see what the numbers say.
I divided last month’s 99 closed sales into 4 groups from low to high. Here is the data for the price points and the number of days on market for each:
$558k and less – 18 days $558k-$650k – 23 days
$650k-$750k – 29 days $750k-$1.6M – 22 days
You can clearly see that there is no hesitation in the lowest quartile of the market. Point one above is dismissed. In fact, that number is 3 days less than it was last month…but what’s 3 days? All four price quartiles from March of this year are within three days of April’s results. I’d say there is no discernable movement in days on market, no matter what the price point.
Longmont Area Real Estate Stats April 2022 (pdf)
Longmont Area Real Estate Stats April 2022 (.jpg)
Back to the you can’t sell it if it ain’t listed theme. Look at this month’s graph in the report. The graph shows monthly inventory, monthly sales, and monthly average interest rate according to Freddie Mac from January of 2019 until the end of April 2022. The sales and inventory numbers are Longmont Single Family Homes. I included the data points for the peaks and valleys of each line. Now, if interest rates were the only driving factor in home sales, as interest rates drop going from left to right, we would see the line representing home sales increase from left to right, but we don’t. Instead, the closed sales (blue) line is nearly an exact mirror of the inventory (green) line, indicating closed sales are more closely a reflection of the number of listings There is no discernable impact on sales from declining interest rates. What we don’t have is an example of what happens when all three check upward at the same time…like at the far-right end of the chart.
In April, the highest days on market for a closed home in Longmont was 63. This is interesting because most agents would immediately guess that it was an over-priced listing since it was on the market nearly triple the average number of days. Well, it was under contract in 8. My guess is that there was an accommodation for the seller to rent back to close on a new build, or find a replacement home, or some other reason to delay closing, making the move less stressful. That type of agreement was barely a part of the business ten years ago. Noses would have been turned up and buyers would have moved on. Today, this is a typical strategy because demand is still very high despite the rise in rates.
Of the 30 attached homes closed in Longmont last month, the five units with the highest days on market were listed by out-of-town agents. Seven of the eight units with the fewest days on market were offered by in-town agents. This would suggest that in-town agents have a better handle on pricing and local sales strategies than an out-of-town agent. This is one of those tenants of the business that we in the business understand: local knowledge is extremely important. Why don’t sellers get this? It’s time to take the gloves off folks and talk to sellers about the value in using a local agent. Last month, SIXTY percent of attached homes AND 58% of single-family closings were listed by out-of-town agents. I know we can’t build a wall and keep them out, but goodness, the number of Denver, Parker, Centennial and Littleton agents selling homes in this town is crazy!
Here are some cool numbers from our defending Market of the Year – the Carbon Valley. Firestone, Frederick and Dacono continue to dance to their own tune. There were SEVEN closings last month under $300k. They were all in the Glens or Prairie Village. The closing with the highest days on market was a mobile home in the Glens for $338,900 at 132 DOM. Just wow. And that isn’t all. There was a resale in Barefoot lakes that closed for $715k. It was originally purchased in 2019 for $543,900. That 31.5% equity gain in three years grossed those sellers a cool $171,100.
The spotlight area this month is Ft. Collins. Their population is about 75% larger than Longmont or about 75,000 more people, but as we know, many of them are college kids. The greater population equates to about 65% more yearly transactions than in Longmont. Despite the higher number of closings, they are experiencing the EXACT same percentage decline in overall transactions as us here in Longmont. It’s amazing how these numbers are so similar throughout the NoCo region. The average price in Ft Collins is nearly identical to that of Longmont, but their year-over-year price increases are much greater. Do you think people drive this far to seek value? In today’s remote-working, gig-economy, I guess it’s possible.
So, what’s the point to all of this? My answers: 1. If you’re waiting for the phone to ring, you’re doing it wrong. 2. If you aren’t getting any local listings, maybe your sphere hasn’t heard from you recently. 3. And, if you concede that an out-of-town Realtor can do a good job for a seller, you might show them this report.
I’m just trying to help you and your clients. Give me or Valerie Graham (303-710-9671) a call or text and we’ll try to come up with some listing solutions to jump start your business.