Higher Rates Can’t Stop this Market; Just Slowing it a Bit.
Let’s get local. In reviewing the news and the reports I receive regularly, the data in this report doesn’t exactly match up to the doom and gloom that they are selling out there. I even emailed constructive criticism to the writer of a piece. It turned out he was the owner of the publication and he admitted to me that clickbait and overly sensationalized article titles is what keeps him in business. We will try to avoid those things in this modest update.
First, please look at the graph with the red and black bars. I stole this fair and square from First American’s stats guru down in Denver. Her name is Megan Aller, and she is much smarter than me. I know this graph shows Metro Denver stuff and that isn’t quite us up here in Northern Colorado, but the data is representative of the whole state if not the whole country right now. Inventory is an issue, and we all know it, but this shows the enormity of the problem. Bottom line it says that if Metro Denver added 24,864 listings today, we’d have a balanced market. If you think things are bad now, try seeing it for what it is – less awesome than it was a few months ago. As inventories start to grow, the market will actually look more normal. It’s a long, long, long way from bad.
We sales reps at First American Title are getting a lot of requests for agents to receive our foreclosure list every week because they still believe the foreclosure tsunami is coming. It’s not coming but we’d be glad to share the list with you. Just send Deb Myers an email and she’ll put you on this list. EMAIL DEBBY FOR WEEKLY LIST or you can read further down this weekly newsletter and see them as well.
And here is a good article about the current delinquency situation – CLICK HERE
While we wait for inventory to build and the foreclosure market to appear we will continue to see a lot more of what we have seen. Most markets are experiencing fewer sales this year over last. At first, this was an inventory issue (can’t sell what’s not listed), but now that problem is being exasperated by higher interest rates. The increasing prices will continue through out the year.
Some notable items from around the region in this month’s report:
The average price of an attached dwelling in Ft Collins is the first negative number we have seen in prices in nearly 10 years. Move along. Nothing to see here folks. The average from 2021 trended much higher due to 6 condo sales of over $1,000,000, mostly at Front Row on Mountain. In 2022 the highest sale was a mere $800K.
More from the nothing to see here file… Look at the giant leap of Days on Market (DOM) for attached homes in Loveland. I don’t think I’ve ever seen a 100% jump in DOM. The 2022 number is extremely influenced by 12 sales of condos at the Lakes at Centerra. Those all had between 343 and 462 days on market. They must have listed them when the broke ground. If you remove those it drops to 34 days, right in line with all other markets and a 50% decrease over 2021, which also had 6 sales from the Lakes at Centerra over 166 days. Remove those as well and you’d have 35 days on market for the typical resale.
The Greeley and Johnstown/Milliken markets seem to be the healthiest in the area. These are the only two markets with higher sales activity than last year and well as rising prices. They also represent the two most affordable markets in the region. They win the Market of the Month Award and are in strong contention for Market of the Year. But seriously, those prices, compared to the rest of the region, are worth the drive.
This market has been called Savagely Unhealthy by Housing Wire. I agree. In the longer term, higher interest rates may end up being a blessing in disguise. Currently, high rates are making life difficult for those who need to buy now. Today the Fed is pumping the brakes on the economy, the effect in the real estate market will be flattening out of prices. We need this kind of break. Every day the cost of a house has been going up. If this were to stop for a while, more people could save and plan and buy a home tomorrow at today’s price. Here is another great article to support my position HERE.
You can’t change the market, you can only work with what you are given. Embrace the change.
First American Title