We have a lot to talk about so buckle up folks. Inventory. Interest rates. Sales. Listings. Days on Market. 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 question is whether the move-up market is moving even faster because people with money, jobs and equity have greater ability to make their move. Let’s see what the numbers say.
Northern Colorado Real Estate Stats April 2022 (pdf)
I divided last month’s 164 single-family closings in Ft Collins into 4 groups from low to high. Here is the data for the price points and the number of days on market for each:
$535 and less – 34 days $535k-$610k – 23 days
$610k-$750k – 32 days $750k-$2.075M – 39 days
It’s a little surprising to see the lowest quartile with more days on market than either of the next two groups. Days on market is 9 days higher in April than in March. I did this same analysis for the Longmont and Boulder markets. They were both opposite, with fewer days on market in the lowest quartile. So, at this point we will give question one above a maybe. The three highest quartiles improved by 7, 18 and 25 days respectively, so we’re going to have to give question two a maybe as well. Again, the Longmont and Boulder markets were opposite of this.
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. My apologies, but there is a lot of data behind this chart, and it would have been too labor intensive to build it for another area. Please bear with me because the point is still valid. I included the data points for the peaks and valleys of each line. If interest rates were the biggest driving factor in home sales, as interest rates drop going from left to right (red line), we would see the blue line representing home sales increase from left to right, but we don’t. Instead, the 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.
The Greeley market is clearly the strongest in Northern Colorado. It’s the new construction that’s keeping things moving and prices moderate. Their monthly and yearly sales in both single-family and attached are the strongest in the region. The average and median prices in both categories are eye catching. This might be one of the best opportunities in the region for a first-time buyer. If they are getting bumped out of other markets because of steep demand, skyrocketing prices and rising interest rates, this might be their best shot for a young couple to buy a home. Think of what that would do for the town if a bunch of young people decided to start their families in Greeley. It’d be transformative.
Loveland has always had such great value. The prices usually stayed pretty moderate and there always seemed to be good turnover. This trend appears to have slowed a bit. Whispered concerns are starting to creep into the conversation. But maybe we should check our expectations. Having 8.9% fewer transactions by this time of year is going to be hard to recover from and meet last years sales total, but is that a good yardstick to use as a comparison? The first four months of last year had the 2nd highest number of closings ever. And that was DOWN from the previous year where we had the highest number of closing EVER…amidst a global lockdown! The 277 closings so far in 2022 is right in the middle of 1018 and 2019, which had 283 and 273 respectively. I didn’t hear anyone complaining that things were slow back then…expectations.
Ft Collins single-family sales are down 13.3% year-over-year. Strangely, this is the exact same percent decrease as in Longmont. But even as we see fewer sales and fewer listings, days on market keeps decreasing and prices keep increasing. The same goes for the attached homes in the Fort. A good indicator of the demand is the percent of closed price as compared to asking price. Over 100% says people, a lot of people, are paying more than asking price. The market may feel like it’s changing, but maybe we need change our expectations and those of our buyers and sellers. The price decreases we see after a home doesn’t go under contract in its first weekend on the market is very strange. Do you remember 2009? Days on market back then was around 110 days, so our current 30 is a blessing.
So, what’s the point to all of this? Possible answers: 1. If you’re waiting for the phone to ring, you’re doing it wrong. 2. If you aren’t getting any listings, maybe your sphere hasn’t heard from you recently. 3. And, you can’t change the market, so maybe you should change your expectations.
We are just trying to help you and your clients. Try something new and give Debby, Lindsay or Julie a call or text to see what ideas they have up their sleeves to help you jump start your business.