| Where are all the listings? No, seriously, where are they? The widespread predictions about the pending market collapse have had plenty of time to set in, but we just don’t see them materializing. I guess it’s a good thing the market isn’t collapsing, but it leaves us guessing as to where it’s headed, both long and short term. The more I read, the more I find diverging opinions. This wasn’t the case a few months ago. When we first saw interest rates rise above 5.5%, there were some universal truths we were all supposed to get comfortable with and none of them were good. The noise we heard back in March sounded a bit like this: as interest rates rise, housing prices will fall, inventory will increase dramatically, houses will sit on the market for an extended period, so days on market will rise accordingly. To be honest, I can’t see any of that happening in the August 2022 results for all of Northern Colorado. I’m not saying that those predictions won’t come true, but interest rates went north of 4.5% back in late March, so we should be seeing at least one of those predictions come to fruition by now. It’s been more than five months, so I’m asking, how long do we have to wait? If you look at the results from Longmont this past month you will clearly see the average days on market for single-family homes rose by exactly 1 day. You will see that active listings went DOWN by four. Median and average prices went up by 6.9% and 10.0% respectively. This is nowhere near the cliff of destruction scenario we were fed earlier in the year. Interest rates surpassed 5% in the middle of April. That seems like plenty of time for this major correction to have begun in earnest. The results in the Carbon Valley, with its towns of Firestone, Frederick and Dacono, are the exact same as in Longmont: Days on Market – DOWN; Active Listings – DOWN; Median and Average Prices – UP. In fact, the Carbon Valley is doing all this while its median price has caught up to that of Longmont. Interest rates crossed above 5.5% in early June…over three months ago… that’s seems like plenty of time for this market to have cratered as predicted. Longmont Area Real Estate Stats August 2022 (pdf) Longmont Area Real Estate Stats August 2022 (.jpg) The casual observer may throw their arms in the air and point to the Longmont attached home stats from August. Holy smokes! Is this the first sign of the apocalypse? No. Days on market are up ten to 40, and this is probably the best indication that higher interest rates are having their intended effect of tapping the breaks on the economy and the over-enthusiasm of buyers. For instance, the attached home sold with the fewest DOM in August was 5 days. This is not something we’ve seen in the past few years. There were 8 homes sold in over 60 days, but 6 of the 8 were priced between $620k and $867… still a bit spendy for Longmont. And the inventory!!! UP 135%?!?! Not really. Sixty-nine of them are new construction in Fox Hill, Terry St, Prairie Village and West Grange. None of them are move-in ready. Remove those new builds and there are only 58 active listings giving us a 7.4% year-over-year increase. I know buyers, sellers, agents, lenders and title companies are all feeling the change in the market. There certainly is one. And to be honest… there are some reports of rising inventory in areas. When we look back over the past few years, it was really difficult when there were only 40 active listings in town. Now that there are 115, the math says we have about a 300% increase, but when we apply the months of inventory evaluation, we only have about 1.4 months. This is such a better place to be than the .5 months we’ve become accustom to. The graph I prepared this month shows, even with slightly elevated inventory and slightly fewer closings, we have listed 22.5% fewer homes this year than in 2019. It has to be the lowest listing year ever. I’m not going to go back and pull all the past listings data for every year, but I can tell you I looked at 2009 and 2010 when nobody wanted to list their house because they had to compete with so many foreclosures and 2022 is lower than those years too. I added the high and low data points to each month to give you an idea of the volume of listings. Last item is something to chew on; something we haven’t had to consider in many years. For those buyers who want to buy sooner than later, have them go talk to their lender and ask what kind of interest rate buy-down they can do to make their payment acceptable. Then, make the cost of the buy-down a part of their offer. I did the math with Bill Rodriguez at Cornerstone and, in almost every case, it makes much more sense for the buyer to go that route, rather than getting a price reduction. In many cases, it’ll cost the seller less too. Food for thought. Cheers, Kyle Snyder 720-534-8355 |
