I may have misled you. It was inadvertent if I did. I doubt if it caused any problems, but we are going to talk about this and how it happened. I hope you’ll forgive me.

Over the past four or five months I’ve been reading the charts and commenting to you on the Year-over-Year (YoY) changes as I do every month. The major, recent changes we’ve seen are increased inventory; higher sales totals; higher Days on Market (DOM); and flattening of prices. These statements and analysis are all true when comparing this year to last. They are all true again this month with +20.2% more inventory; +20.6% more sales +4.4% more DOM; and just +1.7% median price gain. This has been going on for months so how could I have misled you?

In addition to these obvious and easy comparisons, I also stated that with higher inventory comes higher days on market. Recent research says otherwise and that’s where you have been misled, because that isn’t the whole story. If you would please open the stats flyer using the link below and look at the graph. It depicts both Days on Market and Inventory over the past two years.

July 2019 Longmont Area Real Estate Statistics (.pdf)

July 2019 Longmont Area Real Estate Statistics (.jpg)

The graph has two sections that encompass a December through March time frame. In these time frames the red line clearly indicates inventory levels to be at their lowest point of the year. The same time frames show the blue line representing Days on Market at their highest point of the year. This tells us that the highest days on market periods have come during the lowest inventory levels. In 2019 the period with the FEWEST days on market came at the HIGHEST period of inventory. Evidence of this is on the right side of the graph where the red line has crossed above the blue.

This year, days on market has risen when compared to last year and higher inventory is partially to blame, but the time of year (winter) has a much greater effect than inventory. Why? I’m glad you asked. Demand. We’ve spoken of it before, who wants to move between November and March? Nobody, hence, lower demand. The summer months in Colorado is when the demand for real estate is the highest. At this point, not even higher inventory levels can dampen the demand for Colorado living!

In other news…

The demand side of the supply/demand equation doesn’t always originate locally. Yes, if a new company relocates to town and brings employees with them, demand goes up locally. If prices are too high in a neighboring town, home buyers will tend to seek value in the next town over, driving demand upward. Likewise, if buyers see taxes or regulation too high in one state, they may choose to move to another that’s more affordable. The inverse of these examples is true as well. Once demand softens in one place, it can soften demand in the areas of substitution. A recent article in Housing Wire says that softening demand in several cities is coming from fewer foreign buyers led by those from China and Great Britain.

Another interesting article in HousingWire says that in Q2 of 2019 the average home seller saw a 34% return on their investment. Translated, that says that the average amount of equity that was pocketed by homes sellers between April 1 and June 30, 2019 was $67,500. Amazingly, the highest returns were 85% in San Jose, CA. Another item in that article says all cash sales dropped to 25% of sales in Q2, down from 27.7% in Q1 2019.

Thank you,

Kyle Snyder