2022 started out very similar to 2021. This is quite remarkable since most of us looked at the January 2021 results and wondered if they could get any “worse”. What’s worse this year compared to last? How about fewer listings, fewer days on market and higher prices? Those worse items used to be considered good for just about everyone except for buyers. Today, it may only be good for sellers, but even that isn’t true all the time.
Sellers are benefitting from the rise in prices and netting more on their sale, but that’s about it. With the sale of their house, they become buyers and we just talked about how low inventory, fewer days on market and higher prices don’t benefit buyers. Extremely low inventory begets a seller additional problems during negotiations and while under contract with appraisal issues, confusing escalation clauses, crazy inspection resolutions and cancelled contracts from buyers unhappy they are over-paying for their home. The landscape has changed. It began about two years ago and it’s only getting worse with skyrocketing prices and even extremely low inventory.
We sold a two more single-family units in Longmont this month compared to last year, giving us a net yearly increase of 3.6%. It’s refreshing to start the year in positive territory in this metric. But, if we skip last year and compare January’s closing total to that of 2020, we are 18.3% in the hole. This is what happens when there are no houses to sell. This is the result to extremely low inventory. Prices are still climbing on a monthly basis and my first prediction for the 2022 real estate market is that the average home price in Longmont will exceed $600,000 for the first time ever. I will further predict that the yearly average will cross over the $610,000 mark. Write that down and get back to me in January 2023.
The attached home sales in Longmont are not as lucky. Their sales are down 29.4%; days on market dropped another 63.3% to 22 days, and inventory is non-existent. The 23 units listed in the report include all active and under contract (because these aren’t sold yet). If you want to go shopping for an attached home in Longmont, you have exactly 3 choices priced between $399k and $545k. Technically, that calculates to 7 days of inventory. Interesting side note regarding inventory – as of 2/9/22 there were a total of 134 listings of both single family and attached homes in ALL of Boulder County.
The Carbon Valley report looks almost identical to that of Longmont. My next prediction for 2022 is that the Carbon Valley will narrow its traditional price gap with Longmont. The yearly average price between the two areas runs between 16% and 19%. My guess is that the value difference finally pays off for the Carbon Valley and they have a bigger average price increase than Longmont by the time the year is over.
January 2022 Longmont Area Real Estate Statistics (.pdf)
January 2022 Longmont Area Real Estate Statistics (.jpg)
Since I’m now creating stats reports for all Northern Colorado… you benefit from this additional research. First, the Boulder County Plains section in the bottom left of my report will no longer be included. As I stated last month, it’s too big and way to diverse in its product, size, and prices to make sense. Second, I can make this section a rotating glimpse into other markets throughout Northern Colorado, so you will see it change each month. I don’t have days on market data from the previous year for any of these, so the one different line item will compare the sold price as a percent of asking price. Once I collect all the data for a year, I’ll revert this back to days on market. In the meantime, enjoy the look at Berthoud this month. Any guesses as to why their days on market is so high and their average price dropped? One guess… New Construction.
I think this month’s graph is one of my favorite ever. I wish it turned out a little sexier, but the information is finally in front of us. This is an evaluation of single-family homes sold in Longmont in 2021. I’m guessing this isn’t a huge surprise for those of you who have thought this through. The green bars correlate to the left side axis. They show the average square feet of the house sold in that price range. As prices rise, the size of the house gets bigger… on average. The red line corresponds to the right-side axis. This tells you average price per square foot of the homes sold in that price point. Buyers of the least expensive homes in Longmont pay the highest price per square foot. The price/sf drops to its lowest point in the $650k-$700k range, then climbs again as prices climb into the million-dollar range. The number above the green bar indicated the number of closed units in that price range.
The chart clearly shows that the least expensive homes sold in Longmont (under $350,000) average a touch over 1,000 square feet and their buyers paid the highest price per square foot at $270. This price/sf is even higher than the million dollar plus homes which sold at about 10% less at $250/sf. This might tell us that those who can least afford a home are paying the most. It also might indicate that investors chasing cheap investment homes might do better by playing the higher price points in the market because they are overpaying for the less expensive homes. We know that once permits are pulled, taps are in, the hole is dug and architecture is complete, economies of scale take over and it’s less expensive to dig a bigger hole, build a second story and generally expand the size of the house. We also know when an owner has more disposable income, the luxury items added increase the price/sf, so the right half of the chart makes perfect sense. Even with this knowledge I’m shocked at the U-shaped red line in the graph, particularly how high the far right end is. Maybe, some advice to the proper buyer would be to chase the value between $550k and $700k, rather than overpay in the lower price points.
The U-shaped graph came out the same for Loveland. Not quite the same for Lafayette and Louisville. Come back here to see the NoCo and Boulder area reports. They will be posted within a week of this one.