Oops, there it goes again. On top of a blistering 11.1% rise in prices back in 2015, Longmont experienced an even greater average sales price increase in 2016. The news of another excellent sales month in December is being overshadowed by the Year-over-Year (YoY) 2015 vs 2016 average sales price increase of single family homes in Longmont. Many experts predicted a similar and possibly smaller increase this past year, but numbers recently released show a 12.5% increase in 2016.
Home sellers have been quite ecstatic since they are able to sell their home and actually make money compared to the foreclosure, bankruptcy and short sale days of 2008-2011 that are still fresh in many memories. In the past two years alone, the average single family home price has risen 23.6% in Longmont. Home buyers are not quite as happy, but demand is still quite high due to the lack of inventory and the even higher prices found in all neighboring towns except for those to the east of Longmont in the Carbon Valley of Firestone, Frederick and Dacono.
The second annual report of YoY price increases is attached to this report shows, in addition to the normal monthly statistics, there are several stories of price increases. One notable item that needs additional explanation is the 19.6% price increase in the average sales price of attached homes in Longmont. This increase is in addition to 14.1% in 2015. All 2016 results here are significantly impacted by several new attached property homes in Southwest Longmont where the base price is well over $350k and most have been on the market for an extended period of time. This is in contrast to the single family home numbers that are not significantly impacted by any new construction in the area in 2016. The single family numbers will change in 2017 with several new housing projects opening soon.
December 2016 Longmont Area Stats
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In a surprising twist to the end of year results is the decrease in the number of homes sold. When the basic economic principal of supply and demand is applied to the results, you see evidence that demand is still very high. Fewer houses sold, in fewer days on market, for a higher average price. The coming new home inventory in 2017 will, hopefully, slow this near parabolic, upward price curve. A well-known axiom of home price increases and historical averages indicate a healthy real estate market shows an approximate 6% price increases per year. Longmont has doubled that for two straight years, which could be considered unhealthy outside of a recovery period. Longmont’s recovery period ended about 2 years ago when prices exceeded their pre-meltdown levels.
2015 vs 2016 Longmont Area Stats
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After years of 11.1% and 12.5% price increases, what are the chances we will see something as low as a 5% increase in 2017? It seems like a lot more than interest rates rising to over 4% will have to happen for prices to slice their upward march by nearly 60%. But let’s just say, something more normal happens this year, and a 5% increase is what we report here next January. Well, if that’s what happens, the average price of a single family home in Longmont in 2017 will be $401,904. How much will your client wish they bought a house now, or this year? The big banks are going to have a hard time screwing up this economy and no matter how you voted, the guy in charge should be good for business, so hang on because if we get anywhere under an 8% increase this year, I’ll eat my sock.
Here is to your best year yet!