Market Data June 7, 2021

Is there really “No Inventory”?

A common phrase that is being used right now to describe the market is ‘no inventory.’

‘There’s no inventory’ is said frequently among those inside and outside of the real estate industry.

The problem with this phrase is that it is untrue.

There is inventory.  Meaning, there are a significant number of new listings hitting the market.

However, there is low standing inventory.  Meaning, the listings that do hit the market don’t stick around for very long before they are purchased.

Standing inventory, which is the number of active properties on the market, is down roughly 70% along the Front Range.

However, the number of new listings coming on the market is essentially:

  • Double compared to December 2020
  • Only 20% to 25% less than this time of year in 2017, 2018, and 2019

So, there is inventory available, it just sells quickly because demand is historically high right now.

Market Data June 3, 2021

Calculating Risk with Home Values

The economic research blog called “Calculated Risk” just completed a fascinating study on home prices.

Specifically, they looked at the correlation between home price growth and inventory.

They used price data from the Case-Shiller Home Price Index and inventory data from the National Association of Realtors.

No surprise, they found that the lower the inventory the higher the home price growth.  Also no surprise, as inventory goes up, price growth slows down.

This all correlates with simple economic rules of supply and demand.

The interesting part of their research is this:  at a certain level of inventory, prices have the potential to go down.

That level, according to their research, is six months of inventory.

That means, prices don’t have a chance of decreasing in a market until there is at least 6 months of inventory available for sale.

To put that in perspective, today there is two weeks of inventory on the market along Colorado’s Front Range.

So, there would need to be 12 times the amount of homes for sale on the market for prices to even have a chance to go down.

Economic May 8, 2021

Different Era, Different Market

Recently it seems there are many attempted comparisons being made between today’s real estate market and the 2006-2007 market.

It seems that people fear a repeat of what happened to the market in 2008 and 2009.

Buyers, understandably, want to make smart decisions and don’t want to buy in advance of any downturn.

The reality is this.  There are some similarities between now and the pre-bubble market of 15 years ago.  Namely, prices are appreciating quickly.

However, there is one massive difference.

The inventory of homes for sale right now is drastically different than 15 years ago.

The rules of economics tell us that, in order for prices to crash, demand needs to diminish, supply needs to swell, or some combination of the two.

Here’s the deal.  Supply today is a fraction of what is was 15 years ago.

Homes for sale today:

  • Larimer County = 238
  • Weld County = 226
  • Metro Denver = 2,594

Homes for sale 15 years ago:

  • Larimer County = 2,998
  • Weld County = 1,113
  • Metro Denver = 29,045

The reason why prices flattened and decreased slightly along the Front Range in 2009 is because the National economy had a meltdown and there was a glut of supply.

We do not have anything similar to those same dynamics today.

We are watching the market closely every single day.  While we don’t expect the current pace of appreciation to keep up, we believe inventory levels keep us insulated from any kind of crash.

Economic April 29, 2021

The Future of Work?

This week we had the opportunity to hear a presentation by Ed McMahon who is the Senior Fellow for Sustainable Development at the Urban Land Institute.

He is a leading expert on the future of housing and development in the United States.

He sees that Colorado is positioned to massively benefit from the work from home shift taking place across the Country.

Ed cited that only 1 in 10 companies expect employees to come back to the office to work full time.  The believes the future of work is a hybrid model where most employees are mixing their work hours between the company office and their home office.

What does this mean for housing demand?

Smaller cities (like Denver), suburbs and high-amenity small towns will benefit.

He sees that those places with a high quality of life will benefit the most.

Bottom line, if people are untethered from their corporate office and can live anywhere, they will choose to live in places that are nice to live.

Colorado is certainly high on the list of high-amenity and high-quality places.

So, the new work from home dynamic is another reason to be bullish on the future of Colorado real estate.

Market Data April 28, 2021

Troutman Park 1st Qtr Real Estate Review

We’ve got a quarter of the year now to give us an idea of what Northern Colorado’s Real Estate Market has in store for 2021. Many were surprised to see how well Real Estate in our area weathered all the storms that last year threw at all of us. I think it’s fair to say that all of us are shocked to see what’s happened through the beginning of this year!

Let’s take a look back to see how Troutman Park’s Real Estate market has done through March 31, compared to the same time during other recent years. Here are the numbers:

2021 Q1 – 9 homes sold for $3,989,900. They ranged from $405,500 – $630,000 at an average of $433,322

2020 Q1 – 13 homes sold for $4,924,800. They ranged from $325,000-$420,000 at an average of $378,830

2019 Q1 – 12 homes sold for $4,439,400. They ranged from $325,000-$450,500 at an average of $369,950

2018 Q1 – 9 homes sold for $3,078,000. They ranged from $290,000-$394,000 at an average of $342,000

2017 Q1 – 7 homes sold for $2,377,200. They ranged from $257,500-$379,700 at an average of $339,600

2016 Q1 – 6 homes sold for $1,871,500. They ranged from $205,000-$400,000 at an average of $311,916

2015 Q1 – 15 homes sold for $4,004,175. They ranged from $218,325-$302,500 at an average of $266,945

We have a new All Time High in our neighborhood! The home at 819 Marble was listed for sale on at $585,000 on February 18, 2021 and quickly had 8 offers in it’s first few days on the market. It went under contract on Feb 22 and closed 22 days later on March 16th.

What I found interesting about the sale of 819 Marble at $630,000 was that it passed the previous neighborhood all time high sales price of $507,000 (731 Benthaven St) by $123,000! That’s an increase of 24.26%!

We’re seeing this in other areas throughout Fort Collins as well. The reason for such a significant jump is the inventory available for sale is down 71% here in Larimer County compared to last year at the same time. With all time low interest rates available many decided to put off their search for a new home and refinance the mortgage they were currently in to either save money or add on and improve their current residence.

That combined with the fact that home builders are seeing increases in costs and reduction in materials available (lumber, appliances, etc) means that there is a historic low in terms of what is available for buyers to choose from. At the same time there is a rise in demand because of the low interest rates and increasing desire for high quality suburban living.

The end result means there is a lot of opportunity for sellers to take advantage of this perfect storm if they want to cash in on all that equity that has developed.

If you have questions about anything or if you’re curious about what your home might be worth, just let me know. I grew up here in Fort Collins, I’ve worked in Real Estate since 2002, live right here in Troutman Park and I’m always happy to share.

Market Data April 17, 2021

Appreciation Rates along the Front Range

While our temperatures felt like record lows this week, real estate prices have been hitting record highs along the Front Range.

 

Here is the average price for residential sales so far this year in each of our Front Range markets (includes both single-family and multi-family):

 

  • Fort Collins = $567,000
  • Loveland = $449,000
  • Windsor = $537,000
  • Greeley = $376,000
  • Metro Denver = $544,000

 

These prices are generally up 10% or more compared to last year.

 

If you are curious to know what your personal property is worth today, even if you aren’t considering moving any time soon, I’m happy to do the research for you.  Just let me know!

Market Data April 14, 2021

The percentage of homes selling at or above list price

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What percent of properties are selling for list price or more!?!

Take a guess.  Of the properties that have sold so far in April, how many of them sold for at least list price?

Meaning, how many of them had a final sales price that was equal to or above the asking price?

The answer…

88% for properties in Larimer County and 86% for properties in Weld County.

We have been tracking this statistic for many years and this is a new record high.

Here’s something else that is interesting…

Not only do the number of properties selling for over asking price exceed the number selling under asking price, they also exceed those selling at list price.

There are roughly double the amount of properties selling for more than asking as compared to the number selling at asking price.

This is all a result of the low inventory, high demand market that we are experiencing.

We are using all of our researching, offer writing and negotiating skills right now to help our clients win in this highly competitive market.

Economic March 5, 2021

Homebuilder Headaches

The National Association of Home Builders recently surveyed their members to ask them about the challenges they currently face and the challenges they expect to face.

Far and away, the biggest headache for homebuilders right now is the rising cost of building materials.

96% of the survey respondents cited this as a significant problem they faced in 2020 and 89% believe it will be a significant problem this year.

It turns out that builders are not only concerned about building material costs, but also the availability of those materials.

78% said availability was a significant problem last year and 80% said that it will be a significant problem in 2021.

Due to increasing materials costs, we notice builders locally having to raise their base prices significantly in order to keep up with rising costs.

Market Data March 3, 2021

How fast are houses selling?

In the residential real estate industry, inventory is typically measured in months.

For example, the definition of a “sellers’ market” is when there is less than 4 months of inventory on the market.  Meaning, at the current pace of sales, it would take less than four months to sell all the homes currently for sale.

Today it makes more sense to measure inventory in days instead of months.

Here is the number of residential properties currently listed for sale in each market:

  • Larimer County = 255
  • Weld County = 261
  • Metro Denver = 1,645

Here is the current pace of sales in each market:

  • Larimer County = 10/day
  • Weld County = 10/day
  • Metro Denver = 112/day

 

So, at the current pace of sales, this is how long it would take to sell all the residential properties currently for sale in each market:

  • Larimer County = 26 days
  • Weld County = 27 days

Metro Denver = 15 days

Economic February 24, 2021

How Lumber is affecting our Housing Market

The price of lumber has doubled in three months.

Lumber is just one of several examples of skyrocketing materials costs which are impacting both home builders and home buyers.

The cost of lumber is now at a record-level $1000 per 1000 board feet.

These rising costs not only add to the sales price of a home but also add to the inventory shortage issue.  Some large, publicly-traded home building companies are slowing production in hopes of building costs dropping over the next few months.

Many people expected lumber prices to drop, or at least level off, when the tariff on Canadian lumber changed in December.

However, because demand has been so high from both building and remodeling, lumber costs continue to climb.