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Five by Five
Here’s a fun fact about the current inventory along the Front Range.
The number of properties for sale is five times as many versus the all-time low in 2022.
And, it is one-fifth as many compared to the all-time high in 2006.
Also, it is half of the long-term average.
So, selection is much higher than the frenzied 2021/2022 market.
However, inventory is still very low relatively speaking.
Inventory Jump
The most significant trend we notice 45 days into the new year is the jump in inventory.
There are many more properties for sale along the Front Range compared to one year ago.
- Larimer County is up 40%
- Weld County is up 39%
- Metro Denver is up 35%
This comes as welcome news for buyers as we near the Spring buying season.
Forecast Takeaways
Here are some of the big takeaways from our annual Market Forecast with Economist Matthew Gardner:
- Interest rates will continue to trend down during the year and reach 6.08% by the end of 2024.
- Home prices will have another year of modest gains increasing 2.0% to 2.5% in Northern Colorado
- 53% of homeowners in Larimer County and 38% of homeowners in Weld County are “Equity Rich” meaning that they have at least 50% equity in their homes.
- Inventory levels will increase in 2024 but will remain below normal which protects prices from any sort of major decline
To receive a copy of the full slide deck from the Forecast, feel free to reach out to us!
Inventory in Perspective
A significant dynamic in the Front Range market is the relatively low inventory. This is the main reason why prices are stable despite higher rates.
Here is some perspective on the inventory of homes for sale to help give some context.
Today’s inventory is:
- Half of the long-term average going back 30 years
- ¼ of the all-time high in 2006
- 3 times the all-time low of 2021
MOI is Still LOW
Despite decreased buyer activity driven by normal seasonal patterns plus higher interest rates, the key stat of Months of Inventory continues to stay relatively low.
Months of Inventory (MOI) is the simple measurement of how long it would take to sell the current inventory of homes for sale at the current pace of sales.
Along the Front Range, this stat ranges from roughly 2 ½ months to just over 3. A market is considered ‘balanced’ when there is 4 to 6 months of inventory for sale.
Here are the specific numbers for Front Range markets:
Larimer County = 3.1 Months
Weld County = 2.7 Months
Metro Denver = 2.4 Months
Jump to Three
The most notable change in the market, in terms of a specific statistic, is months of inventory.
This statistic measures how long it would take to sell all of the current inventory at the current pace of sales.
Months of inventory has jumped to three along the Front Range.
One year ago, it was two months. Two years ago, it was three weeks.
The jump is a result of decreased demand driven by higher interest rates combined with slightly increasing inventory.
We expect months of inventory to continue to increase and imagine it could be at four months by this winter.
Ups and Downs
Here is a look at how the market performed in August versus August 2022
Prices:
Larimer County Up 4%
Weld County Up 8%
Metro Denver Up 6%
Transactions:
Larimer County Down 18%
Weld County Down 31%
Metro Denver Down 15%
Inventory:
Larimer County Up 18%
Weld County No Change
Metro Denver Down 4%
Where It’s At
New Homes are where it’s at.
By ‘it,’ we mean inventory.
Given low supply of existing homes, home buyers have figured out that new homes offer an effective place to find homes for sale.
Here are the stats…
Inventory of existing homes is down 7.7% year over year. And, last year’s inventory was historically low.
Meanwhile, sales of new homes rose 4.4%. This increase was much more than most analysts expected.
New Homes are where it is at.
Year to Date
Here is an interesting look at the market year to date versus the same time period in 2022.
Bottom line, the number of transactions is down considerably, and prices are flat to slightly down.
Larimer County = Sales down 17.5%, prices up 0.7%
Weld County = Sales down 29.6%, prices down 2.2%
Metro Denver = Sales down 22.4%, prices down 2.9%
New Opportunity
One of the many opportunities for buyers today is new construction.
In Northern Colorado, just under 25% of all available homes for sale are brand new homes.
That percentage is roughly 50% more than normal.
Buyers who are looking for a greater selection can consider new homes.
New homes offer obvious advantages like trendy finishes and new appliances.
They also often offer attractive incentives like lower mortgage rates.
So, in a time when it feels like there is less to choose from, new homes are a great option.
