This year the Spring market is occurring in the Summer.
Typically the busiest months for real estate along the Front Range are April, May and June.
This year, because showing activity was restricted in the Spring months, we are seeing robust activity this Summer.
Here’s an indicator. Sales through July 2020 versus July 2019 are up:
- 12.6% in Metro Denver
- 17% in Northern Colorado
To see double-digit increases in sales despite was is occurring in the National economy, is nothing short of remarkable.
The market is in short supply.
More homes are needed to fulfill the need to buyer demand.
Compared to exactly one year ago, the supply of homes is down:
- 32.6% in Metro Denver
- 25.1% in Northern Colorado
An interesting and useful measurement we track is months of inventory. This stat tells how long it would take to sell all of the homes currently for sale at the current pace of sales.
Of course, months of supply can vary greatly by price range and location. However, this stat does a good job of explaining the overall state of the market.
Specifically, months of supply tells us if the market is in balance.
A ‘balanced’ market is when there is 4 to 6 months of supply. A buyers market occurs when the stat is higher than this range. A sellers market occurs when it is lower.
The months of supply looks like this in our market:
- 1.0 months in Metro Denver
- 1.3 months in Northern Colorado
So, the market overall is significantly under-supplied and more homes are needed to meet demand.
Home Builder’s confidence in Baby Boomer buyers is at an all time high.
The National Association of Home Builders (NAHB) surveys their members each quarter to discover what they expect of future sales.
The builders base a large part of their answer on how many people are visiting their sales centers and model homes versus the same time last year.
The results in their most recent survey show that builders have never been more confident about buyers who are 55 and older.
The confidence index for this age group is actually double of what it was in 2012. The NAHB sites low interest rates and strong job growth as the reasons for the high confidence.
A statistic we keep our eye on is the percentage of homes which sell for at least list price.
In a robust, healthy, market with lower inventory, we will frequently see homes selling for their asking price or even higher.
Here are the number of sales that occur for list price or higher in each of our major markets:
• Fort Collins = 60%
• Loveland = 60%
• Greeley = 71%
• Windsor = 56%
There are a couple of things we notice about these numbers. First, well over half of all sales are for at least list price. This means that a buyer needs to be prepared to make a full price offer (or higher) in most cases. This also means that if a seller is priced right and marketed effectively, they should achieve their asking price.
We also notice that these percentages are lower than one year ago. In 2018 these numbers were 5% to 10% higher in each market. This is good news for buyers of course because the bidding wars are not as intense as last year.
A high-level look at the Northern Colorado region shows that the number of residential sales is down 5.4% in Larimer County and up 4.7% in Weld County. This is simply comparing the number of closings from June 2018 to June 2019 versus June 2017 to June 2018.
The high-level look doesn’t tell the whole story. It get’s more interesting when we look at individual Northern Colorado cities and towns:
• Fort Collins = -8.8%
• Loveland = -5.7%
• Greeley = +11.7%
• Windsor = +16%
• Wellington = -16.9%
• Timnath = +44.1%
• Severance = +20.4%
• Johnstown = -18.7%
• Berthoud = +18.1%
• Evans = -14.7%
So, what can we learn from this? The areas with increased sales are where there is an abundance of new construction (Timnath and Severance for example).
The areas with decreased sales don’t have an abundance of new construction (Fort Collins for example).
The exceptions to this would be Wellington and Johnstown. It appears that there is price sensitivity to the new construction product now being built in these areas. Given rising costs, builders are challenged to deliver a product under $350,000 in these places.
For instance, in Wellington, between June 2017 and June 2018 there were 137 sales of new homes priced under $350,000. Today there are only 6 new homes on the market at that price point.