Way Under

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The Nation’s real estate market is significantly under-supplied.According to the most recent research from Freddie Mac, the United States has a housing supply deficit of 3.8 million units.The available inventory today is lower than it has ever been in the last 40 years and is 3.5x lower than the peak of 2008.The reason why available inventory is so low, is the low amount of new home starts that have occurred over the last 15 years.Builders have faced many obstacles trying to keep up with housing demand including supply chain issues, labor supply, land availability, water availability, and stricter approval processes.Fewer new homes were built in the decade ending 2018 than any other decade since the 1960’s.The reality is, the obstacles builders face are unlikely to change significantly in the foreseeable future.Low inventory is likely to persist.An under-supplied market is a key reason leading economists do not expect home prices to crash even while the market cools off.

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Mis-Led

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The most misleading stat about the housing market is increase in inventory. The number of properties for sale is up significantly compared to last year.  In most locations along the Front Range, inventory has doubled.This is obviously great news for buyers because they now have more choice.This is obviously meaningful for sellers because they now have more competition.But, it does not mean there is a glut of inventory.  It does not mean that we are now, all of a sudden, over-supplied.Quite the contrary.  The market is still undersupplied.  There would need to be at least double the amount of homes for sale for Front Range real estate to begin to be balanced.The increase in inventory, being so large, gets a lot of attention in the media and can sometimes be taken the wrong way.Yes, inventory has doubled.  But, it has doubled compared to all time lows.Freddie Mac reports that Nationally, the market is undersupplied by 3.8 million housing units.So, the increase in homes for sale is a good thing for the market and is nothing like a glut of inventory.

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Bargaining Power

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Buyers (finally) have more bargaining power.  For many, many months sellers had the distinct upper-hand and commanded above-list price offers.  Bidding wars were the norm.  Buyers had virtually no negotiating power.The numbers show that the dynamic has absolutely changed.The ratio of the final sales price to the list price is now at 98.1%.From April 2020 to July 2022, the ratio was at or higher than 100%.The peak was in April 2022 at 104.3%.In the span of just a few months, sellers have gone from multiple, over-list price offers to expecting to come off their list price.

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Bargaining Power

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Buyers (finally) have more bargaining power.  For many, many months sellers had the distinct upper-hand and commanded above-list price offers.  Bidding wars were the norm.  Buyers had virtually no negotiating power.The numbers show that the dynamic has absolutely changed.The ratio of the final sales price to the list price is now at 98.1%.From April 2020 to July 2022, the ratio was at or higher than 100%.The peak was in April 2022 at 104.3%.In the span of just a few months, sellers have gone from multiple, over-list price offers to expecting to come off their list price.

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Inflation and Housing

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Yesterday’s Consumer Price Index report for October showed a lower-than-expected increase in inflation.  Many believe, based on the numbers, that inflation rates may have peaked.  Investors cheered and the stock market showed its biggest increase since bouncing back from the pandemic-caused bear market in 2020.So, what does yesterday’s news mean for housing in the short term?
  • Higher real estate consumer confidence as fears of inflation will likely subside and people will feel wealthier as their investment accounts rebound
  • Lower mortgage rates because they track the yield on the 10-year treasury which has fallen over 8% since Friday 
Yesterday’s news certainly is a positive for Front Range real estate.

The post Inflation and Housing appeared first on Fort Collins Real Estate | Fort Collins Homes for Sale & Property Search.

Inflation and Housing

/in , , , , /by
Yesterday’s Consumer Price Index report for October showed a lower-than-expected increase in inflation.  Many believe, based on the numbers, that inflation rates may have peaked.  Investors cheered and the stock market showed its biggest increase since bouncing back from the pandemic-caused bear market in 2020.So, what does yesterday’s news mean for housing in the short term?
  • Higher real estate consumer confidence as fears of inflation will likely subside and people will feel wealthier as their investment accounts rebound
  • Lower mortgage rates because they track the yield on the 10-year treasury which has fallen over 8% since Friday 
Yesterday’s news certainly is a positive for Front Range real estate.

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A Numbers Game

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Here’s a fun fact. Generally speaking, a Seller should expect to have between 8 and 13 showings before receiving an offer.

The exact number of course depends on price point and location.

So, how quickly a property sells depends upon how quickly those showings are generated.

The old adage of ‘it’s just a numbers game’ is true.

A certain number of people need to look at a home before someone makes an offer.

If a home isn’t generating showings, it is usually because the property is priced too aggressively, isn’t being marketed professionally, or both.

For a Seller to have a property sell along the Front Range, their simple mission can be to generate 8 to 13 showings.

The post A Numbers Game appeared first on Fort Collins Real Estate | Fort Collins Homes for Sale & Property Search.

A Numbers Game

/in , , , /by

Here’s a fun fact. Generally speaking, a Seller should expect to have between 8 and 13 showings before receiving an offer.

The exact number of course depends on price point and location.

So, how quickly a property sells depends upon how quickly those showings are generated.

The old adage of ‘it’s just a numbers game’ is true.

A certain number of people need to look at a home before someone makes an offer.

If a home isn’t generating showings, it is usually because the property is priced too aggressively, isn’t being marketed professionally, or both.

For a Seller to have a property sell along the Front Range, their simple mission can be to generate 8 to 13 showings.

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Luxury is Stronger

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The market above $1,000,000 is stronger than the market overall.This is true in both Northern Colorado and Metro Denver.The luxury market is not slowing to the same degree as the overall market.In Northern Colorado:
  • Closed transactions are down 41% in the overall market and 26% in the luxury market over $1,000,000
  • Pending transactions are down 44% overall and only 13% in the luxury market
In Metro Denver:
  • Closed transactions are down 40% overall and only 13% over $1,000,000
  • Pending transactions are down 41% overall and only 17% in the luxury market
This is likely because higher-end buyers are not as sensitive to higher interest rates and there tend to be more cash transactions in the luxury market.

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Big Jump

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We are seeing a big jump in properties for sale as measured by months of inventory.​​​​​​​

As a reminder, a market is considered balanced when there is between 4 and 6 months of inventory on the market.  Meaning, at the current pace of sales, it would take 4 to 6 months to sell all of the properties currently for sale.

Inventory one year ago at this time was:

  • 1 month in Northern Colorado
  • 0.7 months in Metro Denver (3 weeks)

Today the inventory is:

  • 2.3 months in Northern Colorado
  • 2.3 months in Metro Denver

This represents a:

  • 164% increase in Northern Colorado
  • 245% increase in Metro Denver

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