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Happy New Year! I trust you all enjoyed a joyous holiday season with family and friends, complete with both relaxation and adventurous travels. As we embark on 2024, I hope you've set inspiring business goals to make this year truly remarkable.
Let's briefly delve into the regional reports for December 2023, with a comprehensive review of 2023 coming your way shortly. Early insights into the data unveil intriguing trends that promise an insightful discussion.
We often anticipate a seasonal slowdown from November through February, a trend that has persisted—until it didn't. Reflecting on the period of 2019-2020, an unprecedented shortage of inventory disrupted the conventional dip in sales, fueled by sustained demand throughout winter. Interest rates were quite a bit lower back then. What does this have to do with today? I hope to paint that picture for you.
Back when I incorrectly predicted the timing of when interest rates would decline, I also predicted what would happen when they do. Declining interest rates mean that the cost of owning a home becomes less expensive. The sweet spot, or tolerance of the buying pool in general, has been pegged at 5.5% by the experts. That’s when sellers are supposed to become more amenable to selling their current home and buying its replacement. It’s also when the general buying pool is happy enough to come back out and shop ‘till they drop. So, what happens in the interim, between now and 5.5%?
I think you are looking at the interim. Overall inventory is lower than it was last year, but sales are much stronger than expected. This could be a turning point. Ten of the twenty areas covered in my reports are at or above last year’s sales totals for the month of December. Another small handful fell just a few closings short of last year’s mark. This is an improvement, albeit small, but a positive shift we haven't witnessed in about 18 months. The primary catalyst appears to be the decline in interest rates, now down to approximately 6.5%.
Longmont Area Real Estate Stats December 2023
Boulder Area Real Estate Stats December 2023
Northern Colorado Real Estate December 2023
There is still a lot of ground to cover today’s 6.5% and 5.5%, strategic thinking could make all the difference. With interest rates moving in a favorable direction, this opportune moment invites buyers and sellers to approach the market more tactically than emotionally. The date the rate thing didn’t look so good with rates climbing. The same goes for the rate buy-down. It’s hard to trust those ideas to work when rates are climbing, but capitalizing on them now may be a prudent move.
Beyond the declining interest rates, buyers also enjoy the added advantage of purchasing homes at 2022 prices, as housing costs have remained relatively flat. In my upcoming 2023 year-in-review report, I'll delve into the details, but preliminary numbers suggest a 16% decrease in total closings in 2023 vs 2022 (down to 11,047). Notably, the yearly average and median prices of Longmont and the Carbon Valley (Firestone, Frederick, and Dacono) mirror those of 2022, fluctuating by just +/-1%. This essentially means today you're acquiring a property at 2022 prices—a significant discount considering the 10+% annual increases we've witnessed for the past 8 years.
In terms of area reports, this month appears relatively stable. Any increase in days on the market are predominantly attributable to new home construction. In the graph, the percent decline in sales volume is from either 2020 or 2021, whichever was higher. Noteworthy in the Boulder report is the influence of two Rock Creek resales for over $1M, built in 2000, impacting just 9 total sales.
Wishing each of you a prosperous and fulfilling 2024!
Best regards,
Kyle Snyder
