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This past weekend I was asked to comment on the current status of the local real estate market. I declined. Shocking, I know. Things feel as if they have been shifting a bit and I didn’t want to say anything until I had pulled the data. I’m glad I held my tongue (for once, right?). It’s felt as if the prices have been flattening and homes were on the market longer – wrong and wrong again.
The “feeling” or idea that prices were flattening came from a combination of data inputs. The first is the chatter on the streets. I speak to a lot of Realtors every month and I don’t hesitate to ask how their business is going. I would never pass up the opportunity to gather this information from the market makers themselves. The rest is my daily reading, new listing data, closings and whatever else comes across my desk. This past month the information pipeline has been pretty clear: market slowing and less upward pricing pressure. Data from the MLS says otherwise.
November data shows a drop in total closings of 11.1% versus last year. This isn’t anything new. It’s been happening all year and is directly due to lower inventory. Days on market in November dropped by an average of 8.5 days in the region, so where is the slowing “feeling” coming from? Average and median sales prices are rocking to another 20+% year over year increase and it’s even up a fuzz in an October to November comparison. So, I ask again, where is this “feeling” coming from?
November 2021 Longmont Area Real Estate Statistics (.pdf)
November 2021 Longmont Area Real Estate Statistics (.jpg)
I can only speculate why the feelings of the market do not match the data from the market, so I will. Three reasons for sure…maybe four.
- Average Price Indifference. Look at the blue lines in the graph this month. Look at the ones on the far right that represent 2021. We’ve set a record so many time we aren’t impressed. We’ve seen and heard that story so many times nobody is impressed, and the excitement is gone.
- Days on Market Over-Expectation. When agents get used to living in a world where average days are in the 30’s, there becomes an expectation by agents and sellers that almost anything will sell quickly. Add in the multiple offers scenario and a feeling of invincibility sets in. Once the multiple offers are taken away, it feels like things have slowed down dramatically. In November of this year about 15% of solds went under contract in 7 days or less. Last year, just 10%.
- Low Inventory Fatigue. Yup, it’s a thing. Right now, there are 100 homes in Active status (remember, my report includes A, U/C, A/B, and P) and we expect to sell about 360 homes. That’s about 10 days of inventory for those who don’t do math. Who wants to fight through that rat race, the cold weather, and moving during the holidays?
- He’s not Busy because I’m not Busy Fallacy. If I’m busy and three people near me are busy, then we all feel busy. If I’m busy and those three people aren’t busy, then a majority of the group doesn’t feel busy. That might be the case here. Again, 95 closings in Longmont last month, only 24 by Longmont agents. This means that only one out of four homes sold in town went to an agent in town. There were several who surely didn’t feel busy.
I hope you like the updated graph this month. It clearly shows that prices are on the rise and inventory is on the decline. The supply/demand stuff won’t go away any time soon. We will never build enough to keep up with the demand, so prices will continue along this trajectory. Inventory may change course, but not any time soon. Notice how there is a January spike in prices just as there is a dip in inventory… maybe people do want to move in the snow and cold.
Here is another list I found for your sellers - The top 10 cities for expats living and working abroad in 2021
And an interesting read – Investors bought $1.7 BILLION in metro area homes
Cheers,
Kyle Snyder
720-534-8355
