Friday, August 12, 2011

Summit County Colorado Real Estate Market Conditions - August 2011 Update

Real Estate Statistics

June numbers flat over May.
Increase in Pending Properties.

June 2011 had a total of 85 residential improved transactions, up only 1 from May 2011. Total residential dollar volume in June was $46.7M, down $2M from $48.7M in May, a decrease of 4%.

While residential volume saw a decrease, looking at all types of properties, June showed a dollar volume increase over May. Dollar volume for all types of property however went up from May’s $56.1M to June’s $65.7M. June transactions included almost $20M of non-residential transactions. Total number of transactions in June for all types of real estate was 104, down 3 from May’s 107.

Total dollar volume on all types of transactions decreased year over year: June 2011 closed with $65.7M and June 2010 closed with $83.8M – a decline of 22.5%. July 2011 residential sales from our MLS indicate 77 residential properties sold with dollar volume at $34.2 million – a substantial decline for a summer month that historically has seen more dollar volume.

The price point with the most activity in June is the $200,000-$200,000 with 17 sales. In second place is the $300,000-$400,000 with 14 sales followed by the $400,000-$500,000 and $500,000 to $600,000 price points with 10 sales each. Ten sales over $1 million closed in June a decrease from the 14 sales in both April and May.
Average prices from 2006 to 2010 are below; 2011 numbers reflect year to date.

Single Family Homes:

2006 - $737,253
2007 - $798,889
2008 - $835,803
2009 - $905,030
2010 - $770,797
2011 - $792,010 ($780,637-May, $764,853-April, $710,227-March)

Multi Family:

2006 - $333,501
2007 - $406,529
2008 - $463,633
2009 - $398,051
2010 - $425,080
2011 - $399,832 ($409,389-May, $409,960-April, $401,769-March)

Vacant Land:

2006 - $311,951
2007 - $391,587
2008 - $470,260
2009 - $399,025
2010 - $336,625
2011 - $261,398 ($261,997-May, $285,563-April, $252,583-March)

As of August 1, 2011, there are 1,832 residential properties for sale, up only 7 from last month. Most of the summer inventory is already on the market, but you can always expect a few new properties to come on the market at any time. The total dollar value of current inventory is $1.29 billion. As of the same date there are 423 land listings, up 6 from last month.

With respect to residential listings, average days on the market is 261; median days on the market is 132. Days on market increased this month because of much less new inventory entering the market.

Our MLS is showing 171 residential properties currently Pending, up 42 from June. Total dollar volume of pending properties per list price is $91.7 million. Pending properties have showed an increase corroborating an increase in summer sales activity. However, with only $91.7 million pending in Summit County, the selling season for 2011 will likely not show any signs of improvement over 2010.

According to Summit County assessor data there are 25,660 residential properties and 2,564 pieces of vacant land. When looking at inventory for sale, 7.1% of residential properties are for sale and 16.4% of vacant land parcels are for sale. Industry experts say that a healthy market has less than 10% inventory.
Industry experts also say that more than 6 months of inventory is a sign of a weak or “buyers” market. With 85 residential properties selling in June and inventory of 1,832, it will take 21.5 months to sell the entire residential inventory. Now, while there might be less than 10% of properties for sale, the lack of buyers can make for a long holding time.
Below are the total dollar amounts of sales in June from 2004 to 2011:

June 2004 $111.7M
June 2005 $112.2M
June 2006 $162.7M
June 2007 $141.8M
June 2008 $92.5M
June 2009 $34.0M
June 2010 $83.8M
June 2011 $65.7M

Total Dollar Volume for 2004-2010 is as follows:

2004 $1.12B
2005 $1.47B
2006 $1.63B
2007 $1.63B
2008 $1.06B
2009 $683M
2010 $698.4M

The year 2006 had the most dollar volume totaling $1,637,874,800.

What does all of this mean to you?

June residential numbers did not impress - instead it was even less than May – a historically low month! July residential closings, according to the MLS, show yet another decline. As I mentioned a couple months ago in this newsletter, this summer was going to be a barometer of how the Summit County real estate market is faring. Unfortunately, it is not picking up, instead it appears to be continuing a slow road downward. Can August transactions save the summer? We will have to see.

Last month, I provided the following historical graphs, but for those of you who didn’t see them, I am going to print them again.

Looking big picture at Summit County Real Estate, Summit has experienced great appreciation over the last 20 years. Recently, average prices have declined around 16%. An interesting side note, the property value reassessments also showed an average of a 16% decline in price. (While people don’t always agree with their property tax valuation, the Assessor’s formula has proven to be accurate with real MLS sales data.)

Sales volume is down 63% from the height of 2006. This factor is the biggest change in our market creating an over-supply and under-demand for Summit County real estate, putting downward pressure on pricing. Sales are steady if not slowing, but surely not increasing. With months of inventory close to two years, it is still a buyer’s market and depending on which neighborhood you want, it could be the perfect time to buy.

To the Sellers out there: Depending on the type of property you own, my advice may differ slightly. In no circumstances are you in the driver’s seat of getting the price you were told it was worth in 2007, but some property types and sectors are performing better than others. With a fairly nice inventory of distressed properties (See Good Deals Section!), in order to sell, properties must be priced aggressively and show beautifully to have a chance to sell. Given absorption numbers, only one in 22 properties is selling each month. How are you going to ensure your property is that one?

To the Buyers out there: My advice has not really changed – although I know you are wondering if we have hit the bottom. I would say we are in the bottom zone, but you never know when the bottom has hit until it’s over. I thought this summer would provide more sales than it has which means there are probably anxious sellers out there. Within this buyer’s market, you can find the right property for a price that we haven’t seen in years. Note that more competition exists in the under $400,000 market.

Amy Nakos, JD, GRI
Your Castle Summit

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