Thursday, April 5, 2012

Summit County Colorado Real Estate Market Conditions - April 2012 Update

First time since pre-recession: dollar volume steady; number of transactions decline showing price stabilization.

Have We Hit the Bottom? Probably

February 2012 had a total of 61 residential improved transactions, down 18 from January’s 79 – a decrease of almost 23%. From December to January, number of tranasactions dropped 31%. Total residential dollar volume in February was $37.7M down $.1M from January’s $37.8M. With 23% less transactions and the same dollar volume, trends indicate that prices are leveling out. If you were one of those people who I told I would warn you when we hit bottom – here is your warning: “It seems we may have hit the bottom.”

Dollar volume for all types of property was $43.1 M in February an increase of 7.4% from January’s $40.1M. Total number of transactions in February for all types of real estate was 79 down 17 from January’s 96 – a decrease of 17.7%%. February 2012 dollar volume was up 12% from February 2011 which posted $38.3M in sales.

The analysis from Land Title, who reports these statistics, is as follows:

Market Analysis % Change showing years 2004-YTD 2012: Monetary Volume in February 2012 is up 12% from February 2011 with 2011=$38,351,800 and 2012=$43,118,700). Transactions in February 2012 were down 11% from February 2011 ( 2011=89 and 2012=79). With the Sales transactions taking a little dip, and volume holding this month indicates that the average prices are stabilizing. This is the strongest showing since pre- recession in 2008. YTD- Gross Volume is up 2% and Transaction Volume is only down 1%.

March 2012 residential sales from our MLS indicate 69 residential properties sold with dollar volume at $37.6 million – No great improvement, but no drop either for a historically slower month.

The price point with the most activity in February 2012 is the $200,000-$300,000 and for the first time I can remember, the $500,000-$600,000 category with 11 sales each. An increase in sales in the $500K-$600K range helps to explain why dollar volume remained steady but number of transactions decreased. In second place is the $300,000 - $400,000 price point with 10 sales and the under $200,000 category, which usually has numerous sales, only has 3.
Average prices from 2006 to 2011 are as follows; 2012 numbers are year to date averages:

Single Family Homes:

2006 - $737,253
2007 - $798,889
2008 - $835,803
2009 - $905,030
2010 - $770,797
2011 - $734,262
2012 - $790,140* ($665,421 – January)

Multi Family:

2006 - $333,501
2007 - $406,529
2008 - $463,633
2009 - $398,051
2010 - $425,080
2011 - $367,280
2012 - $362,211 ($337,853 – January)

Vacant Land:

2006 - $311,951
2007 - $391,587
2008 - $470,260
2009 - $399,025
2010 - $336,625
2011 - $246,478
2012 - $208,020 ($131,500 – January)

*In February the sale of $3.225M new construction home in Shock Hill in Breckenridge is the reason the average single family home price jumped by almost 19%. As the year progresses and more data of sold single family homes are included, I would expect this number to go down.
As of April 4, 2012, there are 1,214 active residential listings in Summit County, up 26 from the beginning of March. The total dollar value of current inventory is $871 million. As of the same date there are 367 land listings, down 3 from March.

With respect to residential listings, average days on the market is 426; median days on the market is 293.

Our MLS is showing 187 residential properties currently Pending, up 30 from March. Total dollar volume of pending properties per list price is $103.8M. Pending properties have increased which means that number of transactions and dollar volume will improve in the next few months.

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, 4.7% of residential properties are for sale and 14.3% 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 61 residential properties selling in February and inventory of 1,214, it will take almost 20 months to sell the entire residential inventory.

Below are the total dollar amounts of sales in February from 2004 to 2011:

February 2004 $62.7M
February 2005 $72.1M
February 2006 $76.6M
February 2007 $88.3M
February 2008 $64.5M
February 2009 $27.2M
February 2010 $36.0M
February 2011 $38.3M
February 2012 $43.1M

Total Dollar Volume for 2004-2011 is as follows:

2004 $1.12B
2005 $1.47B
2006 $1.63B
2007 $1.63B
2008 $1.06B
2009 $683M
2010 $698.4M
2011 $684.2M

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

What does all of this mean to you?

This month presents a new trend that we haven’t seen since pre-recession 2008 – a decrease in number of transaction, yet an increase in dollar volume. While there was the sale of $3.2M single family home which may have skewed statistics a bit, the number that most surprised me was the increase in sales in the $500-600K range. Given this trend, I peeked into March sales in our MLS where almost half of the residential sales fall between $100,000 and $400,000, showing me that this trend may be an anomaly. However, it could also signal the start of a price recovery in Summit County Real Estate. In any event, this trend along with my personal experience of working with more buyers and witnessing more properties going under contract, does signal to me that we have hit the bottom and are in a state of recovery – even though it may be a slow recovery.

If you are a buyer on the fence, it may be time to get more serious, especially as new listings begin to hit the market and with more buyer competition, the best properties will be swiped up faster than the last few years. If you are a Seller, you still need to be priced right so don’t think this bit of good news is a reason to increase your asking price by 10%.
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