Summer Greetings from Summit County!
Dear Clients and friends.
Rather than do a Keystone/ Summit County Newsletter stating how GREAT the Real Estate Market is, I thought sending you a couple of articles forecasting where the Real Estate Market is headed would be more important. As a seasoned Real Estate professional, I subscribe to many Newsletters and Journals regarding the Colorado and National scene. Below are two credible recent articles ( abbreviated by me) …..
Hope you will find them informative. - Bill
|
|
ARTICLE I
“There is no real estate inventory in Colorado, yet closings are up” …… an excerpt ….
from Glen Weinberg: Fairview Lending who is based in Steamboat Springs, CO.
If you look at Denver county, the number of properties sold is up 10% , in Routt County (Steamboat) sales of single family homes are up 30% over 2019. If there is no inventory/ little inventory available, how are sales continuing to break records? Is there another metric we should be focusing on?
A metric other than inventory?
Historically one of the key metrics in real estate to focus on is "available inventory." How can inventory remain at historic low levels and yet sales are still extremely high? There is something else going on in the markets; how quickly are homes moving from listing to sales?
What is Absorption rate?
The term absorption rate refers to a metric used in the real estate market to evaluate the rate at which available homes are sold in a specific market during a given time period. It is calculated by dividing the number of homes sold in the allotted time by the total number of available homes. I like to refer to this as the “velocity” of the market. In other words, how quickly is the market moving.
When I track Denver County, not only has inventory dropped 17% since the same period in 2019 sold listings have stayed about constant, leading to the frenzy we are seeing in the market. In a nutshell, the absorption of properties has quickened, leading to the “hot” real estate market.
|
|
What is in the data?
We are seeing throughout Colorado real estate is “hot”. What does this really mean? What is the data saying? I looked at the last four years of sales in Denver County of single family homes and in Routt County of single family and condos. The data is fascinating. In both Denver and the resort markets like Steamboat, it is not just anecdotal that real estate is moving quickly.
In Denver, the absorption rate is now 84%, meaning 84% of all houses listed within a month are selling. Steamboat is around 77% up from a historical average of around 45%. The condo market is astounding with absorption up to 114% which means that all the inventory in a month plus whatever was lingering on the market was sold.
"The pace of absorption" is one of the biggest drivers of appreciation. It is showing that demand has stayed robust as properties are bought/sold quickly leading to considerably higher prices.
WHERE DO WE GO FROM HERE?
-
Prices should start to slow the absorption rate: As prices continue to rise, more buyers are priced out which should begin to temper demand.
-
More listings due to high prices: With prices reaching a peak in many markets, this has brought out a new group of sellers looking to cash in on the lofty valuations. This trend should continue and accelerate through the fall.
-
Switch from goods to services: As the economy reopens there is a large shift from goods like houses to services like restaurants, travel, etc… We will see a huge reversal of spending pattern shifts over the next year which will put a damper on future sales.
-
Interest rates: The Federal reserve hinted at a tightening coming down the pipe. The move in rates has yet to be factored into the markets expectations of interest rates. I anticipate a large jump in interest rates over the next 90-120 days which will drastically cool the market as houses are relatively more expensive.
-
Labor Day: It is fascinating how many economists and people I have spoken with have a date of labor day in mind when the world “normalizes”. Labor Day is the date that schools should be back full time, businesses recall many of their workers, and a more “normal” pattern begins to emerge. If all these events occur on our around Labor day this will cool the real estate market and it too should behave a bit more normal.
Will prices fall?
I am doubtful we will see any major changes in Colorado on the pricing side. In 08 before the crash there was considerable overbuilding and lax underwriting. Neither of these conditions are occurring today. Furthermore, there is a lot of wall street money getting into the single-family rental game which should help keep demand strong.
The one concern area is in the rural/non metro markets throughout the state along with the suburbs. As the economy continues to reopen there will be a large movement back to old patterns where people live closer to work.
|
|
What should Buyers and Sellers do in Colorado’s hot housing market?
1. Seller: Now is the time to sell. With the absorption rate so high in many markets, now is the time to sell. It is likely the best time in the next 3-5 years.
2. Buyer: Patience should allow more inventory to enter the market. Although I don’t see any large drop in prices in most metro and resort areas in Colorado, the feeding frenzy will slow down allowing buyers to take a measured approach to a purchase without the insane bidding wars and pressures of today’s market.
|
|
Honed, professional expertise, experience AND FULL TIME commitment to clients needs and goals are ESSENTIAL for optimum success in this historic, competitive environment. |
|
ARTICLE II
From Inman Connect …. A NATIONAL Real Estate Newsletter.
New listings fell 3 percent for the week ending July 3. But with year-over-year increases during 12 of the last 15 weeks, the analysis concluded that the dip was a direct result of the 4th of July holiday.
“While the holiday led to a dip in new listings, growth should bounce back in the weeks ahead as record-high prices continue attracting more homeowners to the market. Combined with recent improvements in the overall trend of inventory and the pace of home sales, the market is showing some early signs of relief from this year’s frenzy,” realtor.com Chief Economist Danielle Hale said.
New listing growth over the past few months has helped slow price growth, giving buyers some room to breathe. And while the number of total active listings was down 39 percent year over year, the decline is shrinking. In fact, according to the analysis, it marked the 13th consecutive week that saw smaller year-over-year declines.
The typical time a home sits on the market is also showing early signs of relief. According to the analysis, time on the market was 23 days faster for the week ending on July 3 compared to the same time last year. While homes are still flying off the shelves, it marked the third consecutive week the year-over-year gap shrunk.
The shrinking gap hints at a market behaving in accordance with the season. During a typical year, as the fall months approach, the average time a home sits on the market gets longer. If 2021 sees normal seasonality, the analysis predicts that the gap will continue to get smaller.
A Redfin report from earlier this month backs realtor.com’s prediction and found that since the summer began, the fast-paced market has been slowing with dips in pending sales and online searches.
According to the July 2 report, Google Trends found that online searches for “Real Estate” fell below 2019 levels for the first time this year, and the number of mortgage purchase applications for the week ending on June 25 fell to the lowest level since May 2020.
But even with these early signs of potential relief, the housing market is still competitive and prices are still high. Per the realtor.com analysis, median listing prices saw a 10.1 percent year-over-year increase, marking the 47th week of consecutive double-digit growth.
“I still wouldn’t call the market buyer-friendly – as it continues to demand quick decisions and top dollar – but it’s finally inching in that direction. If the shift towards more typical seasonality continues, we could see the usual fall break in prices return this year,” Hale said.
|
|
SUMMARY
It is not just anecdotal that Colorado real estate is hot. From Denver to the resort communities and everywhere in between absorption rates have increased leading to bidding wars and ultimately higher prices. The feeding frenzy in Colorado will not last much longer. I am already seeing signs of cooling as more properties come on the market due to the high prices. As interest rates rise and spending patterns normalize so will real estate. If you are a buyer, now is the time to sit tight. The opposite is true if you are a seller, now is the time to move as conditions are still extremely favorable. If the experts are correct, Labor day will be the tipping point for more “normalization” in the real estate market.
|
|
Honed, professional expertise, experience AND FULL TIME commitment to clients needs and goals are ESSENTIAL for optimum success in this historic, competitive environment. |
|
OUR SHOWCASED PROPERTIES
for questions and inquiries, please call us!
|
|
 |
NEW to MARKET!
1090 Blue River Pkway 4- #204
Silverthorne, CO
1 BR | 2 BA | 860 sf
1 car garage
offered at $685,000
Listing: Bill Bergman
ph 720.291.3299
For Property website
|
|
|
|
The New Sanctuary ** at Keystone (Under Contract) |
16 Sanctuary Ln, Keystone, CO
4 BR | 4 BA | 2,627 sf
offered at $1,575,000
2 car oversized garage
Listing: Elle B. WiLLson
ph 970.389.5248
For Property website
|
|
|
|
Development Update for ** "The New Sanctuary" at Keystone
Future Releases:
18 Sanctuary Lane – Paired Home
10 Sanctuary Lane – Paired Home
12 Sanctuary Lane – Paired Home
200 Caravelle Drive - Single Family Home
|
|
Please click on graphic below to enlarge Site Plan for The New Sanctuary |
|
|
|
500 Tennis Club Rd #1327
Keystone, CO 80435
2 BR, 2.5 BA, (plus Office) 1,547 sf
offered at $775,000
Listing: Bill Bergman
For drone video,
|
|
|
|
Bergman Realty Group
Bill Bergman (MBA)
Managing Broker/ Owner
direct: 720.291.3299
|
|
|
If at any point you wish to stop receiving my emails, please let me know. My top priority is keeping my clients as informed as possible, not to send unwanted information.
Should you have any questions, or would like to discuss anything further, please don't hesitate to give me a call.
Sincerely,
Bill
|
|
|
|
|
|
|
