Real Estate News
The Final Quarter
The Real Estate Market update from an eternal optimist-
We all know and hear about how crazy the real estate market is, and I have consistently counseled both clients and prospective real estate professionals that the real estate industry is a roller coaster, so expect the unexpected and hold on for the ride! This year, I am exhausted heading into the last quarter and totally ready to leave this year behind!
Not only has the market in general been difficult this year, but high interest rates, lawsuits, new regulations and proposed legislation changes have affected every segment of the market differently, making it even harder to navigate. So, when you ask 3 various professionals “How’s the market?” and you get 3 different answers, it’s not likely that we disagree with the others perspective, rather that we are answering a slightly different question. For instance if you look at the Colorado real estate market in general, right now we are at an inventory high for the last 10 years. meaning that we have not seen as many homes actively marketed for sale since August of 2014. However, if you look at Evergreen and the entire foothills area market, we had about the same inventory from 2014 through April of 2020. Then, Covid hit and inventory took a tumble as sales went up, creating the perfect seller situation- high demand and low inventory. This caused pricing to hit a peak in May of 2020 (based on ReColorado median sales on a 3 month rolling average). Since then, the foothills have seen prices remain high at an average of around $350/square foot. In Evergreen, we have seen the average and median sales price spike again and remain over $1M through August. Yes, that is correct- the AVERAGE home price in Evergreen is over $1M! In the foothills area (including Conifer, Pine, Bailey, Kittredge, Indian Hills and the western parts of Golden, Morrison and Littleton), it’s been pretty steady, just above $900,000 for the last 18 months. Simply looking at this can be deceiving because certain price points within these areas have been very competitive, while others have slowed significantly. For example, in Evergreen, properties under $900,000 and over $2M are selling, on average, in under 10 days on the market, while homes in the “middle of the market” are listed for an average of almost 30 days.
To look at the combined supply and demand, I like to look at “Months Supply,” which tells us about how many months of inventory are on the market based on the last several months of sales, along with the actively listed properties. Looking at both Evergreen and the foothills areas, we are now seeing our highest supply since 2015, at 4.8 months of supply. This is indicating that our days on market are increasing and I think we will see it continue to increase through the election and holiday season.
So, what does that all mean? What is actually happening and what is likely to happen next? In general, during Covid we saw the loss of “seasonality” as low supply and high demand persisted, making prices go up, giving sellers control of the market. This was driven by several factors including options to work from home, which allowed people to live further away, coupled with historically low interest rates. As folks went back to work, life returned to normal, and interest rates went up, we were faced with a difficult year of low supply mixed with lower demand. No one wanted to list their homes and lose their 2-3% interest rates to trade for a 7% rate. This, along with kids being back in school full time and families settling into their “new” homes, we saw less demand to move. We are currently seeing fewer showings per listing since May of 2020, when we were figuring out how to show homes with the pandemic regulations.
Now, as rates are lowering and the market is opening back up, we are seeing higher supply, and a somewhat increasing demand. But, we are also seeing sellers demanding higher prices, thinking that they are still in control, coupled with buyers that are not ready to pay for homes that are not perfect. Rates, by the way, are now still historically considered low around 6%, although much higher than the 2-3% that some folks are still enjoying from their purchase or refinance in 2020-2022.
The people we are seeing selling and buying are those that “have to move” for life, work, and family circumstances. As a broker, I am definitely feeling that there is less excitement and more burden involved with most transactions right now. More contracts are contentious, fighting over terms and inspection items, and we are seeing more contracts falling through, thus putting the house back on the market. In some cases, we see this happen multiple times. There have been a lot of factors at play this year- interest rates, inflation, and economic issues, and now we are amid the most contentious presidential election races in history. While I’ve told people that by the numbers, the market is finally coming back into a more balanced, normal space, I don’t think the market has realized this quite yet. In short, the market and people are stubborn and not as excited about the moves that they are making so the best way to put it is that the market is difficult.
Thankfully I do see some light beginning to shine at the end of the tunnel. As rates continue to come down, and we expect them to continue to drop through the first quarter or next year, I think more buyers will come back into the search. As these buyers are also less distracted and worried about the election and then holidays, I think we will see a happier, more balanced market emerge heading into 2025. Those of you that know me, know that I always look for good, and I always find some bright side to every challenge I’ve been given. So, understand that I am enjoying and thriving in this final quarter, knowing that it will make us all stronger and appreciate when the market is more cooperative!
