This manager made a fateful and foolish decision. He embraced his inner nerd. He began churning out data. He began to wax eloquently (and sometimes, quite opinionatedly) about the market and it’s trends. He sent out a two page SEND-ALL email written in Word with a mess of numbers. He printed it off and distributed it at a company sales meeting. He called it “The Stat Pack.”

That month, April 2006, was also a fateful month in local real estate. It was the same month that the real estate market tipped from the gonzo insanity of “buy know or be priced out forever” (a quote from former NAR lead economist David Lereah, author of 2005′s fateful “Why the Real Estate Boom Will Not Bust“). That single month, asking prices rose, sales prices mysteriously dipped, inventory soared and so did interest rates. By the end of June, there were 1200+ more listings for sale than the same time the year before. This Stat Pack thing just happened to launch at the same moment that the market tipped.

The Stat Pack has officially been retired. There are three reasons. The first is that my old (yes, the geek and the manager and the author are all one in the same. Back to first person singular) brokerage that I left three years ago insists on producing a document of the same name. The second is that documents suck and video, even bad video like mine, is better. The third is that the market has changed. We are now at a 13 year low in inventory. We are at the lowest supply of housing after first quarter in MLS history (3.5 months to sell through all of it). We are at the highest rate of sale in 6 years. And the house money of 3.6% interest rates is still out there.

Anything decent will not only be gone by Monday, but will have a bidding war take it out. Here are the cold hard facts in moving graphic form, narrated by yours truly:

Think back two years ago, and would you have thought the market would come to this? In an era of 12-year low inventory and even national pending sales that are approaching what they were in the peak of the First-Time Buyer Tax Stimulus, the market is seeing a major-league squeeze. These are just my metrics, but the last five contracts I’ve written, either listing or buy side, have all involved properties on the market less than 48 hours.

Less than 48 hours.

Jay sent me a referral and I did a market analysis for this seller last August. Now they’re ready to go.

Take a look in the Buying Pattern difference between 2011 and 2012. I could tell last August the market was flipping upward, but I didn’t anticipate that prices would rise 10%… in just six months.

A lot sold in 2011, but note the gravity for sales around $170,000

Fewer homes sold in 2012, and the squeeze drove prices up: look how many around $200,000

Oh yeah, average market time was cut in half year over year and within that market time, five of the 8 sales last year sold in less than 51 days, or 1/3rd of the average homes were taking to sell-thru in 2011.

Six months, $20K in appreciation.

This will be fun to explain to the appraiser.

We also believe that to really understand something, you have to do two things:
1.) Have a regular practice, and in real estate market reports, that means a somewhat religious consistency to doing the same data each and every month. It’s in exercises like these that patterns are best seen and understood.
2.) Thoughtful analysis comes from good questions. There are such things as dumb questions. But a bigger problem is taking things at face value. Prices are up. Supply is down. Demand is up. Contracts are up a lot. Well… why is all that happening?

As we change The Stat Pack this year into a blog format, this is our monthly second installment, on the theme of, “why’s that happening?” This month: What’s Squeezing the Market?

Go Pepsi. I hate both teams.

Western Colorado Springs is always a hard one to get a finger on. The older a home is, the harder it is to price. The newer it is, the fewer generations of improvements have been made, theoretically the conformity should be tighter, the pricing more predictable (see Newport Heights and Stetson Hills for vivid examples of this effect). So make the homes 30 to 60 years old, put them near these big rock formations and a bunch of cool bars and restaurants, add in mountain bikes and walkability with predictable traffic patterns (like, none) and you get Old Colorado City and West MLS areas.

OLD COLORADO CITY was divided into three groups. We did not include areas south of Highway 24 primarily because of lack of data and variances due to new construction in Gold Hill Mesa. The three groups were pretty simple geographically: East of 8th Street; between 8th and 21st; west of 21st to 30th. Highway 24 was the southern boundary.

OCC east of 8th: this was the largest price elasticity we saw during this project. There was one occasion of a homes of similar size selling at 3 times the difference in price and numerous examples of homes similarly sized selling for 2 times the price of their peers. The area didn’t sell terribly well due to a high failure rate, but almost 40% of the homes sold in less than 30 days. 

OCC between 8th and 21st: While the extreme fluctuations in pricing were less in this area, prices tended to be higher, and more “consistently inconsistent” with widespread variety in pricing.

OCC between 21st and 30th: this is the stretch that we think has the most opportunity for investors looking to make short-term profits and for those looking to make a long-term buy-and-hold profit. The reason is walkability. This is the only section of Colorado Springs that will regularly score 75 or above on Walkscore.com. Not everyone wants that benefit. But given how scarce it is, we venture that there are far more that do want it, then the city offers. Add to that our little example of sizes of homes all selling from $173,000 to $175,000 in the last six months, and the investment merits of this area start to really shine.

WEST (WES)

We wanted to add Roswell to this report along I-25, but it’s too bloody hard. The mapping is weird and the pockets of it are so many we did not feel that it would could be described by something as scientifically rigid as these graphs. So it was omitted as too difficult. Chelsea Glen was also omitted, although that was probably a mistake, because we included Canyon View and there were half as many sales in there this year as Chelsea Glen (which had a good year). So there, that we made a mistake and forgot one. Damn. The big three areas are all here: Pleasant Valley (and the mesa above); Holland Park; and the creme de la creme Kissing Camels.

Pleasant Valley: We’ll tell you something most other real estate websites won’t: if you want a really good home in Pleasant Valley, it’s probably a for-sale-by-owner purchase. We know, because we had one buyer offer on six different For-Sale-by-Owner properties last year, before they struck gold on number seven. It also means that we trust this data only partially. We know factually that a great number of sales happened in this area outside the MLS in 2012.

Holland Park: Most of Holland Park’s sales were under $200,000 and most of the failed-to-sells were over $200,000 making this market somewhat predictable for the westside. Probability of sale was around average for the city, but it ended strong, with half of the available inventory at year’s end spoken for by contract.

Kissing Camels: Prices did not have a good year in Kissing Camels with the average sale at $665,000, down from the upper $900′s a few years ago; but then, many of those fantastic mansions on the greens aren’t even for sale, so it’s not exactly an apples for apples comparison. It is notable how strong the market was between $550,000 and $800,000, and Cathedral Ridge now has dirt moving again. 

Some MLS Marketwide baselines… Probability of sale last year for the entire MLS was 63.8%. That was the highest probability since 2005. These graphs sometimes reflect mostly lower numbers, but that is because the software counts under contract properties as still “active”. In essence, these are contracts, and in certain cases, we notated what happens to months of inventory and probability of sale if you “count the contracts” that are there at the start of the year. Saying that, for the most part, Northgate inventories are low carrying over into 2013, but there are not a lot of under contracts in these neighorhoods outside of Flying Horse.

If you would like any of these slides emailed to you for specific information, hit me up at Benjamin@BenjaminDay.com. Yes, we realize that they read a little small, but we’re preciously attached to our WordPress format, so, sorry.

The software used to create these graphs is from http://www.Focus1st.com and we used a date range of January 1, 2012 to January 11/14, 2013 for all of the searches, doing as many as possible on two different business days to get a competitive comparison for a single snapshot in time.

Disclaimer time: Benjamin Day composed this blog post and is solely responsible for it’s content. This information reflects data and opinion of real estate licensee in The State of Colorado. Based on information from the Pikes Peak REALTOR Services Corp. (“RSC”), for the period January 1, 2012 through January 21, 2013 . RSC does not guarantee or is in any way responsible for its accuracy. Data maintained by RSC may not reflect all real estate activity in the market.

Audubon: Like some of the neighborhoods in Briargate and Northeast, there was a multi-market effect in Audubon, with three different markets operating here: there was a remodeled market, an average, tidy condition market, and a below market-quality but “good enough floorplan and lot to work on it” market. Persistent appreciation can be seen in the seasonal buying pattern.

Country Club: some of the largest variances in price can be found in Country Club, an area that backs up to the golf course, Palmer Park… and Circle Drive. This is an area with a lot of variables. Considering that the price was well-above average for the MLS area, the probability of sale, while lower than the MLS, was pretty respectable.

East of Wasson (Century Heights): the only real difference between Audubon and Century Heights, other than proximity to Circle Drive (this area is east of Circle) was that there was sightly more elasticity in pricing in this area with values tending to sell at a slightly larger premium above the predicted “average” price in the trendline. Why that’s so interesting: the average price was actually $10,000 less in Century Heights, but there were similar “comps” in both areas showing a likely interchange with buyers. The probability of sale and seasonality of buying patterns was also pretty similar.

Homestead: Two markets, again: a market for homes that have been improved; and a market for homes worth-improving.

Old Farm: The Time to Sell Pattern shows an interesting anomaly about Old Farm: almost all of the sales were between $180,000 and $225,000, a pretty tight little ballpark of price. However, there were three outliers in price. So even within pretty well-defined areas, there are exceptions.

Villa Loma: this area actually bucks many of the pricing regularity trends seen in Homestead and Old Farm because pricing is much more stratified: the median price was almost 10% lower than the average price, but then there were a cluster of sales around $180,000 and another cluster around $200,000 to $225,000, and then a few more above that. The Scattergram shows the larger homes actually breaking further away from the predicted trendline price showing buyers willing to pay a premium to get both square footage and high-quality.

Village Seven: The same trend in Villa Loma was mirrored in Village Seven. For example: in October, there was a sale at $150,000 and another at $360,000, and at least one sale in each $50,000 bracket in-between. It’s not just like there are outliers… there is a wider variety of pricing than in previous years.

Some MLS Marketwide baselines… Probability of sale last year for the entire MLS was 63.8%. That was the highest probability since 2005. These graphs sometimes reflect mostly lower numbers, but that is because the software counts under contract properties as still “active”. In essence, these are contracts, and in certain cases, we notated what happens to months of inventory and probability of sale if you “count the contracts” that are there at the start of the year. Saying that, for the most part, Northgate inventories are low carrying over into 2013, but there are not a lot of under contracts in these neighorhoods outside of Flying Horse.

If you would like any of these slides emailed to you for specific information, hit me up at Benjamin@BenjaminDay.com. Yes, we realize that they read a little small, but we’re preciously attached to our WordPress format, so, sorry.

The software used to create these graphs is from http://www.Focus1st.com and we used a date range of January 1, 2012 to January 11/14, 2013 for all of the searches, doing as many as possible on two different business days to get a competitive comparison for a single snapshot in time.

Disclaimer time: Benjamin Day composed this blog post and is solely responsible for it’s content. This information reflects data and opinion of real estate licensee in The State of Colorado. Based on information from the Pikes Peak REALTOR Services Corp. (“RSC”), for the period January 1, 2012 through January 21, 2013 . RSC does not guarantee or is in any way responsible for its accuracy. Data maintained by RSC may not reflect all real estate activity in the market.