Tag Archives: Colorado Springs Market Data

The Stat Pack, February 2013, Part 1: General Data

Fancy Whiteboards and Fancy Data: The Stat Pack, September 2012

For the full download of data, please visit our monthly report here:

The Stat Pack after the Downgrade

This post rated AA+.

From the subjective analysis that concludes the forthcoming August 2011 Stat Pack.

Advice for market participants:
SELLERS: You are right to believe that absolutely everything favors buyers right now including the price tag on your house. The question you must ask yourself is this: if you were a buyer in this market and this was the first-time you encountered your house, would you buy it? Would you buy your house during a time when the future of Fannie Mae and Freddie Mac is questionable? When the US lost it’s AAA credit-rating? When job security was so tenuous? Yes, this is made up for by the fact that values are depressed, interest rates are incredibly low, and there are 20% fewer homes to choose from then just one-year ago. While all the data is positive as far as “the deal” is concerned, buyers are taxed with everyday concerns that make ANY compelling decision to buy your home  or someone else’s, extremely difficult. Whatever you can do to mitigate those concerns: do it.
BUYERS: This is the very definition of a kick-yourself market. Will you kick yourself for buying in this market? Or will you kick yourself for missing the boat and not buying? EITHER could be true. YOU are the only one that can answer that question, and it must be answered based on your personal situation. In the last 40 years, housing has not been this affordable. And at the same time, the perceived risk of making any major financial investment due to multiple circumstances beyond your control has never appeared greater. If you are in it for the long-haul, and that is defined as a period of time longer than five years of occupancy and ownership, then this is a brilliant market of markets to buy into. If you have any degree of uncertainty about five years of ownership, you best act quick on any decent rental, because there is only 1 – 3% occupancy out there in single-family rental properties.
Analysis:
A memory from my time studying history at Colorado College: freshmen regularly observed that “we learn from history” and “history repeats itself”. These comments would then be thrown out like fresh meat to a pack of starved lions, also known as the upperclassmen, who would pepper the room with their Aristotelian intellect, essentially rehearsing their law school application interview with startling logical brilliance. Of course we learn from history. Of course it repeats itself. But the implications of x and variables y and z will later cause the following courses of action, either action A or action B. It was simple. We were post-Cold War, Clinton-era wunderkids. We had it all figured out. Here was an orderly, systematized world that was easily understood and readily grasped.

Fast forward 15 years…
Standard and Poors just downgraded America’s credit rating to AA+. And the historical precedent for this is what exactly? Beyond that, the administration of this variable onto the system known as global finance will cause what future courses of action? A, B… Z?  Why did Standard and Poors downgrade Fannie Mae and Freddie Mac this past Monday, and not in 2009? Why is France with a substantially larger percentage of debt to GDP still rated AAA? Why can’t I defend away $2 trillion mathematical errors? Does it matter?
The bizarro land of real estate invokes the immortal words of gonzo journalist Hunter S. Thompson (which strangely becomes more relevant with each passing year) “when the going gets weird, the weird turn pro”. There is no editorial accident in constructing a SWOT analysis to lead-off this month’s Stat Pack that shows all strengths and all opportunities as the present condition of the real estate market. Without getting too subjective, it is pretty safe to say that everything out there in the real estate market is really good right now: prices are mostly stable, inventory levels are down substantially, foreclosures are down by over 30% from a year ago (which was down off of 2009), interest rates are microscopic at 4.25% as of this writing, prepaid PMI programs give buyers with high credit, real income and the knowledge to buy in good areas incredible opportunities right now and quite a few sellers want/need to make a deal. Everyone of those statements is objectively, measurably accurate.
The problem has to do with everything else that is beyond the consumer’s ability to control. When you buy real estate you participate in world finance, like it or not. All those subprime mortgages were tied to Mexican banana farms which were tied to Thai import/export companies which were tied to Korean manufacturing which were tied to Irish discount airlines. The series of dominoes from one man’s excessive spending in 2005 and subsequent foreclosure in 2007 ended up carrying global implications because bits and pieces of his mortgage and hundreds of other defaulting mortgages were scattered around the globe to investors in all corners. Everybody, everywhere owned just a little bit of everyone else’s little debts. No problem, until a bunch of those (ahem, AAA-rated) debts start to go bad. In the thunderclap that followed this meltdown, the economy of trust was broken. Banks slammed the doors of trust shut in late August 2007 and have barely cracked them back open. Now ten years removed from 9/11 and the beginnings of a war that has seen the sacrifices of a volunteer armed forces, we live in a society that suffers from disaster-fatigue, where meltdowns are increasingly common and increasingly expected. What’s the next order of magnitude to steal away the headlines? Just when you think you have seen it all, something new happens. And the backdrop for this is an ever-more-toxic political climate, where civil discord is a relic of the past.
Why this matters: Sellers more often than not bought in a feel-good era. Buyers today are buying in a feel-worse era. When sellers bought, their motivations were very different than today’s buyers. More likely, the reasons to not buy were not nearly as pronounced as they are today. This makes a seller’s job of marketing their property to a cynical, distrustful audience extremely difficult. This makes buyers more resistant to making decisions that are based on feeling good. People make real estate decisions electively for one of two reasons: pleasure or pain. It is easier now to market with language like: “pain-free”, “move-in ready”, “all-set”; rather than “luxurious”, “masterpiece”, “incredible views”. The first set of phrases use language that dominates the mind of the buyer: pain; inconvenience; problems; doubt; it then overcomes these fears and pains. A seller must speak the day-to-day language of the buyer in order to demonstrate value in today’s market.
This is all talk about the emotional climate of real estate and the difficulty of gauging cause and effect in today’s economy. The day after the S&P downgrade that basically discounted America’s ability to repay it’s debt, what happened? Wall Street went into shock, losing more than 5% and treasuries – the repayment of which was the very thing S&P was calling into question – saw a surge of money, propelling 30 year mortgage rates down. In the midst of all this chaos, the real estate side of the ledger improved yet again.
Year to date, Colorado Springs Real Estate is having a decent year that no one seems to know about. It is all relative and all compared to the last several years which have not been the rosiest of real estate sales years. This year, there will be about as many sales as 2008, more than 2010, slightly fewer than 2009. But what is most intriguing is that the number of listed properties, while still high based on the last ten years of inventory, is lower than at anytime since 2005. For six consecutive months, inventory has been at 6.1 months or less, a stable balance between supply and demand. Because there are fewer homes for sale and slightly higher demand than this time last year, the earlier drops in average sale price will probably balance out as the year finishes because buyers that are buying are less likely to see new listings come on the market and are more likely to try and make a deal with what is out there now, thus stretching slightly upward in price.
The best advice we can give: if you’re participating in a real estate decision for long-term reasons, ignore the toxicity of the present.

Mid-Year Review: July 2011 Market Stats

Click Here for Mid-Year Review Market Report

The Summer Viewing at Pikes Peak Urban Living is on the cat fight between two market metrics: Average Sales Price and Months of Inventory.

Months of Inventory is a handy-dandy metric to forecast, predict or… guess… what the market will do next. The barometer that has traditionally held sway is a 6 month supply of housing equals a neutral market. Get below six months and stay there and the market should see appreciation and increased seller-control. Go above six months, and that much to choose from sways control to buyers and prices drop. The majority of the last four years have been in excess of 6 months with a few brief months in 2009 under 6 months supply. July 1 showed a reading of 5.5 months. After three previous months from 5.9 to 6.1 months of inventory, that should be a predictor of prices going up.

Yet they haven’t done that.

Average price year to date is off 4% from a year ago. A lot of this was the post-tax-credit malaise that wrecked the market last spring. REALTORS went from running their engines at 110% in April to idling them in May, and never really getting them out of neutral the rest of the year. This year has been somewhat spastic, but overall, prices are steady to down then they’re showing appreciation.

Most everyone has an easier time understanding what has happened as opposed to grasping at what might happen, and correspondingly average price gets a lot of press. But as I spoke about last week, the relationship between units for sale and units sold is pointing to possible to likely improvements. The market has crested in inventory and is in the six to seven month cycle of fewer, not greater listings. There will be new listings each month, but not at the rate that they were before, and many good new listings will be recognized more readily as valuable by active buyers because buyers operating in the second half of summer and early fall generally have to make quick decisions. These are general conditions that don’t always hold, but with fewer than 4800 listings for sale, and two more months under 6 month’s supply likely… it will be interesting to see what happens to pricing over the next six months.

To see the active market numbers, Click Here for the Stat Pack.

Does Supply & Demand Rule Everything? If So, Which Way is the Market Heading?

I’m having more fun with math than any man should be allowed this morning.

Here is a quick snapshot in chart form of what the Pikes Peak MLS Market looks like in Single-Family Sales terms at Mid-Year.

Pikes Peak MLS Mid-Year Snapshot

Now, this is a graph of what the relationship between Supply and Demand looks like at Mid-Year, expressed as Months of Inventory (Total Active Listings Divided by Unit Sales per Previous Month).

2010 Tax Credit Expired on June 30, 2010.

 

 

April 2011 Colorado Springs Real Estate Market Report

How about that for an SEO Title?

April continued the trend of “we don’t know anything” from one month to the next. In January, sales were lousy, but price was decent. In February, sales were again lousy, as in really lousy, but price was outstanding. Additionally, listing volume continued to be lower than expected. Then came March. March had pricing go down to where it was in January (sigh) but saw a 7% increase in closings over the tax-credit fueled March 2010 (hurrah!).

In other words, predicting the market is like predicting when it will snow next in Colorado. Good luck.

Here is the info:

 

April 2011 Stat Pack

On a side note… April marks the Five Year Anniversary of the Stat Pack. I was either the first real estate goober to start obsessively tracking the market (be glad my blog wasn’t around for my 13 page July 2007 edition…) or the last one of the first adopters still standing, but I do not think there is a market report with 60 consecutive months and four consecutive annual reports worth of real estate data tracking the local marketplace. Not to say that term of length makes this any more relevant, just saying. I’m happy this project has gone on five years. Thanks for reading it.

 

2011 Annual Forecast: Part I

How is the market?

I love the question, but have to prep anyone I know that I’m as big a windbag as anyone they’ll ever meet in real estate. I can talk the pros and cons and opportunities and pitfalls like anyone.

For the sake of everyone’s oxygen-supply, I’ve found it’s better to show how the market is rather then tell.

Page 2 of the 2011 Annual Report and Forecast

This is Page 2 of the 2011 Annual Report and Forecast.

This page tells everything that is going on in the macro-market. It doesn’t tell you much about what’s going on down the street from your home, but it does tell you what sellers are feeling and what buyers are seeing. This is the pulse of the market.

This page shows four different trends in graph form: Monthly Listing and Sale trends for the last six years; units listed versus units sold for the last six years; months of inventory (sales-rate) for the last six years; and pricing comparisons (all listings, new listings and solds) for the last six years.

As many people know and acknowledge, 2005 was the peak boom year nationally and locally for the real estate market. That is the baseline for comparison for 2010 sold data in all six graphs.

The relationship between monthly listing inventory and monthly sales was most of out whack in Summer 2005 and Winter 2008. The 2005 sales year was characterized by high purchasing and low inventory; 2008 was characterized by high inventory and low purchasing. But in 2009, inventory started to return to more normal levels. Demand picked up. This lead to a more balanced market. This lead to declarations that maybe the end of the slump was at hand (yours truly: guilty).

What few anticipated was the rapid build-up in listing inventory in the first six months of 2010. Inventory increased from just under 4000 to 6000 in less than 180 days. This spike in inventory actually out-paced the massive listing build-ups (on a percentage basis) in 2006 and 2007. Following the expiration of the tax credits June 30th, the lid was coming off of inventory while demand disappeared. July 2010 was the worst summer sales month in decades. It was then eclipsed by August. Quarter 3 sales were off 26.9% from 2009.

The massive drop in Quarter 3 explains why 2010 ended up as the worst performing year for sales in the last decade. Sales began to pick up moderately in November and December, but the four to five month echo behind the expiration of the tax credits radically changed the game. For the year, it was more probable your home listed for sale would not sell, then sell.

Six months is considered a balanced market. That means prices are not likely to go up or down, but stay flat. Less then six months sustained gives pressure to rising prices; over six months gives credibility to falling prices. Again, this is the market as a whole. There are neighborhoods in the $300K’s with 4 months inventory today; there are neighborhoods in the low $200K’s with 10 months inventory today. But 2010 looked more like 2007 and 2008 then 2009 when the year ended with less than six months on the board. It is worth noting that months of inventory has actually declined through the fall into winter on a monthly basis, after peaking at over 10 months in August. But this graph indicates further threats to pricing in 2011.

For my money, this is the craziest graph of them all, and it doesn’t have to do with my color scheme. It’s all lines merging towards some sort of magnetic pole. Since February 2009, average price has steadily increased. Since approximately the same time, new listings coming to market have moderated their expectations. At the start of Summer, 2009, total listing price began to drop. The average list price in the market has dropped by more than 20% in the last 20 months, while average price has risen to 2004/2005 levels again. In the last four months, when listing volume has slackened notably, sellers that are coming on are increasingly coming on in lower price ranges and/or are coming on closer to in-line with price expectations. If you’re looking for a new listing in the $500K’s, keep waiting; not many have hit the market lately. But if you’re hoping that sellers would quit over-pricing their homes, start looking at inventory again. Right now, new to market average asking price and average selling price are identical as 2011 begins.

So what to make of all this?

We’ll keep un-packing the story later this week. This is some of the data. I’d love to make a neat and tidy explanation of all this, but that would be 1.) cheating and 2.) inaccurate. There’s more data to share to complete the picture and generate the forecast.