Days on market continues to plummet and months of inventory is less than 3.5 months in half of our major MLS areas right now.
Here is a review (at times staggering) of the price trends for the 8 MLS areas we most frequently list and sell in. Values are compared to First Quarter 2012.
In April 2006, a very bored manager of a little real estate outpost on Library Lane (yes, that is the street name) decided to stick his toe back into the kiddie pool of real estate. Between reviewing contracts and making sure sellers were signing Addendum A’s, this agent went looking at the data, remembering the puzzling and vexing questions of his client, Chandra Narumanchi, who, the previous year, had the audacity to demand to know the months of inventory in his neighborhood, and what the probability of his house selling might be.
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:
My buddy Jay Epperson with Re/Max Cherry Creek in Denver is working a “Pick Your Neighbor” Campaign with his database and farm, which means the good folks of Stapleton and east Denver are being enlisted to help find homes for sale.
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 don’t believe in silver bullets. It’s why cable news doesn’t work well for us. Things don’t get easily distilled down into one minute 15 second soundbites of information.
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?