Written by: Rick Hausman, Supervising Broker, Roots Real Estate.
The weather isn’t the only thing that warmed up early… So has Real Estate Activity.
Residential Detached Market Analysis
The number of homes sold (detached and attached), and the median sales price is up in March compared to March 2011.
In my opinion in any market more important than gross numbers are the relation between them. The ratio of buyers to sellers or balance between supply and demand. Over the past few years Fort Collins Real Estate market has remained fairly stable and healthy compared to many in the nation. This occurred despite declining sales volume because of declining inventory. The trend of declining inventory in Fort Collins continues. In March 2012 IRES reports inventory is down 20% versus March 2011(some of which may be explained by a methodology change) and March 2011 inventory was down 21% versus March 2010. Declining inventory is old news… What’s new this year is increased demand. Residential detached Sales in March 2012 are up (226 versus 171) compared to 2011 and 2010.
Attached Dwelling Market Analysis
The attached market mirrors the detached market with significant declines in inventory but more modest increase in sales. One factor which may be influencing the inventory decline (in both categories but more significantly in attached units) is the low vacancy rate. Some sellers are deciding to rent properties rather than sell them due to the low vacancy, high rents and selling market values.
Increased demand (at least through the 1st quarter) may be the new trend. What can increase demand and turn a market around can be complex but in the most basic analysis the key would be jobs. In February of 2010 the Fort Collins/Loveland MSA had 160,105 employed and in February of 2012 that number was 165,100 which translates to unemployment rates of 8.2% down to 6.8% (according to the Bureau of Labor Statistics). More jobs translates to higher demand for housing.
If these trends continue their will be upward pressure on price. With declining inventory and upward pressure builders will pull more permits to meet demand and some sellers who have been waiting to sell may put their homes on the market. As the highest sales months approach will more inventory come onto the market to meet the demand?
Is this “officially” a seller’s market?
Many define a buyers market as more than 6 months inventory and a sellers market as less than six months inventory. By that definition using current active listings and the average monthly sales over the last 6 months the Fort Collins market would be neutral (3 in chart above) with a 6 month inventory. However that average monthly sales volume is over the slowest sales period (winter months) and so if you use the March sales volume (which is usually lower than the April, May and June period) the inventory would be about 5 months supply and a sellers market.