No Omens
Shakespeare famously wrote, “beware the Ides of March” in reference to March 15th.
However, when it comes to luxury real estate, there doesn’t seem to be any bad news on the horizon.
Instead, properties priced over $1 million are certainly on the upswing.
So far this year, there have been 26% more sales of luxury properties in Larimer County compared to early 2023.
And in Weld County, luxury property sales are up 36%.
Strength in the luxury market is certainly an indicator of the overall confidence in Northern Colorado real estate.
Leap Year
The statistic that is leaping so far in 2024 is inventory.
Northern Colorado is seeing a big uptick in number of homes for sale.
However, it is not an alarming amount and is still a ‘Seller’s Market’ by definition.
Larimer County inventory is up 39% and Weld County is up 48%.
Months of inventory is up to 2.3 in Larimer County from 1.7 months a year ago.
Weld County is also at 2.3 months today and was only 1.2 months a year ago.
With higher inventory comes more selection for buyers and more importance for sellers to price right.
More Normal Range
The length of time that it takes for a property to sell is settling into a more normal range.
“Days on Market” is an insightful statistic that counts how long it takes for a property to go from live on the market to sold.
Today measurement stands at 72 days in Larimer County and 74 days in Weld County.
From January 2021 to November 2022, Days on Market never went above 60. This time period was defined by incredibly high demand and drastically low supply.
The time frame of January 2018 to December 2020, which was more ‘normal,’ had Days on Market between 60 and 90 days.
Out of the Gates
How is the year starting? All of us in the real estate industry are especially curious to see how 2024 is starting off after the first slow real estate year in a long time.
Rates have settled down and are trending down.
Prices have shown resilience and continue to go up.
But, how about transactions? Are they picking up after a year that saw an 18% decline in the number of closed residential properties?
It turns out the year is starting off strong but not unusually strong.
Pending transactions are up in Larimer County 7% year over year and up 3% in Weld County.
So, we are already seeing signs that 2024 will be a year of growth compared to last year.
Price Plummet
For anyone waiting for home prices to drop before making a buying decision, there is good news.
The recent plummet in mortgage rates means that home prices, effectively, just took a big dip.
Rates have gone down by 1% in the last 45 days which means that a prospective home buyer’s payment is 10% less today than what it would have been at the end of October.
For example, the Principal and Interest payment for a $500,000 loan is $341 less today than what it was 45 days ago.
So, from a buyer’s perspective, prices have gone down by 10% in a very short time.
Most Surprising News
The most surprising piece of news for our friends and clients is that prices are essentially flat compared to last year. People find that surprising given what interest rates have done over the last 18 months. They wonder, how could prices not fall significantly after interest rates jumped considerably?
The answer is the fundamental economic lesson of supply and demand.
There is enough demand in the market for the current supply to keep prices stable even in an environment of higher rates.
Now that rates are (finally) trending down, it gives us even more confidence about the continued growth of real estate prices along the Front Range.
Here is a look at how home prices compare to one year ago:
Larimer County = Down 0.8%
Weld County = Up 3.4%
Metro Denver = Up 0.8%
Net Worth Surge
Net worth surged for American families during the pandemic era, largely because of increased home values based on the Federal Reserve’s Survey of Consumer Finances.
Net worth is a measure of household assets after accounting for liabilities. After accounting for inflation, median net worth jumped to $192,900, a 37% increase from 2019-22, the Fed found.
That percentage growth was the largest since the Fed started its modern survey in 1989. It was also more than double the next-largest increase on record. Between 2004 and 2007 real median net worth rose 18%.
Increasing Reductions
More and more sellers are having to reduce their listing price.
Nationally, 37% of all home sellers have recently had a listing price reduction. This is according to a recent report from Altos Research.
This is up from 30% in May and is now at the second-highest level since 2018. The highest it has been in the last five years is November 2022 when it stood at 41%.
A “normal” range is between 25% and 30%. Today’s number is a result of softening demand based on higher interest rates.
Proper pricing is always important for a seller and is especially so now as we enter a typically slower time of the year with added challenges related to interest rates.
$44 Trillion
Have you ever wondered how much all of the residential real estate in the U.S. is worth?
It’s $44.5 trillion.
That’s 44 with 12 zeroes after it.
This data comes from the Federal Reserve’s Quarterly “Z.1” report.
The total valuation increased by $2.4 Trillion over the last quarter and is essentially flat compared to one year ago.
In total, liabilities on residential properties (mortgages, equity loans, etc.) is $12.9 trillion.
So, collectively, residential property owners in the U.S. have a 71% equity share and owe 29% of the value.