This month marks the 2nd Birthday of The Stat Pack, my signature service to the real estate industry that I simultaneously adore as an intellectual production, and despise for the obsessive compulsiveness it creates within me. As a product, it's great. As a process, it's kind of like scabies. I can't shake it from my being.
As a manager I was frustrated to be out of the trenches and upon opening up my satellite office in May, 2006, I began researching market dynamics and broadcasting that to the three office company via email. The first month I chose, reporting on April, 2006 data, turned out to be the very moment that the market had tipped. January through March were moving at a blistering sales pace, but April saw a couple weird trends happen all at once. Our inventory had been building despite the demand, and in April, it soared. Selling a home (for a perceived profit) was now the fashionable thing to do. So April, 2006 was the biggest listing month ever. Simultaneously, a demand-side surprise unfolded: units went down and so did the average selling price. At the same time, the perceived profit motivation of sellers jacked the average asking price up substantially. April was a blip, May was a sputter, by June when interest rates soared a full-scale correction was unfolding. Most analysts point to 2006 as the year the market tipped, but because of the Stat Pack and all it's tables and graphs, you can actually see the moment when it occurred: April, 2006. In fact, the market was so far ahead to that point, that through June 2006, the market was only off 4 units in sales activity over the previous calendar year for the entire MLS. But then the year finished off 8% as the 2nd half tanked, with sales off 17%.
This was becoming fascinating stuff to me, and in October, 2006, I launched a formalized product for the company so they could be smarter than the average REALTOR on every listing appointment and with every increasingly rare buyer. I called it "The Stat Pack", because it was short and to the point (something that borders on impossible for me) and, well, it was a package of stats. I called it what it was and "white paper with words" wasn't descriptive enough.
For the first 24 issues of the Stat Pack, it has recorded a market-wide collapse that has only one historical challenger in Colorado Springs' young history, the massive recession of the late 80's. From a consumer's perspective, this one is honestly not as bad. Prices have not fallen like they did then, and unemployment, while worsening still, has not reached the horrid levels it reached then. The percentage of foreclosures is nowhere near where it was in the late 80's, even though the gross number has been up. From a REALTOR's perspective however, this has been as bad as it gets, and that has it's own damaging consequence on the market (when the advisers operate out of fear). The number of REALTORS in the PPAR membership is at 3300 right now, down from the peak of over 4000, but only off 12% from last year's renewal. Sales volume interestingly is off 21%. We have the same number of brokers practicing the business as we did in 2005, the market's peak, and sales volume is off more than 40% from that point. Additionally, margins are off. I'lla dmit, I charge more than I ever have to list a property now, at 6.5%. But I never paid for staging, pre-listing home inspections, home warranties, furnace cleanings, professional photography and unlimited double-sided color flyers. My marketing costs were maybe $500 per listing in 2005. It's over $1500 now, and my average sales price is lower. I'm having a good year, but my production will probably end up being 23% lower than 2005.
Why all the personal backstory?
Here is my internal memo to ERA Shields from 45 minutes ago when PPAR finally released September, 2008 sales data:
SUBJECT: YEAH, BABY! WHEN THE STAT PACK LOOKS BETTER THAN YOUR MUTUAL FUND
Okay, it’s not hard for the subject line above to be true these days. That would be true in many markets across America.
But our data in Colorado Springs is actually better than the data reported earlier this week by the National Association of REALTORS, which forecasted what we see today: the pending sale index was up a healthy measure in August when analysts had expected a retraction.
I’m not exaggerating when I say that this will be the most optimistic read in the Stat Pack’s history (turns 2 this month, issue 25, the previous 24 were all pretty bleak!).
- Average sales price went up.
- Median was up a skosh.
- Inventory went down.
- We out-sold September, 2007 (the first time year-over-year sales were up since March, 2006!), a healthy increase too of 5.6%
- Units sold were only off 5% from the previous month, August, which is way ahead of the seasonal average. September is usually a big dip.
Here is a really quick-read (you can guess what I’ll be doing the rest of the day):
- Inventory sits 12.2% lower than this time last year.
- Unit Sales are off 15.9% year to date (this is improving, it was off 20% over the summer)
- Average sales price for the year HAS TAKEN A BEATING, but a lot of that price beating happened before the end of April. Values have clearly stabilized over the last five months.We're off over 7%, but it was as high as 9% in the Spring.
Incremental improvement will likely be offset by incremental to larger-scale set backs over the next 6 to 8 months. Right now, we’re in the same boat the rest of the nation is:
- Jobs aren’t being created
- Assets are shrinking
- Credit is tight
- Financing is restricted, especially in the higher price ranges
- We can’t change any of that on a local level
What is truly enviable though is while the rest of the nation is still in the midst of foreclosure explosions, inventory builds and price nose-dives, Colorado Springs is:
- Seeing a slowdown in registered foreclosures
- In declining inventory
- Stabilized in price with periodic improvements
- Has stabilized sales activity
Lastly, Americans aren’t going to stop investing. Only the worst real estate markets in America are off as much in 12 months as the Dow Jones Industrials, which is now approaching a 30% decline in 18 months. We ain’t in that boat.
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