April data revealed a few surprises:
1.) UCCS Senior Economist Fred Crowley has seen a pattern develop in the local economy that leads him to believe that the worst is over and the conditions for improvement are developing. was based largely on the end of marketplace conditions continued erosion, and a "nominal improvement" in the Business Condition Index, a weighted metric analyzing ten primary components of the local economic health.
Click Here to view the April, 2009 QUE.
2.) April sales units were off 8% from April 2008, and average sales price was off 11% from the same time last year. HOWEVER... April 2009 sales were up 25% from March 2009 sales (the 2008 month-over-month increase was 7%) and inventory went DOWN almost 70 units (a bit more than 1%). The last number is very encouraging for a couple of reasons: supply and demand needs to balance before any market recovery can take root. Right now there are 1200 fewer homes for sale than the same time last year and market activity is increasing to a point very similar with last year.
3.) With 5009 listings for sale today, there are over 1500 properties that are under contract or pending. At the same time last year, that number was around 1300.
4.) Flying in the face of all of this were 539 demand for sale foreclosure filings in El Paso County, the highest monthly figure ever recorded in our county.
To See the Market Data by Price, Months of Inventory, Pricing Trends, Supply and Demand Trends, MLS Areas and complete Analysis, CLICK HERE.
What's a Buyer to do?
What's a Seller? A seller needs to consider what buyers are doing. You're not going to sell to yourself or another seller. So paying attention to "the market", which happens to be Buyers... is critical.
Buyers have to be cognizant of their price range and their goals. I want to look at the four-segments: FIRST-TIME BUYERS: Under $225,000 there is less than a 5 month supply of housing. This is shrinking daily. There is
now talk of monetization of the first-time buyer tax credit. This would make the $8000 first time credit available as downpayment money at a real estate closing. The FHA actually announced this program on May 12th, but had to retract it due to pressure from the Office of Management and Budget who pulled a sort of comically bureaucratic "how you gonna implement and pay for this?" on the hair-trigger gang at HUD. Nonetheless, first-time buyers are out in strong numbers and now have a clock audibly ticking on November 30th when the eligibility for the credit expires (that's if it doesn't get renewed).
THE FIRST-MOVE-UP BUYER: From $225,000 to $350,000 inventory is beginning to retract. It's increasingly obvious that buyers in the midst of personal change (more kids, long commute, quality of life desires) are electing to sell in the lower ranges and move-up. There are multiple areas in town with only two to three months of inventory in this price range, but for the entire MLS it is around 10 months. In most parts of town, this is where a really good long-term buy can be found, and occassionally the obscenely priced bank-owned property (yours truly had a buyer on the losing end of an REO in Broadmoor that fielded 11 offers last week).
THE SECOND MOVE-UP BUYER: Here is where opportunity begins to exist in spades. Some areas like Pine Creek are moving pretty well. Other areas like Monument have over 20 months of inventory in most neighborhoods. Many properties that are selling in this price range have to reduce $20 to $30,000 in order to sell and appraisals are very subjective: it may be a $425,000 nieghborhood, but if there isn't a single sale in the last 7 months, an appraiser has to use any comp they can find, REO or otherwise.
THE HIGH-END: I personally hesitate to call this the land of opportunity. A 47 month supply of housing over $500,000 indicates that pricing still has a long way to go before it stabilizes. Notably, Black Forest, parts of Northgate and Monument areas like Kings Deer, Walden and Longview are bloated and won't stabilize in values until 2011 unless high-end buyers get some sort of goofy $25,000 tax credit as part of a Federal McMansion Rescue Package. Jumbo financing could be reformed later this year (the real estate rumor mill is at full tile drunk with bailout fever), which would help, but when there are steets with nine homes total and six are for sale asking more than $625,000 and one has sold in the last 10 months like there are in Longview... the value of new construction is muddled by the sheer magnitude of nicely appointed luxury homes.
I often rush to the word "remarkable" to quickly explain things, and it is easy to see why first-time buyers and move-up buyers are attracted to this market: the opportunity to grab a great home for a growing family and set up a long-term investment now at depressed prices and interest rates really is remarkable. But as this stretches into the upper reaches of price, and one looks at an area like Longview where small builders built homes with an apparently infinite supply of buyers from 2005 to early 2007, and it becomes more apparent why a buyer might hesitate to act. If "remarkable" is the stimulus to get into this marketplace and buy, what's remarkable about a lot with no trees and long distance views? The house? Well what's more remarkable? Butterscotch-glazed hickory cabinets or cherry-suede dove-tailed maple? Verde Merratacca, or veined marble? What's so strange about this market is that in this apparently "customized" set of the price range, the homes take on the flavor of competing commodites. When the buyer has to choose between one commodity or another in almost any marketplace, what usually prevails is the cheapest price.
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