Well, once again, summer is flying by but thankfully Colleen and I have been able to find some time to get away for a few days here and there because the weekends haven’t been completely booked up showing property like they were last summer – undoubtedly because there aren’t very many to show.
Does that mean the local real estate market is slowing down? I think the answer is maybe, but it’s too soon to say for sure. Comparing year-over-year sales statistics from the MLS there isn’t a single category that’s down from the January – June period of last year. The problem with making that comparison however, is that the first half of last year included the “shut down” period which took us off-line for about a month before the COVID-rush of folks relocating really kicked in. So, to smooth the numbers, let’s compare the current pace of sales to 2020’s average.
Last year in the North Fork area there were 199 homes sold through the local MLS, or 17 per month, and so far this year it’s been 19. The Delta area averaged 24 homes per month last year vs. 25 for the first half of this year, while Surface Creek was at 18 last year and is running at 17 per month this year. I’d say that’s a pretty even pace of sales. What has changed significantly though are the prices. The North Fork area has seen the biggest jump in values, where the median home price now hovers at $338,500, up 26% from last year and 43% higher than 2019. Delta’s average home price has risen 20% so far this year to $288,000 (29% higher than 2019) while Surface Creek is up 15% to $293,000 (26% higher than 2019). Holy smokes! Those are unsustainable rates of increase which have clearly begun to tame demand by pricing some folks out of the market.
The supply side of the equation isn’t helping either. In a “normal” market, at any given time, there is typically about four to six months of inventory on the market. That means, at the current rate of selling 19 homes per month, there should be about 100 homes available. There are, however, only 28 homes (priced under a million) currently on the market in the North Fork – that’s 1 ½ months worth. A paltry few. So, it logically follows, that the number of homes under-contract for sale in our area has fallen to the mid 40’s from a high of 70+ last fall. Those numbers point to a slowing market – which is okay, because a frenetic market isn’t a healthy one.
And, given the water-tap situation in Paonia, Hotchkiss and Crawford, the prospects of a building boom to increase the supply are zero. So far interest rates have not changed enough to dissuade anyone from borrowing, but the inflation chatter circulating around the financial community may result in higher borrowing costs by next year if the economy stays on course – potentially dampening demand further. Please don’t take this to mean that I think a local market correction is imminent, but the hottest part of the boom may be over, as hopefully so too is the hottest part of the summer.