With each passing month our local market between Aspen, Glenwood Springs and Rifle is inching its way back to an equilibrium between supply and demand, but we are still not there yet. All indications suggest that 2011 will turn out to be the best year for buyers.
Here is the monthly commentary from our friend Joe Carpenter at American National Bank in Rifle:
What do flood waters and housing inventories have in common? Answer: They both rise and fall.
As we're experiencing record run off from the snowpack of the past season and see the rivers reaching or exceeding flood levels in many areas, I can't help but draw a parallel to the local housing market over the past three years where we've seen inventory levels swell as a dramatic decline in sales dammed the flow of transaction activity and flooded the market. Like the flood waters, the gage of whether housing stock is rising or receding is a function of the relationship between what is flowing in (new listings) and what is flowing out (sales) with consideration given to the existing levels (total inventory). Flood waters are expected to reach their peak for the season in this area any day now but in that regard, the housing market is well ahead having reached its high water mark in January of 2009 where we saw a stunning imbalance of nearly 9 listings for each sale and an absorption rate of over 73 months! The housing waters have been receding steadily ever since and the trend continued during the past two months.
April results for the broader market (Aspen to Parachute) reflected a listing-to-sales ratio of 1.28:1 on 150 new added units to a respectable 117 sales. One would have to go all the way back to 2007, the peak of the market, to find a single month in which the balance of listings to sales was as close as this. The absorption rate fell to just over a 12-month supply compared to over 43 months a year earlier and nearly 48 months in April of 2009. The western suburbs (New Castle to Parachute) also set another new record in April for recovering market balance posting just 1.12 listings for each sale (also a best since 2007) and an absorption rate of a scant 6 months compared to 27 months a year earlier and nearly 44 months in April of 2009.
May results reflected an increase in listing activity to 200 units typical of the spring but well below May of the two prior years which had 256 and 288 new added units for the month. Meanwhile, sales for the May posted another good showing at 97 units compared to 63 in the same month a year earlier and twice that of the 49 units recorded in May of 2009. The absorption rate as of May month-end stands at about 17 months, nearly half that of a year earlier where it stood at 32 months. Similar trends were reflected in the western suburbs for May.
The housing figures are as telling of the conditions as the flood gauges posted in the rivers. There is no question that the market is well on its way to recovery. Just the same, there remains an excess amount of "standing water" with 1,631 available residential units for sale as of May month-end, including 364 units in the western suburbs. Prices will remain suppressed until the inventory of distressed sales, now about 40% of the market, has run its course. Once the market is separated from those that HAVE to sell from those that WISH to sell, the artificially low prices that currently establish "market value" will evaporate. At that point, a new stage and a significant change in the dynamics of the housing recovery will have occurred. It's not of question of "if", but "when". And it's evident from the statistics that it's getting closer by the month.
(Courtesy of Joe Carpenter, American Nationa Bank, Rifle CO (970 625-2895 - Joe.Carpenter@anbbank.com)
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