Fort Collins Real Estate Market Update June 15, 2008

Before we get into all that negative stuff, let's see what we can find to write that is positive about the current local real estate market - at least for home owners and home sellers. How about home sales in May were up 19% compared to last month.  May was the biggest month of closed sales since August of last year. There were an additional twelve sales recorded for April so the decline improved from 16.8% to 12.2%. The average selling price showed a very modest drop of 1.2% compared to last year. Marketing times, at least for the homes that are sold, continue to improve. The homes that closed in May were on the market an average of 114 days and the year to date now stands at 118 days compared to 129 days at the same time last year. The inventory of homes for sale is staying low with 2,154 available at the end of May, a 19% decrease from the 2,445 on the market last year. Based on sales over the last twelve months, this is about a seven month supply of homes, very close to a balanced market and much better than the ten to twelve months of inventory reported nationally. And new home sales hit a record price with an average of $420,161 in May, an increase of 30.7% from last year. This was obviously caused by the mix of sales but the median price was also up 6.6%

On the national scene, the pending home index reported by the National Association of Realtors increased 6.2% in April compared to the previous month, contrary to the Wall Street economists who had predicted no movement.

Now for all the other stuff! The table shows home sales dropped 15.6% in May compared to the previous year, continuing an uninterrupted trend of double digit decreases that began in September last year. There has been a drop in closed sales of over 200 homes in the first five months of this year and a decrease of 15.3% representing almost 400 homes in the last nine months.  The average selling price drop in May was just the second in the last seven months and now stands at a very slim 0.8% increase for the year. The median price to the end of May is actually down 1.9% for the year to $209,970.

Traditionally closed sales in the four month period from May to August are the highest of the year, averaging around 46% of the total annual activity. With the first month of this peak season in the books, it looks like sales for the four month period in 2008 could be in the range of 1,400 homes which in turn would put us on a pace for annual sales of just over 3,000 homes. With just one month behind us, this is a bit of an analytical stretch but if we continue with a 15% decline in monthly home sales that is exactly where we are headed. Thankfully, beginning in September, we are up against very low sales figures from last year and if we can at least match those figures for the last four months of the year, sales should end up in the 3,300 range. This would take us back over ten years to a level of home sales not seen since 1997.

We believe the low sales are mainly the result of fewer first time home buyers entering the market, due to tighter lending standards and a feeling of uncertainty as to where the market is headed. When there are fewer first time home buyers this limits the options of the move up buyer and this can affect all price levels. We are then left with a market dominated by new buyers moving into the area and, while Fort Collins is still an attractive destination, there are not enough jobs being created in the current economy and potential buyers from states such as California are experiencing their own problems trying to sell in order to relocate.

So we end with the familiar refrain; for sellers, if you are motivated - and we have to assume that you are if you have your home on the market at this time - be assured that there are qualified buyers - who are looking for homes that are competitively priced and in move in condition.  For buyers, you have the best of all worlds. Flat selling prices that have increased just 1% to 2% per year for the last few years, a good selection of homes offered by motivated sellers and mortgage interest rates that are about as low as they have ever been. Over time, a home of your own has been one of the best investments a family can make and now is a good time to buy and start enjoying it.

Pam & Dave Pettigrew, Real Estate Brokers and Certified Residential Specialists are available to answer your questions on real estate. Write to them at Prudential Rocky Mountain, REALTORS, 2700 S. College, Fort Collins, 80525, call them directly at (970) 282-9305 or email FCRealtor@msn.com. For an archive of past columns and market information visit their award winning web site at www.FortCollinsRelocation.com