The numbers are in for the Delta County MLS, and there are some surprising updates.
We
just received the market stats for Western Colorado real estate sales, and
there are some interesting nuggets. Overall in Delta County, the average sale
price of a home is up 11.5%, from $302,000 to $337,000. Inventory is down from
169 units to 122 units, a 27% drop, and duration on market has decreased from
3.1 months on average to 2.1 months, a 32% drop. Montrose County was even
stronger, with a 27% increase in the average home price to $406,000. Inventory
is down 16% and homes are taking only 1.5 months to sell, on average. Mesa
County’s average home price increased to $419,000, an 18% increase. To recap,
Western Colorado home prices are up about 18% over the past year and inventory
is down significantly.
The North Fork Valley is showing a surprising jump in average home prices
The sales numbers show a huge jump in average home prices in the North Fork Valley for communities of Paonia, Hotchkiss, and Crawford, 2020 real estate prices had already jumped 25% or so, bringing the average sale price to $367,000. We had been cruising along with average residential sales prices of $280,000 or so, and pow! We jumped up to $367,000, which was a big jump. However, year-over-year to 2021, the average sale price jumped again to $520,000, another 41.5% jump! Wow!
It’s
our fault! We sell large properties at higher-than-average prices
I
have to admit, part of that jump may be due to our work at United Country
Colorado Brokers. We closed one deal at $1,150,000 and another deal at
$1,500,000, and there were only 13 properties sold in the North Fork Valley in
November. While the sales stats of many offices tend to closely track the local
market, with sales averaging the same as the MLS stats, our average sale is
$1,083,000, or close to three times the average. We undoubtedly skewed the
numbers with those two sales. We will do it again in December as well, as we
have several deals under contract at well over $1,000,000. Normally there might
be 30-40 sales in a month, but with lower inventory, a couple of larger
properties can up the average sale price significantly. Yes, we might have made
the numbers jump, but you know the saying, “Sorry, not sorry”? Our sellers are
happy with the job we did.
Lower inventory and shorter time on market—that’s the lesson from 2021
The
Delta County MLS is reporting a 27% decrease in active listings in 2021. That
is significant in itself, but there’s a statistic that many people are
overlooking. Of course we had a huge financial and housing crisis in which the
bubble burst in 2008, and the next few years were pretty rough. The market was
flooded with properties. In 2021, we had roughly 16% of the inventory on the
market as we did in 2010. That’s right, we have 1/6 of the active listings that
we did 11 years ago. It is NOT a buyer’s market as it was back then. It is
definitely a seller’s market. Back in the bad old days, I can recall many
properties that took a year or more to find a buyer. It was not uncommon for
specialty properties—such as horse properties, mountain lodges, and luxury
homes—to sit on the market for two or three years before finally selling. That
is not the case anymore. Our Southwest Colorado “Days on Market” statistic
shows the average days on market dipping 27%, from 126 days to 92. When most
loans take 45 days or more to finalize, that means the average home is on the
market only six weeks before it goes under contract. Our personal experience
mirrors these statistics. A typical “house in town” often goes under contract
within days or even hours of listing. They get snapped up with multiple offers.
Luxury homes, country homes, equine properties, and other specialty properties
take longer to sell. We have had several great properties go under contract and
sell quickly. We sold Loren Williams’ listing, a 1,453-acre hunting ranch with
three cabins, in only 75 days start to finish. We wish we had another 10
listings just like it, because we fielded so many phone calls after it was
under contract from buyers who missed out.
Where is the market going from here? Up or down? Investors are buying real estate
My
crystal ball is broken. All indicators are showing major inflation, including
housing. The affordability index is way down. Interest rates are starting to
climb, which will put a damper on housing sales. Simple demographics show that
we are far behind in meeting housing demand, however, and everyone needs a
place to live. Nobody really NEEDS a luxury home, a hunting ranch, or a ski condo,
but lots of people WANT these types of properties, and with all the economic
pumping that has been done by the government, there is a lot of cash out there.
My forecast is that we are still going to see strong housing demand and sales
of higher-end properties for the short term—at least a year and a half to two
years. Investors see their cash holdings devalued on a daily basis, so they’re
literally going to ground, buying up land and real estate assets as a hedge
against inflation. We have been primed for a crash or a re-set in the stock
market and international economy for several years now, and the current
administration seems to wish to ignore all the warning signs. For those who
have been waiting for the market to adjust, it hasn’t happened and many of
those skeptics have been priced out of the market.
What is the wisest real estate investment strategy? Western Colorado real estate market analysis
My
advice is to go through your real estate portfolio and carefully analyze each
property for its long-term potential, keeping inflation and future development
potential in mind. Each property has a carrying cost. For those properties with
high property taxes, HOA dues, and utility bills, you may want to consider
selling that property now while the market is hot. Properties with low taxes
and carrying costs will probably continue to appreciate in value and make for a
good “buy and hold” strategy. Building lots are in very short supply right now
and are bringing a premium. If you own building lots, a very good strategy is
to partner with a developer to build new housing and bring those properties to
the market while interest rates are still relatively low. We have a development
team ready and waiting to take your phone call if that is the case. Check out www.wdgnow.com for development ideas.
Let’s do a portfolio review to see which investments to keep, which to sell, and which to buy
I just got a call the other day from my investment advisor asking me to review my 401K and IRA investments, and we made an appointment. People with assets routinely review their stock portfolios, their insurance policies, and they have their mechanics go through and maintain their vehicles. They get an annual physical from their doctor. When real estate may be the biggest asset in your portfolio, why wouldn’t you review your real estate holdings to see which properties are performing, which are not, and the next investment strategy? We can help you perform a review of your holdings and recommend new strategies. At United Country Colorado Brokers, we specialize in unique properties, real estate investments, rural businesses, mountain ranches, and land. We’re here to help guide you into your next real estate investment. Visit our website at www.uccoloradobrokers.com to learn more, or call 970-872-3322 to make an appointment.