High demand uncharted water for housing market

The first-quarter sales and pricing for the four-county area show an overall 16 percent increase in the median price compared with the first quarter of 2014.

The top county for price appreciation was Larimer with a 23.9 percent increase, followed by Broomfield, Weld and Boulder counties. Home sales increased 10.6 percent compared with the first quarter last year, led by a 21.4 percent increase in Boulder and an 18.7 percent increase in Larimer County.

These are unprecedented numbers and certainly well beyond any predictions for the year. What is totally amazing is the number of homes sold. The net inventory of homes for sale a year ago was 2,962, and this has dropped 20 percent to the current supply of 2,368 homes. In a normal market, we would expect the drop in supply to put a real damper on sales, but in spite of this, sales increased 10.6 percent for the first three months. Obviously the limited supply is putting pressure on the selling prices but a 16 percent price increase is getting out of hand.

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The average days to offer is further evidence of the demand, with the first quarter checking in at 47 days compared with 56 a year earlier.

New home construction is trying to keep pace with the increased demand, and there were 614 sales in the first quarter compared with 476 a year ago, an increase of 29 percent. Unfortunately this is still just 17.3 percent of total sales, and we need a lot more new homes to fill the demand.

It is difficult to predict where we go from here. We expect a demand for around 11,000 homes in the next six months, and a balanced market of a six-month supply would require 11,000 active listings. At the present time we have 2,368 homes for sale, which is about a five-week supply. During the last year the supply averaged one to two months and there was a 2.4 percent increase in sales compared with the previous year so we have learned how to navigate the limited supply.

But a 10.6 percent increase in sales is uncharted water and a 16 percent increase in pricing is sure to put a damper on sales.

Stay tuned.

Dave Pettigrew is a real estate broker at Ascent Real Estate Professionals in Fort Collins. Contact him at FCRealtor@msn.com or 970-282-9305.