‘Teeter-totter’ market reflects inventory-price link

As we’ve documented in this space, the housing market in Northern Colorado is currently no playground — especially for buyers. But there is a piece of playground equipment that can help us describe what’s going on: the teeter-totter.

That’s because the more housing inventory goes down, prices are moving up with even greater force. Consider these swings between shrinking supply and rising prices: In the Fort Collins area, inventory was down 20.9 percent between June 2014 and June 2016, while the average price was up 30.2 percent. For the Greeley area, the two-year supply was off 23.6 percent and prices were up 24.3 percent. And in the Loveland area experienced a 31 percent drop in supply and a 26.4 percent increase in prices.

If you can find a moderate change in inventory, chances are you’ll find a moderate movement in prices. In fact, that’s occurred in the Windsor area, where inventory was down just 6.2 percent over two years. At the same time, prices were up a modest 8.2 percent, well under the regionwide average gains of 26.9 percent.

Here are some additional observations from the June results:

Five of the region’s seven sub-markets saw average prices top $350,000 in June. Across the region, average prices climbed 10.1 percent to reach $352,235.

Regional inventory continued its downward trend in June, with 1,584 homes listed on the market — off 17 percent from June 2015 and down 32 percent from June 2014. However, a better trend is in the making: June’s supply was up 9.5 percent over May.

After May, sales experienced an increase from the previous year, June sales saw a year-over-year decline — another reflection of tight inventory unable to sustain demand. Only one of the area’s seven sub-markets — Windsor/Severance — reported an increase in year-over-year sales. At 1,282 closings, June sales slipped 5.7 percent, although it did represent a 3 percent gain over June 2014.

Over a two-year span, between June 2014 and June 2016, average prices are up 26.9 percent across the region, and two sub-markets, Fort Collins/Timnath/Wellington (30.2 percent) and Longmont (36.9 percent) each surpassed 30 percent.

Looking at individual sub-markets, here’s an assessment of what occurred on a local basis during June:

Fort Collins/Wellington/Timnath: After a month when home sales increased 13.3 percent in May, they slipped 7.3 percent in June. At the same time, the average price increased 6.8 percent to $385,037.

Greeley/Evans: At $251,256, the average price in June increased 10.1 percent, matching the average increase for the region as a whole. Notably, the average price actually was down 6.5 percent from May.

Loveland/Berthoud: After a 17.4 percent price hike in May, Loveland/Berthoud experienced a relatively modest one-year increase of 8 percent in June, with the average price reaching $351,938.

Windsor/Severance: It’s no coincidence: Windsor/Severance was the only sub-market to show an increase in inventory during May, and the only sub-market to experience a year-over-year increase in sales during June. Closings last month totaled 109, up 11.2 percent over June 2015. It also was the only sub-market to see the average prices fall, down 0.8 percent to $361,999.

Estes Park: June prices averaged $370,366 in the resort community, up 10.3 percent from a year ago, but actually down 7.7 percent from May, when prices averaged $401,485.

Ault/Eaton/Johnstown/Kersey/La Salle/Mead/Milliken: This collection of Weld County towns experienced a dramatic one-year increase in average prices, jumping 20.1 from the previous June to an average price of $327,761. But with 93 sales, there was also a dramatic slip in closings — down 25 percent from the previous June, and 10.6 percent from the previous month.

Longmont (Weld and Boulder counties): Longmont eclipsed the $400,000 threshold in June. At $407,531, the average price increased 20.1 percent over June 2015, and 5.3 percent in just one month. At 197, total sales essentially were flat, down just 2.9 percent.

Larry Kendall co-founded associate-owned The Group Inc. Real Estate in 1976 and is creator of Ninja Selling. Contact him at 970-229-0700 or via www.thegroupinc.com.

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