Home Prices Reaching Possible Breaking Point
With consumer confidence at a 16-year high and Montrose Colorado real estate values gaining monthly, anticipation is expected as to what 2017 will bring. Along with the booming equity in home vales comes the reality that Montrose home prices are reaching a possible breaking point for local buyers in the $150,000 – $300,000 price range (see inventory levels below).
Anxious Buyers and Apprehensive Sellers
Wage growth, at 2.5%, has failed to match increases in real estate price gains. This is the most evident for first-time home buyers and reflects the declining trend in US home ownership. The steep increase can be attributed to, once again, lack of new housing inventory. Further, the lack of new construction can be linked to the tight lending requirements for construction loans. National inventory levels are at a 20-year low (Property Buyers Face Hard Spring). Potential homes Sellers are now becoming reluctant to put their homes up for sale in fear of purchase options once they do sell. The current housing market has created a curious cocktail of anxious Buyers and apprehensive Sellers.
As home prices increase, the volume of sales is taking a hit. The median days on the market in Montrose has dropped to 69 days. Subtracting an average of 45 days to close, homes are now residing on the market for 3.4 weeks before they go under contact. Further, the average number of homes sold in Montrose Colorado dropped last month from 58 to 46 units sold. Still, home equity gains are relatively modest in comparison to the 14% gains seen in 2005 before the Financial Crisis. Last years equity gain in Montrose topped out at 7%.
Mid-Range and Luxury-Housing Inventories
On a brighter note for Montrose, current inventory levels above $300,000 are drastically improving. We’ll see if this trend continues through the spring and summer, but relative to a year ago, mid-range and luxury-housing inventories are looking much healthier.
Current Saturation Rate 10/4/16 – 4/13/17 (6-months):
- $500- 900K (assuming current homes under contract close):
- 2.33 Homes selling per month
- 24/2.33 = 10.30 months of inventory
- $400-$500K (assuming current homes under contract close):
- 4.33 homes Selling per month
- 34/4.33 = 7.84 months of inventory
- $300 – 399K
- 8.16 homes selling per month
- 54/8.16= 6.61 months of inventory
- $150 – 299K
- 24.5 homes selling per month
- 51/24.5 = 2.08 months of inventory
A healthy housing inventory, when buyer demand and seller supplies are equal, is considered to be around 6-months.
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Copyright 2017 Keller Williams Colorado West Realty, LLC. If you have a brokerage relationship with another agency, this is not intended as a solicitation. Equal opportunity housing provider. Each office is independently owned and operated. For sale by owner data not included in research findings. Sales data reflects sales from homes not limited to the Atha Team LLC. This information was gathered from Keller Williams, The National Association of Realtor, CoreLogic data analysis firm, Montrose Association of Realtors, and the Mortgage Brokers Association. This data is considered accurate, but is not guaranteed. Copyright Atha Team LLC 2017. All Rights Reserved.