Looking at last year’s real estate market and further back to 2015, one can observe the monumental wealth created through home ownership in the Uncompahgre Valley. Over the past seven years, homeowner’s net worth increased by 50% in Montrose, adding approximately $200,000 to household real estate values. Local and out-of-area demand continued to drive up real estate equity in the valley with steady annual gains from 2015 to 2020. Successively, the urban-flight and ultra-low mortgage rates in the fall of 2020 triggered a massive jolt in demand and prices, which continued through the summer of 2022.
A shock to the market occurred mid-summer as home buyers re-evaluated monthly payment costs as the mortgage rate doubled from 3.2% in January to 6.2% in June. Pundits and experts cannot remember a time in recent history when rates increased so quickly over such a short span of time. Although mortgage rates skyrocketed, creating downward pressure on demand, housing prices in Montrose still increased 8.9% when comparing the full calendar year of 2022 to 2021.
With affordability plummeting due to high prices coupled with high interest rates, demand has softened, reminiscent of unit sales similar to December 2017 and 2018. Compared to November, December did see a small spike in pending/under contract homes, most likely due to the small dip in mortgage rates mid-November. Unit home sales are down 43% from last December and prices are 6% below last December’s peak. Incorporating December’s recent price drop, the rolling 3-month median shows prices are basically flat.
Market Crash Ahead?
Relative to 2008, and due to parameters and constraints enacted through the Dodd-Frank Act of 2010 , mortgage borrowers are in much better financial health to weather a housing downturn. Although total mortgage debt is 15% higher today, total home equity is 131% higher per homeowner than at the end of 2007. A hypothetical 20% drop in Montrose home prices from the 2022 median price would bring home valuations back in line with mid-2021, not a great scenario, but nothing like 2008 given the significant home equity held by most homeowners.
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Statistics gathered from CREN MLS, criteria are all residential not including mobile or manufactured housing in Montrose. 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 Realtors, CoreLogic data analysis firm, Montrose Association of Realtors, CMU Department of Business and Economics, InfoSparks, YCharts, National Association of Realtors, Cornerstone Home Lending, and the Mortgage Brokers Association. This data is considered accurate but is not guaranteed. Copyright Atha Team LLC 2022. All Rights Reserved.