Our local real estate market has good news to deliver, both for the final quarter of the year and for the year as a whole.
The number of properties sold and the dollar value of those transactions were both up significantly in 4th quarter 2012: 15% and 29%, respectively, according to data provided by Advanced Title Company. Comparing 2012 to 2011, the number of properties sold and their dollar value increased 12.5% and 16%, respectively.
I am often asked if the market is going up; and, according to local MLS, Advanced Title and Zillow.com data, the answer is yes. Zillow and MLS calculate 3.9% and 6.6% increases for all homes sold in 2012. However, before you take those numbers to the bank, realize that they are both viewing a macro-sized look. Within particular house-types, parts of town, floor styles and other variables, the numbers may be different when the microscope is applied to a specific property.
By the way, according to MLS data the median sold home price last year was $159,900 and Zillow pegged that number at $162,400. For those of you who like to glean data and do analysis from the Internet, realize that the numbers you have access to are a generalization. I like Bob Reece from Advanced Title's advice when he says: "Call a Realtor for the details."
Two factors are probably most important to understand the reason we experienced price increases in our local real estate market.
First, 2012 inventory, the number of homes on the market for sale, was lower in all price categories than in 2011. Under $200,000 at the end of the year there was about a 2.5 month supply of homes for sale; compared to 3.3 months a year earlier. Since first-time home buyers, investors and anyone of higher capability can buy in this price range that is where the action is. Consequently, that price range is experiencing a seller's market with more demand than supply, especially of desirable houses. In the $300,000-500,000 price range there is about 6 months of supply, creating a balanced market, not favoring buyers or sellers in terms of pricing and negotiations. As has been the case for a few years, above $500,000 the market has an excess of homes for sale, that number being about a 17-month inventory at the end of 2012 compared to a 19-month supply a year earlier.
Second, the number of government-owned properties, foreclosures, is less than a year earlier. The government pricing strategy seems to be to price them to sell, to clear out their inventory. That had been making it tough for a private homeowner to compete on price in their neighborhood. With less of those price killers out there, overall prices have seen some improvement. While the number of government-owned house sales decreased for the first time since 2008, it was ironic that the number of bank-owned properties sold in the Grand Valley increased from 82 in 2011 to nearly double that at 162, this past year. The banks may budge some on sales prices but their sales do not seem to undercut private pricing quite so much.
New construction was definitely a bright spot locally in 2012 real estate. Numbers of permits were up by 31% for the year with even a 13.5% increase for the 4th quarter.
Looking ahead, the sun seems to be rising on Grand Junction real estate. If unemployment continues its downward trend, mortgage interest rates remain below 4% for many borrowers and overall confidence in the local economy hangs on or grows, we could be looking at another year of 4-6% home price appreciation. For those of you who want to buy at the bottom, it looks like that day has past. For those who want to sell, that rising sun is here today and will get brighter.
Doug Van Etten is an associate broker with Keller Williams Colorado West Realty and is also the founder/organizer of the Real Estate Investors Network (REIN). Van Etten has been helping homebuyers, sellers and investors with their real estate needs since 1992. Contact Van Etten at DougVE@kw.com or 970-433-4312. For information on the REIN, info@REIN-WesCO.org.