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December typically experiences a slowdown in real estate sales, which doesn't make producing that report a particularly enjoyable task for me. Similarly, January tends to be one of my least favorite months to report on, given the sluggish sales that often result in a less engaging report. However, this January might offer some surprises, although the challenge of conveying information effectively remains.
Analyzing real estate sales requires a nuanced approach due to the time lag between property decisions and actual closings. For instance, a closing in January, most likely, went under contract in December, and with Days-on-Market ranging from 50-90 days, that January closing may have been listed in October. Thinking back to October, interest rates were approaching their 40-year highs. As rates topped out in December, a buyer decided to invest in their future and now they own a home and can begin to build wealth through homeownership. Across Northern Colorado, many buyers recognized this as their opportune moment to purchase. Fifteen out of the eighteen areas covered in my reports depict January 2024 sales totals either on par with or exceeding those of January 2023.
Despite interest rates retracting to around 6.5% in January, regional sales figures remained robust. This phenomenon might signal the beginning of a reversal in a troubling trend that has persisted for several years. While rising interest rates have been a significant concern, inventory shortages have been the primary issue. Even amid escalating prices, real estate sales remained resilient from 2020 to 2022, amidst a global pandemic. However, the lack of available properties hindered market activity. Last year, I anticipated an increase in listings when rates dropped to 6%, yet it seems that 6.5% might be the tipping point to invigorate the market.
The graph in the middle of this month’s reports shows new listings for the month of January for the past five years in five different markets. The clear winner was January of 2020, just before lockdown. Since then, listings have disappeared. Loveland, Longmont, and Greeley each took a 50% cut in listings between 2020 and 2023. This shortage of listings has been a recurrent topic of discussion over recent years, highlighting the imbalance between consumer demand and available inventory.
Longmont Area Real Estate Stats January 2024
Boulder Area Real Estate Stats January 2024
Northern Colorado Real Estate January 2024
Perhaps the tide is finally turning. In January, new listings surged, possibly triggered by the drop in interest rates. The year-over-year increase ranged from 17% in Boulder to a substantial 48.8% in Greeley, with Longmont closely following at 40.4%. These significant spikes in new listings cannot solely be attributed to new construction or sellers suddenly deciding to list their properties in January. Rather, it appears to stem from the anticipation of declining interest rates, encouraging sellers to enter the market.
A couple of noteworthy figures deserve mention this month. Firstly, observe the apparent 35.7% decrease in Boulder's average price. This decline, however, is somewhat misleading. In January 2023, two high-value closings artificially inflated the average price to an all-time monthly high. Excluding these outliers, the average price reverts to a more typical $1.72 million. Similarly, Louisville's report was affected by a limited number of closings in January, resulting in a perceived price swing. This year, two out of three closings exceeded $1 million, whereas three out of four last year were under $1 million.
Another noteworthy deviation from the trend is the reduction in Days-on-Market observed in nine areas this month, contrasting with the trend over the past year. This positive development warrants close monitoring. Additionally, it's worth noting that Bloomberg predicts a drop to 5.5% in interest rates this year. Should this prediction materialize, it could significantly alter the real estate landscape. I invite you to share your predictions on how this might impact our market.
Let's observe whether these trends persist into February and throughout the year. Until the next report, take care, and please feel free to reach out with any observations from your market.
