Fort Collins Home Sales - The Good, The Bad and The Promising

There are a couple of ways to spin this report on January housing sales: The Bad - the 138 Fort Collins home sales in January make it the poorest sales month in recent memory. In the ten years from 1998 to 2007, January sales averaged 198 homes. Last year we dropped to 158 and experienced another 12.7% decline this year so we are now at 70% of the average over the last decade. On top of that, January has been a pretty good indicator of how the year is going to go with each January in the last ten years very close to 5% of the annual sales total. If this holds true it would put total sales for 2009 at around 2,760 homes, a 12% decline from 2008 and the lowest level since 1991.

The Good - at least for home sellers, is that the average selling price continues to hold up with a slight 0.1% decrease in January. Normally a low demand would put pressure on selling prices but the record low inventory of homes for sale is obviously helping to hold the line. The inventory of homes for sale rose slightly to 1,548 at the end of January compared to 1,499 at the end of December but this is 15% below the level of January 2008.

	2007		2008		2009		% Inc	% Inc
	Homes	Avg Price	Homes	Avg Price	Homes	Avg Price	Homes	Price
January	194	$249,650	158	$254,431	138	$254,141	-12.7%	-0.1%
February	201	$237,260	180	$257,371
March	294	$248,438	262	$259,654
1st Quarter	689	$245,488	600	$257,593

The chart shows the current month compared to 2007 and 2008 plus the figures we are up against for the next two months - which look pretty formidable at this time.

Other areas in our region are not faring much better in sales and selling prices. January sales in the Loveland area were off 31% with a 0.5% increase in the average selling price. Sales in Weld County were a little better showing a 5.7% drop but the average selling price was down 6%. Metro Denver reports homes placed under contract rather than closed sales but they experienced a very poor start to the year with sales down 15.8% from last year combined with a 17.8% price drop in the average selling price and this was in spite of a 19.4% drop in inventory. National figures for January won't be out for another month but the December report from the National Association of Realtors (NAR) produced some good news when existing home sales rose unexpectedly, jumping 6.5% to a seasonally adjusted annual rate of 4.74 million units. In addition, the most recent Pending Home Sales report showed a very welcome gain of 6.3% in December compared to November and was up 2.1% from the previous year. In addition, NAR's Housing Affordability Index rose 10.9% in December to 158.8 which is the highest on record. This report tracks the relationship between home prices, mortgage interest rates and family income.

Our crystal ball has been pretty cloudy for the last couple of years and we have used up all our mulligan's so we are not even going to venture a guess as to what 2009 will bring for local home sales. There does seem to be a lot of cautious optimism that we are nearing the bottom but consumer confidence is still very shaky, particularly with concerns over job security. Our state and region appear to be in better shape than many other areas of the country as Moody's Economy predicts Colorado job losses for 2009 at just 0.8% compared to 2008 employment levels. This is the third best rate in the country. The proposed home buyer tax credit, which is still being hammered out, and record low interest rates - which could be going even lower - should get a lot of potential home buyers off the fence and into the market.

One problem we are going to have to deal with eventually is the fact that residential construction is almost at a standstill due to many factors; mainly very low builder confidence and an inability to finance speculative inventory. Even with renewed consumer confidence, a tax credit and lower mortgage interest rates we are never going to get back to the sales levels of 2004 and 2005 without a supply of new homes and there will have to be a thaw in credit markets for this to happen. This coupled with at least a six month lag time to bring new homes to the market, means we may not see many new homes available for sale this year. That will make resale homes more in demand and may resurrect the move up market.

It promises to be interesting...stay tuned!