WOW – that was ugly!! November real estate activity really went in the tank with a total of 143 closed sales representing a drop of 29.9% from last year. To put that in perspective, the 2007 figure was a 21.5% drop from the year before. In fact, the average November over the last eight years has been 253 closed sales so the decline is 43.5% from the average. There were eight late sales reported for October which improved the previous month slightly but we now have a 14.4% decrease in sales for the year to date in the Fort Collins region. And, to make matters worse, we also had the largest price decline for the year with the average November sale of $239,382, 12.7% lower than last year. This moved us from a very marginal 0.065% increase to an 0.8% decrease in the year to date. The median price is now at $212,000 for the year to date compared to $215,720 last year, a drop of 1.7%.

The days on market for the November closed sales averaged a yearly high at 123 days compared to 116 last year and 118 last month. About the only good news for home sellers is that the inventory of homes for sale continues to drop with 1,693 listings at the end of November compared to 1,890 last year and 1,743 last month.

With one month left, it is now obvious that we will have the first year to year decrease in the average selling price in the thirty three years of records that we have going back to 1976. In this cyclical world of real estate that was an amazing unbroken string that we can now add to the scrap heap, along with all the other nasty experiences of our recently announced recession. Not only that but with the prospect of maybe 125 December closed sales, we will finish the year with a total around 3,050 which will be a decrease of over 15% from 2007 and the lowest sales total since 1995. Obviously this is historical stuff but a part of history we wish we could have avoided.

There are two main problems in the current market. Many potential buyers who have the ability to buy are sitting on the sidelines trying to absorb the body blows and figure out how to deal with all of the adverse news. Other prospective buyers are finding they don’t have the credit rating or the equity required to become a homeowner in this new world of real estate. About the only prospect for change now lies in the mortgage market with talk of government subsidized interest rates, perhaps as low as 4 to 4.5%. This could bring more buyers into the market but with the way inventories are going, particularly in new home construction, they will be greeted with a limited number of homes for sale. On the other hand, more buyer interest will likely encourage those home sellers who are also on the sidelines to test the water. It will take a lot longer to ramp up new construction as most builders are reluctant or unable to build spec homes in this market and with a minimum of six months up to a year lead time to bring product to the market we don’t anticipate many new homes to be available next year.

We are about to turn the page on 2008 and, no doubt, 2009 will bring more challenges. For better or for worse, it does promise to be interesting.

We thought it would be a good time to take an updated look at real estate sales by zip code in the northern Colorado area. The sales shown are for single family resale homes only, comparing the first ten months of 2008 with 2007 and the price is the median price for the sales. The category of single family resale homes makes up about 75% of all home sales and the median price is the mid point with half of the sales priced below and half of the sales priced above.

In the Fort Collins area the overall sales for single family resale homes to the end of October were down 12.6% and the median price down 0.9% Nothing stands out very much in the large Fort Collins zip codes except the largest zip code – 80525 – also has the largest decline in sales. The number of home sold is a little better in the 80528 but generally it seems that where sales have declined the most, prices are firmer on the homes that were sold. Wellington (80549) achieved a slight increase in sales but at a 10.3% decline in price. A couple of rural areas; Red Feather Lakes (80545) and the Poudre Canyon (80512) have recorded big price increases coupled with a big drop in sales. The Loveland area (80537, 80538) has a small decrease in sales with prices pretty well in line with last year. Windsor (80550) is struggling with a 21% drop in sales and a 10% drop in median price.

The supply of homes for sale is fairly balanced with a six months supply generally considered to be a balanced market between supply and demand. The two areas with the highest supply are the smaller rural areas of Red Feather Lakes and the Poudre Canyon and it is obvious the situation in the Windsor area is not going to get fixed anytime soon with almost a years supply of homes dragging down the market. If you want additional information by subdivision or price range, please call or email us.

A word of caution on the supply is that in general it varies dramatically by price range with lower priced homes in a sellers market and higher priced homes dealing in a buyers market.

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The Federal Reserve announced Tuesday that it will buy up to $500 billion worth of mortgage-backed securities over roughly the next year-and-a-half. The Fed’s shopping spree won’t begin until next month, but the mere announcement of it was enough to send mortgage rates below 6 percent. In fact, thirty year fixed interest rates are as low as 5.25 to 5.5% and this has even caused a bit of a refinance boom. The bottom line is that it is a great time to buy a home. It wasn’t that long ago when those rates were over 7% and the difference in the monthly payment for an $180,000 mortgage with a 7.5% loan and a 5.5% loan is $237 per month or almost $3,000 per year. Another way to look at this drop is that the lower rate takes about $29,000 of gross annual income to qualify while the higher rate needs $36,000. Or, with the lower interest rate you can now qualify for a $220,000 mortgage instead of $180,000 – with the same monthly payment – so you can purchase a more expensive home. To get started call us today!