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.