What a difference a few months make. Back in April every new listing was inundated with buyers. Open houses were flash mobs and multiple offers were the norm. Since Memorial Day it seems to be a different market and I’m trying to figure out if the fundamentals have changed or if everyone is just away on vacation.
First of all, this is not an unusual trend. The common perception is that summer is “the” time for real estate sales. That might be true in other places, but in Boulder County spring is king. Every year the market slows down for the summer. Most years it’s in June, last year it was in late July and this year it appears (in hindsight) that it was late May.
Let’s be clear, the market conditions in Boulder County are still good, transactions are still happening, buyers are still out looking, new listings are coming on the market and deals are closings are still happening but it seems that the pressure in the market has waned. Especially in the high end of each towns market.
In this article I will present a number of different measures that measure market activity. Cutting to the chase it isn’t clear cut. Let’s begin by looking at sales. This first chart shows the number of closed transactions in Boulder County each month over the past five years. The orange line shows sales in 2016 and it’s clear that we are not keeping up with last year’s torrid pace. Through the first half of the year sales are down 10% from 2015.Inventory is low compared to past years and this has definitely been a cause for the lower activity. When buyers don’t have many houses to see the chances that they find one to buy goes down. This next chart shows the flow of new listings to the Boulder County market (all price ranges and types) on a weekly basis. It appears that new listings peaked back at the end of May and if we follow the trend will be decreasing for the rest of the year.
Unfortunately, showings started falling just as more new listings were coming to the market. More listings and fewer showings means that buyers didn’t have the sense of frenzy as they did back in April. The graph below shows the gross showings by month in Boulder Louisville and Lafayette as set by Centralized Showing Service. They don’t handle every showing in town but they have a very significant number and the sample is large enough to call it representative.
So far everything makes sense. This is where it gets a bit fuzzy. I track the number houses that go under contract each week in Boulder County. From the graph below it appears that sales are still brisk. This shows equal or more contracts even while there were fewer showings. Obviously there are still buyers out there and finally with less competition they can jump on a property and get their offer accepted. It’s been all too common these past few years for buyers to look around a quite a few houses, find the right one, get beat out in a multiple offer situation and then be forced to start anew. Wash, rinse, repeat! This cycle pumps up showings. In the old days, a new listing comes on the market, buyer sees the listing, buyer likes the listing and then buyer buys the listing. Maybe we are getting back to that. Refreshing!
Before I started checking any of these statistics I felt the market slowing. Fewer listings for my buyers to see, not so many people at open houses and houses staying on the market a bit longer (what’s longer than immediately?). In an extreme sellers market sellers sometimes get greedy and when they don’t get their price in the first week to ten days they come back to reality a bit. So it would make sense that there would be more price reductions. Looking at the graph below we can see that the answer to that query is technically yes, but it doesn’t support the hypothesis that the market has changed.
Given the information below it seems that the market has slowed but it seems more like a vacation than something more permanent. If you need to sell your house this summer you may need to lower the price. If we are patient, we will most likely feel the pressure rise when the buyers are back in town.