Greetings folks! A friend emailed me recently, curious as to why I had nothing to say about Zillow's recent termination of its iBuyer arm. To quickly sum up my thoughts: Letting robots determine what’s best for everyone is never a good idea. They lost a billion dollars on this little misguided venture which, coincidentally, is what I paid them in advertising in 2009.
The implosion of their flipping biz is good news for housing around here as “hot” markets like ours were heavily targeted - I brought it up in September since it was actually impacting our inventory. So today we’ll go over some housing numbers relevant to the inventory crunch. These are courtesy of the FCBR and parrot the data I recently pulled from our MLS in preparation for this newsletter.
Fort Collins single family homes year over year (October 2021 vs. October 2020)
A couple of points to ponder. First, you might be wondering (as I am) how new listings and sold listings can be so drastically different. For context, we’re looking at actual numbers of 347 houses sold in October 2020 and 256 sold in 2021. I can tell you it isn’t new construction nor a huge drop in listings or pending sales from the previous month. Class? Anyone?
Secondly, “months supply” means how many months of housing inventory we have available to meet current demand. In other words, if no new homes were to be listed and somehow all the active buyers snatched up what remained, it would take X months until there were zero homes left for sale. In a balanced market this is around three months, supposedly. We are currently at .6 (about 19 days) whereas October 2020 was at 1.2 (about 37 days). This unfortunately includes an abundance of inventory in Sunflower (the 55+ trailer park) as well as all luxury homes. So yes, in this imaginary scenario all of our struggling buyers would either need to scrape together $3,500,000 to $4,900,000 OR bust out their disguises and fake IDs and masquerade as elderly bingo enthusiasts.
I won’t bombard you with similar stats from all the other areas of NoCo but some of the average/median price increases year over year may surprise you:
Median sale price +17.2%
Average sale price +26.9%
Median sale price +25.2%
Average sale price +21.6%
Median sale price +29%
Average sale price +25.3%
Median sale price +13.8
Average sale price +22.5
Again, these are all single family homes as the smaller numbers of townhomes and condos doesn’t paint a realistic picture in terms of year over year movement.
Finally, what do all these stats and, most importantly, the affordability index mean? It means 1) Affordability around here is dropping, and 2) The housing affordability index is a measurement of how affordable housing is compared with the median income for an area - the higher the number, the more affordable an area is presumed to be. I’m simplifying things, but an affordability index of 100 would mean a household earning the median area income would just be able to afford a median-priced home in the subject area. The national average affordability index is around 150; FTC was at 92 in November of 2020 and is currently around 76. We can chalk some of this up to inflation as the national numbers moved from 146 in 2018 to a high of 180 in March of this year and has dropped since. As a review from three sentences ago, a higher number means more affordability.
Some people feel strongly one way or the other about how affordable an area “should” be, while others don’t care at all. It’s an interesting debate, and within my Indies group there are passionate arguments on both sides. Some feel affordable housing should be a right while others feel it’s a natural byproduct of progress. What do you think?
Yes, I’m raising more questions than answers this month because I truly am curious about everyone’s opinions on this. Perhaps next month I’ll switch things up and send out an email on how to make spiced cider or getting your furnace ‘winter ready’ or something.
Hope everyone is doing well and as always I welcome your questions and comments! Cheers, Crip
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Crip Erickson, Owner/Managing Broker