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Record Increase
Home builders have experienced their largest-ever increase in building costs so far in 2021.
This is according to the latest Producer Price Index report.
Year to date, building costs are up 14.5%. This amount tops the previous record of 7.1% which occurred in 2008.
Specific materials which have seen significant increases include lumber, drywall and steel.
The price of steel has risen 117% this year.
These material cost increases combined with increases in items like building permits and tap fees are causing home builders to raise their sales prices.
Price Matters
Almost twice as many sellers now have to drop their list price before a sale compared to July.
In October, 19% of all sales were forced to drop the list price before receiving an offer. In July it was 10%.
These properties that start out priced too high end up taking four times as long to sell compared to those that are priced right on day one.
The bottom line is this- price matters even in a strong market.
Average Prices
It’s true, average prices have increased substantially over the last year.
Would you have guessed that Weld County has seen the largest increase along the Front Range?
The specific numbers are below.
As you look at the numbers, it is important to remember that average prices have increased because of appreciation and because there are more higher-end homes that are selling.
The increased volume of high-end transactions has played a big rule in increasing the average price.
Average Price of a Single-Family Home based on closings so far this month:
- Metro Denver = $675,000
- Larimer County = $624,000
- Weld County = $514,000
Average Prices exactly one year ago:
- Metro Denver = $614,000
- Larimer County = $549,000
- Weld County = $417,000
Seller Facts
Here are some fun facts about recent home sellers. This research comes from the National Association of Realtors survey of home buyers and sellers:
- 10 years = the average time recent home sellers have lived in their home. This number has remained essentially unchanged for the last ten years. From 1987 to 2007 the average was 6 years.
- 89% = the percentage of home sellers who use a Realtor to help sell their home. This has been trending higher over the last 20 years. In 2001, 79% of home sellers used a Realtor. As the transaction gets more and more complex, more sellers seek the help of a Realtor.
- 75% = the percentage of home sellers who found their Realtor through a personal relationship as opposed to seeking out an agent they didn’t know.
- 77% = the percentage of home sellers who only interviewed one Realtor for the job of selling their home.
No Inventory?
One misconception about today’s market is that there is ‘no inventory.’
Actually, there are numerous new listings that hit the market each month. It just so happens that they tend to sell quickly.
The numbers show the number of new listings that came on the market in September closely equate to the number of sales that occurred.
- In Larimer County, 693 new residential listings hit the market last month and there were 688 sales.
- In Weld County, there were 681 new listings and 733 sales.
- In Metro Denver, there were 6125 new listings and 5233 sales.
So, while homes tend to sell quickly today, there is still a significant amount of new inventory hitting the market each month for buyers to consider.
No Two Alike
Anyone who has more than one child is frequently amazed by the difference between the children. How is it that two kids from the same parents are so different from each other?
Same goes in our Northern Colorado market. We see a major difference between certain price ranges and certain locations right here in our little neck of the woods.
Clients are constantly reading about and hearing about the “hot” market. They make assumptions that every price range and every location in Larimer and Weld Counties are on fire. Not true!
Just like two kids from the same parents are different, two price ranges in the same place are very different.
To make this point, let’s look at months of inventory. This statistic simply measures how long it would take to sell the current inventory of homes at the current pace of sales.
Across all price ranges, months of inventory in Larimer County = 2.0. Meaning it would take two months to sell all the homes currently for sale. But this is misleading, because months of inventory…
- Under $500,000 is 1.2
- Between $500,000 and $1,000,000 is 4.2
- Over $1,000,000 is 11.7
So, the $1,000,000 seller who hears that the market is “hot” is actually faced with a year’s inventory currently on the market!
This is a very high-level look at the differences in our market. We are happy to give you a detailed look at your exact neighborhood in your exact price range. Let us know if we can help!
