Real estate outlook holds steady in an unsteady election year
Phil Castle, The Business Times:
Given increasing real estate activity in Mesa County, Annette Miller expects the market to hold steady in the midst of what’s typically an unsteady election year.
If local economic conditions improve, so could the market. Still, foreclosure activity could affect prices, said Miller, senior vice president of Heritage Title Co. in Grand Junction and a long-time observer of the real estate industry.
Kevin Borman, managing broker at Keller Williams Colorado West Realty and chairman of the Grand Junction Area Realtors Association, said most of the latest trends are encouraging. “Our market is showing definite signs of recovery.”
One month after showing some signs of slowing, real estate activity picked up in July, defying what’s sometimes a seasonal slowdown during a time when people take summer vacations.
Miller said 308 real estate transactions worth a total of more than $62.6 million were reported in Mesa County. Compared to the same month last year, sales increased nearly 12 percent and dollar volume jumped 19 percent.
The July numbers bring total real estate transactions for the first seven months of 2012 to 1,943. Those sales were worth a collective $380.4 million, Miller said.
Compared to the same span in 2011, year-to-date sales are up 11 percent and dollar volume is up almost 10 percent.
At the current rate, 2012 remains on pace for 3,330 transactions worth a total of $652 million. If realized, those numbers would be the highest since 2008, yet less than half of those in 2007.
Miller said she expects real estate activity to hold steady through the year despite the distractions of presidential campaigning. “It will remain surprisingly steady during an election year.”
Ross Beede, sales manager at Coldwell Banker Home Owners Realty in Grand Junction, agreed. “I think we’re going to stay right where we are.”
Borman said a number of encouraging trends in the residential real estate market have continued over the past six to eight months, among them increased sales, fewer days on the market for homes and smaller inventories. Meanwhile, mortgage interest rates remain at record-low levels. Borman said he expects those trends to continue. “Our outlook is good for the next year.”
Beede said the residential housing inventory varies according to price range, but there’s only a three- to four-month supply given the pace of sales at lower prices. Some homes priced at the lower end of the range fetch multiple offers, sometimes for more than the listing price.
At other price ranges, the shrinking inventory has at the least prompted some buyers to “pull the trigger” more quickly in making offers, Beede said.
While the Mesa County real estate market hasn’t yet experienced substantial price appreciation, the conditions are in place to start driving up prices, Borman and Beede said.
According to information from the Grand Junction Area Realtors Association, the median prices for homes sold in July from the multiple listing service was $176,500. The median price for homes sold through the first seven months of 2012 was $165,00, up 1 percent from the same period last year.
Still, property foreclosure activity remains another factor to consider in assessing the outlook for the Mesa County real estate market. Said Miller: “I’m gonna watch it.”
Through the first seven months of this year, foreclosure filings increased more than 22 percent compared to the same span last year. At the same time, though, foreclosure sales were down more than 8 percent.
Miller said 70 resales of foreclosed properties were reported in Mesa County in July, almost 23 percent of all real estate transactions. At this time last year, 77 resales of foreclosed properties were reported, representing 28 percent of all transactions. Foreclosed properties are accounting for a smaller proportion of overall real estate sales, she said.
Since foreclosed properties tend to sell for less than comparable properties on the market, foreclosure activity can pull down real estate prices. Beede said, however, that many of the so-called short sales of homes that otherwise would go to foreclosure have been for market prices.
Borman considers foreclosures a necessary process to go through to reduce the inventory of foreclosed properties and further stabilize the real estate market.
Meanwhile, record-low mortgage rates are likely to continue to bolster real estate activity, Beede said. Lower monthly payments help make homes more affordable. “It’s like walking away with money in your pockets.”
While the pace of real estate sales in Mesa County remains far below that of the booming market under way only five years ago, even that change of pace can be welcome. Said Beede: “A slow pace is good. A slow pace is healthy.”