Phil Castle, The Business Times

Real estate sales continue to decline in Mesa County as higher interest rates make financing on home purchases less affordable.

Year-over-year decreases in transactions and dollar volume are all the more dramatic given what was a robust market in early 2022.

While the trend could continue, industry observers hold out hope real estate activity will pick up in the second half of 2023.

“We’re more on our way to a normal market,” said Robert Bray, chief executive officer of Bray & Co. in Grand Junction.

Annette Young, the administrative coordinator at Heritage Title Co. in Grand Junction, said it’s less a matter of demand as it is interest rates and affordability.

Young said 212 real estate transactions worth a total of $83 million were reported in Mesa County in February. Compared to the same month last year, transactions fell 36.9 percent.

Dollar volume dropped 40.7 percent despite six large transactions worth a total of $11 million. They included the sale of an industrial and manufacturing building on 8 acres for $2.6 million, and two residences for more than $2 million each.

For the first two months of 2023, 426 transactions worth a combined $176 million were reported. Compared to the same span in 2022, transactions decreased 40.2 percent and dollar volume declined 41.9 percent.

Young said year-over-year comparisons won’t be meaningful until later in the year. Besides, the market has changed, she said. “We’re in the market we’re in.”

Higher interest rates on mortgages combined with higher home prices have pushed some prospective buyers out of the market, she said. Moreover, existing homeowners with mortgages with low interest rates are reluctant to sell given the prospect of higher interest rates.

Higher rates also have affected other aspects of the industry, she said, with declines in applications for loans and refinancing.

According to numbers Bray & Co. tracks for the residential real estate market in Mesa County, 147 homes worth a total of nearly $61.8 million were sold in February. Compared to the same month a year ago, transactions dropped 35.8 percent and dollar volume fell 33.8 percent.

For the first two months of 2023, 295 homes worth a total of almost $119 million were sold. Compared to the same span in 2022, transaction dropped 34.4 percent and dollar volume fell 35.3 percent.

Bray attributed what he described as dramatic year-over-year declines to interest rates, which have climbed to 6.7 percent on 15-year mortgages and 7 percent on 30-year mortgages.

New home construction also has declined, he said. A total of 73 single family building permits were issued in Mesa County during the first two months of 2023, only about half the 137 permits issued during the same span in 2021.

There are some silver linings, though, Bray said, with a growing inventory and slightly lower prices.

As of the end of February, there were 479 active listings in Mesa County. That’s more than double the 222 listings at this time last year.

The median price of homes sold during the first two months of 2023 fell to $360,000. That’s down 2.3 percent from the same span in 2022.

While the first half of 2023 likely will remain sluggish, Bray said he expects real estate sales to pick up — although not to the same pace as the last two years.

The local economy remains strong and it’s still a good time to buy real estate, Bray said. Potential buyers should prepare now for opportunities, he added.

Foreclosure activity continues to increase in Mesa County, although few properties go through the whole process, Young said.

For the first two months of 2023, 47 foreclosure filings were reported, but only seven sales.