Phil Castle, The Business Times

Two trends continue to diverge in the Mesa County real estate market. While the number of transactions decreases, the dollar volume of those sales increases.

Local industry observers attribute the drop in transactions to low inventories and the effects of higher interest rates on mortgages. But strong demand continues to push prices higher.

Robert Bray, chief executive officer of Bray & Co. Real Estate in Grand Junction, said he remains encouraged. “I think we’ll still see a good, healthy market.”

Annette Young, the administrative coordinator at Heritage Title Co. in Grand Junction, said 495 transactions worth a total of $203 million were reported in Mesa County in March. Compared to the same month last year, transactions decreased 11.3 percent and dollar volume increased 2 percent.

Just 15 transactions accounted for a combined $31.4 million, Young said. They included the sales of a self-storage facility for 6.9 million, a car wash for $4.15 million and 200 acres of agricultural land and a home for $3.25 million.

For the first quarter of 2022, 1,207 transactions worth a collective $507 million were reported, she said. Compared to the first quarter of 2021, transactions decreased 9.5 percent and dollar volume increased 15.5 percent.

“The general numbers are evident of the mix of low inventory of homes for sale and the upward pressure on sales price as a result of the demand,” Young said.

According to numbers Bray & Co. tracks for the residential market in Mesa County, 312 transactions worth a total of $127.5 million were reported in March. Compared to the same month last year, transactions declined 17.7 percent and dollar volume fell 7.2 percent.

For the first quarter of 2022, 761 transactions worth a combined $311 million were reported. Compared to the first quarter of 2021, transactions decreased 14.5 percent even as dollar volume increased 2.3 percent.

Bray said the effects of higher interest rates on mortgages are starting to show up in the Mesa County market.

The interest rates on 30-year mortgages have increased to 4.5 percent to 4.7 percent, Bray said. That’s 1 percent to 1.5 percent higher than a year ago.

Higher interest rates increase the cost of borrowing and make it more difficult for some potential homebuyers to access financing or decreases the amount they can borrow to purchase a home.

From a long-term perspective, however, interest rates remain a “bargain,” Bray said. 

He said he recalls a time when borrowers were literally lined up around the block to apply for mortgages with a nearly 9 percent interest rate.

Housing inventories remain low, but in March moved higher than a year ago, Bray said. There were 228 active residential listings in Mesa County at the end of March, up from 156 at the same time last year. “They were not taking things off the shelf as quickly.”

Bray said he expects more inventory to some onto the market in what’s typically a busy second quarter.

It’s still a sellers’ market, though, with persistent demand pushing up prices. Bray said the median price of homes sold during the first quarter hit $370,000, up 20.5 percent from the first quarter last year.

While higher interest rates could slow real estate activity, Bray said the Grand Valley economy remains strong and the effect of higher rates will be less pronounced. “I still think it’ll be a healthy market.”

Meanwhile, property foreclosure activity continues to pick up in Mesa County.

Young said 80 foreclosure filings and seven foreclosure sales were reported in the first quarter. That’s up from two filings and seven sales for the first quarter of 2021.

While eye catching, the increase isn’t surprising, Young said. “This was to be expected as catch-up following the moratorium.”

Still, the three resales of foreclosed properties during the first quarter of 2022 constituted less than 1 percent of overall transactions — far lower than the 10 percent threshold Young considers indicative of a healthy market.