Phil Castle, The Business Times:
Annette Miller believes the Mesa County real estate market is still moving through a proverbial valley, and a wide one at that. But if recent trends continue, the market slowly will move out of that valley.
Real estate sales remain on pace to top last year and reverse a four-year downward trend, although dollar volume lags as property foreclosures hold down prices. Foreclosure activity has slowed, however. And inventory levels have retreated as supply and demand come closer to equilibrium. There’s also the promise an improving labor market could further buoy the housing market.
“Dynamics could change,” said Miller, a senior vice president at Heritage Title Co. in Grand Junction who closely tracks the real estate market.
Kevin Borman, managing broker of Keller Williams Colorado West Realty and the newly installed chairman of the Grand Junction Area Realtor Association, agreed. “Overall, we’re definitely seeing improvement in the market.”
Borman said the analogy of the market going through a valley is appropriate. “If we’re not on the bottom, I feel we’re fairly close,” he said.
According to figures from Miller, 227 real estate transactions worth a total of $44.8 million were reported in Mesa County in October. The number of transactions was up 8.6 percent over the 209 sales reported for October 2010. The dollar volume was down 6.8 percent from the $48.1 million reported a year ago.
The latest numbers bring real estate transactions through the first 10 months of 2011 to 2,220, up 5.4 percent from the 2,106 transactions reported during the same span last year.
At an average of 220 sales a month, the Mesa County real estate market remains on pace for 2,640 transactions for 2011. That would top 2010 by almost 5 percent and reverse the downward trend that’s followed the most recent market peak in 2006.
Nonethless, the total would remain below 2009 and constitute a little more than a third of the more than 7,000 transactions that ocurred in 2005 and 2006.
The dollar volume of real estate sales through October 2011 in Mesa County totalled $455 million, a decline of almost 8.2 percent from the $495.6 million in dollar volume for the same period last year.
October 2011 figures don’t include the sale of 39 government-owned properties for which the prices weren’t disclosed, Miller said. A total of 81 government- and bank-owned properties were sold during the month, accounting for nearly 36 percent of all sales.
For October 2010, 47 real estate-owned properties were sold, 12 of those government-owned properties, she said.
Sales of real estate owned properties tend to pull down prices because they usually sell for less than comparable properties on the market.
Nonetheless, it’s necessary to work through the inventory of foreclosed properties, Miller said. “It has to happen for the future health of the housing market.”
Moreover, there are signs property foreclosure activity is slowing in Mesa County.
For October, 106 foreclosure filings and 98 sales were reported, Miller said. Filings fell nearly 41 percent compared to the same month last year, although sales increased more than 36 percent.
Filings constitute the beginning of the foreclosure process, while sales come at the end. Because of the time in between, both a filing and sale for a given property don’t occur in the same month.
For the period between January and October 2011, 1,000 filings and 810 sales were reported. Year-to-date filings declined 23.4 percent, while sales dipped 2.6 percent.
Borman said statistics derived from the multiple listing service through the end of September show that active listings have dropped to 1,116, almost half the number of listings at same time last year.
Assuming that number remained unchanged, that would leave about a five-month inventory of housing at the current pace of sales. That means supply and demand are moving closer to what’s considered a balance, Borman said.
Lower prices and historically low interest rates have made housing more affordable and driven up real estate activity, he said, particularly on the lower end of the price spectrum.
According to Miller’s numbers, most real estate sales in Mesa County through the third quarter of 2011, occurred in the price range between $120,000 and $150,000 and accounted for nearly 25 percent of all sales.
Another 14 percent of sales occurred in the price range between $100,000 and $120,000.
Improving labor conditions also could help the housing market, Miller said. As more people join the labor force, home sales will increase and the inventory of housing will shrink.
For September, the latest month for which estimates are available, the seasonally unadjusted unemployment rate in Mesa County dropped a full point to 8.5 percent, it’s lowest point in two years. While payrolls remain below levels of a year ago, the work force has grown over the past three months.
Borman said he expects a recovery in the real estate market to come slowly, similar to what happened following the oil shale bust in the 1980s.
Still, trends point to the market moving in the right direction, he said. “There are all good signs for us in the real estate industry.”