Dear Friends,
Most of us are great at looking back on historic data and "explaining" how the events affected the market. I am going on record with my 2009 forecast. Of course, all of the economic indicators for the world, nation, state, and the Durango Area are quite clear for 2009, so making a forecast should be easy (kidding).
Preliminary 2008 Market Statistics:
These statistics are from the Colorado Real Estate Network multiple listing service from January 1, 2008 thru December 22, 2008 for La Plata County:
Total of 846 Properties Sold...$323,264,214 Market Volume...$382,109 Average Price...95% Sold vs List Price, and 193 Days On Market.
Residential: 681 Properties Sold...$263,395,137...$386,777 Average Price...96% Sold Vs List Price, and 176 Day On Market.
Other sold properties include: 127 Land listings, 32 commercial properties, and 6 multi-family.
These are not final numbers for 2008, and the totals will be higher as sold properties are recorded for the last days of December. Also, please understand that other properties outside of the Multiple Listing Service are not in this review or forecast.
How do these numbers compare to the highest year of transactions ever?
In 2005, the total properties sold was 1,917 as recorded by our MLS service, and of those, 1,257 were residential, 480 land, 71 commercial, 8 multi-family, and 1 farm and ranch. In total, 56% fewer properties have sold, and of those, there were 50% fewer residential listings!
MARKET FORECAST FOR 2009...DRUM ROLL...!!!
ALL PROPERTIES: 950 SOLD (APPROXIMATELY A 10% INCREASE)
MARKET VOLUME: $332,500,000 (APPROXIMATELY EVEN)
AVERAGE PRICE: $350,000 (APPROXIMATELY AN 8% DECREASE)
RESIDENTIAL: 770 SOLD (APPROXIMATELY A 10% INCREASE)
MARKET VOLUME: $277,200,000 (APPROXIMATELY EVEN)
AVERAGE PRICE: $355,000 (SAME 8% DECREASE)
AVERAGE DAYS ON MARKET UP FROM AN AVERAGE OF 176 DAYS TO 190 DAYS
SOLD VERSUS LIST PRICE DOWN FROM 96% TO 94%
Commercial will have additional vacancy rates, more properties on the market, increased days on the market, and greater price pressure, as businesses are further stretched for revenue, and consumers continue to tighten their belts.
Land sales will continue to be slow, but they will quickly rebound in 2010. In 2009, we will start to work off some of the current residential inventory, and in 2010, we will return to builders providing new inventory, thus increasing their demand for vacant land parcels.
For residential, we will see demand increase, but prices will continue to be under pressure thoughout 2009. The demand change will provide the stimulous for an exciting 2010, because the increased transactions of 2009 will reduce the number of homes on the market. By 2010, the demand should outpace supply.
November and December of 2008 have some of the lowest market transactions that we have seen in 20 years, even though the population has increased by 40% in these two decades. These low transactions are a result of the October economic turmoil, and following the difficulties of the entire year of 2008. The beginning of 2009 will continue to be slow, because the contract activity has not increased through December, and that has a direct impact on the number of sold properties in the months following. If my forecast is correct, hang in there as we will start to see things improve, and hopefully by mid-year, we will all be more enthusiastic. We will look back at October 2008 as our emotional low, and in fact, the consumer confidence index was at an all time low in that month.
If you would like to have futher conversations on Durango Colorado real estate, please contact me, Don Ricedorff at The Wells Group 970-375-7014, don@frontier.net, or at my website at durangorealproperty.com.
Don Ricedorff is a licensed real estate broker in the State of Colorado, with 16 years of experience, and he resides in Durango Colorado. He has numerous real estate designations, which have provided him with an unparalleled education to assist his clients. The designations include:
CRS, Certified Residential Specialist
CRB, Certified Residential Broker
CCIM, Certified Commercial Investment Member
ABR, Accredited Buyer Representation
GRI, Graduate of Realtor Institute
RSPS, Resort and Second Home Property Specialist
CIPS, Certified International Property Specialist
SRES, Senior Real Estate Specialist
He is also an active volunteer in the community and his church. His highest aspiration is spending time with his wife, Janet, and his three children Kelly, Katie, and Kyle. His other interests include playing tennis, fly fishing, hiking, boating, and water skiing.
Monday, December 22, 2008
Thursday, December 4, 2008
How Do You Know When You Are At The Bottom Of The Real Estate Market? This Is Your Source For Durango Colorado Real Estate News.
The quick answer is that you don't know, and I don't know if there has been a bottom to the real estate market, or when there will be a bottom to the real estate market. Perhaps the bottom was 30 days ago, or it is now or six months from now. We will only be confident after we look back. Markets are not easy to predict, but the experts generally look for the length of the downturn as compared to past recessions, and the prospects for economic recovery. Some investers choose the contrarian investment method. A contrarian believes that the conventional wisdom of the moment, and the herd mentality leads to pendulum swings beyond the current risks, which leads to overly optimistic or pessimistic behavior. This certainly was the case in the optimism of 2005, at the very height of the market, and millions of investors, speculators, builders, and developers have paid dearly for that mistake, and it may be true in the pessimism of the moment. For most people in the United States, real estate has been their single biggest and best investment. Most Americans who have owned real estate for more than five years still have appreciation in their property, and some have huge appreciation. A high percentage of the senior population count on their home as their single biggest nest egg.
The market will begin its upward swing when consumer confidence is regained. Consumer confidence affects their purchasing patterns, as discretionary spending is impacted by how consumers "feel" about their jobs, life, and security. Major purchases such as automobiles and homes are greatly impacted by consumer confidence. The Consumer Confidence Index bottomed in October 2008, an all time low, with a 38.8 index rating (1985=100), and improved moderately in November to 44.9. Perhaps the 41 year low in October will be the bottom of consumer confidence. This low level of consumer confidence suggests the real estate market will not rebound in the short term, so we are unlikely to see a major shift in the real estate market in the next six months, and perhaps longer.
From a contrarian point of view, here are the positive considerations for purchasing in the near future:
a) Interest rates are at nearly an all time low. Yesterday, Wells Fargo offered 30 year financing with no points or origination fee at 5.5% in Durango. Low interest rates spur the purchasing of real estate as low rates directly improve purchasing power.
b) Prices have fallen nationally, regionally, and locally. Astute investors and home buyers are taking this opportunity to purchase at discounted prices.
c) There is a large supply of homes on the market, which means selection is greater, and it improves the purchaser's negotiation position.
d) The national news is doom & gloom.
e) A December 2, 2008 article in The Wall Street Journal quoted an economics professor at Massachussetts Institute of Technology that he predicts house prices to increase an average of one percentage point higher than inflation over the long term, and in the same article, a survey completed by Realogy Corp. found that 91% thought that owning a home was the best long-term investment they could make.
f) The huge bail out program, and other stimulus programs should begin to improve the economic vitality in the first quarter of 2009, which may help to improve consumer confidence.
g) The real estate market has fallen for three straight years. This is longer than previous downturns.
A contrarian investor would choose a time like now to purchase real estate. There are others that will want to take a wait and see approach. How about you? What best describes you?
If you would like to have further conversations on Durango Colorado real estate, please contact me, Don Ricedorff at The Wells Group 970-375-7014, don@frontier.net, or at my website at durangorealproperty.com.
Don Ricedorff is a licensed real estate broker in the State of Colorado, with 16 years of experience, and he resides in Durango Colorado. He has numerous real estate designations, which have provided him with an unparalleled education to assist his clients. The designations include:
CRS, Certified Residential Specialist
CRB, Certified Residential Broker
CCIM, Certified Commercial Investment Member
ABR, Accredited Buyer Representation
GRI, Graduate of Realtor Institute
RSPS, Resort and Second Home Property Specialist
CIPS, Certified International Property Specialist
SRES, Senior Real Estate Specialist
He is also an active volunteer in the community and his church. His personal interests include spending time with his wife and three children, playing tennis, fly fishing, hiking, boating, and water skiing.
The market will begin its upward swing when consumer confidence is regained. Consumer confidence affects their purchasing patterns, as discretionary spending is impacted by how consumers "feel" about their jobs, life, and security. Major purchases such as automobiles and homes are greatly impacted by consumer confidence. The Consumer Confidence Index bottomed in October 2008, an all time low, with a 38.8 index rating (1985=100), and improved moderately in November to 44.9. Perhaps the 41 year low in October will be the bottom of consumer confidence. This low level of consumer confidence suggests the real estate market will not rebound in the short term, so we are unlikely to see a major shift in the real estate market in the next six months, and perhaps longer.
From a contrarian point of view, here are the positive considerations for purchasing in the near future:
a) Interest rates are at nearly an all time low. Yesterday, Wells Fargo offered 30 year financing with no points or origination fee at 5.5% in Durango. Low interest rates spur the purchasing of real estate as low rates directly improve purchasing power.
b) Prices have fallen nationally, regionally, and locally. Astute investors and home buyers are taking this opportunity to purchase at discounted prices.
c) There is a large supply of homes on the market, which means selection is greater, and it improves the purchaser's negotiation position.
d) The national news is doom & gloom.
e) A December 2, 2008 article in The Wall Street Journal quoted an economics professor at Massachussetts Institute of Technology that he predicts house prices to increase an average of one percentage point higher than inflation over the long term, and in the same article, a survey completed by Realogy Corp. found that 91% thought that owning a home was the best long-term investment they could make.
f) The huge bail out program, and other stimulus programs should begin to improve the economic vitality in the first quarter of 2009, which may help to improve consumer confidence.
g) The real estate market has fallen for three straight years. This is longer than previous downturns.
A contrarian investor would choose a time like now to purchase real estate. There are others that will want to take a wait and see approach. How about you? What best describes you?
If you would like to have further conversations on Durango Colorado real estate, please contact me, Don Ricedorff at The Wells Group 970-375-7014, don@frontier.net, or at my website at durangorealproperty.com.
Don Ricedorff is a licensed real estate broker in the State of Colorado, with 16 years of experience, and he resides in Durango Colorado. He has numerous real estate designations, which have provided him with an unparalleled education to assist his clients. The designations include:
CRS, Certified Residential Specialist
CRB, Certified Residential Broker
CCIM, Certified Commercial Investment Member
ABR, Accredited Buyer Representation
GRI, Graduate of Realtor Institute
RSPS, Resort and Second Home Property Specialist
CIPS, Certified International Property Specialist
SRES, Senior Real Estate Specialist
He is also an active volunteer in the community and his church. His personal interests include spending time with his wife and three children, playing tennis, fly fishing, hiking, boating, and water skiing.
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