Read Part One
RESULTS FOR SINGLE FAMILY RESIDENTIAL SALES: ALL PRICES
For all price categories of the single family residential market (SFR), the number of Closed Sales was nearly unchanged 252 this year, 254 last year, with the a median selling price of $216,000 versus $218,750 for the prior year. Total volume in SFR was $69,340,344, down 8.3% from 2011.
Within the SFR market there are a variety of year- end figures for different price categories.
Results for Homes Priced $800,000 and Above
There were 10 Closed Sales recorded with the median price moving up from $1.1 million to $1.2 million for 2012. I was the Listing or Selling Broker for 4 of the recorded sales for homes within this price bracket. The average number of days on market, a measure of how long it is taking to sell a property dropped from 328 to 261. This indicates some of the older inventory has sold and that Brokers are convincing Sellers to price their properties more realistically. At year end there were a total of 61 Active Listings priced above $800,000. At the current absorption rate, this represents a nearly 5.5 year supply of homes.
Results for Homes Priced $500,000-$800,000
There were 13 Closed Sales reported, only 1was a foreclosure property with the Median Selling Price rising to $611,000 from $573,000 an improvement of 6.6% over last year’s figure. Total Closed Volume was $8.2 million as compared to $10.0 million for last year. There were 41 Active Listings in this price range at year end, representing a little over a 3 year supply.
Results for Homes Priced $300,000 - $500,000
There were 45 Closings reported for the year, while 2011 recorded 51 sales. 3 of these were foreclosure properties, representing 5.8%. The Median Selling Price of $399,500 as compared to $375,000 for the prior year. Total Closed Volume declined from $19.5 million to $17.5 million for 2012. At year end there were 78 Active Listings in the $300,000- $500,000 price range representing a 21 month supply.
Results for Homes Priced $200,000 - $300,000
67 Closings were reported for 2012, against 59 Closings for the prior year. 8 of the Closed Sales were foreclosure properties, accounting for 13.5% of the Total Unit Volume. The Median Selling Price for homes in this bracket was $242,500, down 6.7% from 2011. Total Closed Volume increased from $17.5 million to $19.5 million. The Median Number of Days on Market decreased slightly from 157 to 154 days, showing a little quicker turnover rate. 55 Active Listings were offered at year end in the price range of $200,000- $300,000 representing a little over a 9 month supply.
Results for Homes Priced $100,000- $200,000
A total of 86 Closings for 2012 versus 88 for 2011. Of these Closings, 31 were foreclosure sales, or 36% of the Unit Volume. Total Closed Volume was nearly unchanged at $13.01 million as compared to $13.11million for the prior year. The Median Number of Days on Market increased from 89 to 129. This may be due in part to the number of short sales within this price range that closed this year. These sales typically take much longer to close from the time an initial offer is made as compared to conventional transactions. At year end there were 43 Active Listings in this price range representing a 6 month supply.
Condo Market Results
Sales of condos and townhomes increased with 45 Closings reported for 2012 versus 42 for 2011. Only 3 of the Closed Sales were foreclosure properties. Total Closed Volume was up 26%, from $5.0 million in 2011 to $6.3 million for 2012. The Median Selling Price jumped as well, moving up to $125,900 from $95,000 as reported for 2011. For condo sales above $100,000, there were 29 closed in 2012 as compared to only 19 in 2011. The Median Number of Days on Market increased from 144 to 169. There were 67 Active Listings on the market at year end- an 18 month supply.
Land Market slowly improving
For the year there were 166 Closed Sales of land in Archuleta County. This figure is up 36% from the 122 transactions recorded in 2011. Total Closed Volume was up as well, $11.7 million versus $10.1 million. The Median Selling Price declined from $35,500 to $24,500. Active Listings were at 835 representing a 5 year supply. This is a slight improvement over last year.
During the period from 2005- 2008 development of hundreds of additional building lots were planned for several large area ranches and land parcels. Fortunately, these plans were cancelled as the market retreated and we were spared a flood of additional lot inventory. It is doubtful we will see any of those projects come forward during the next few years unless there is a very strong increase in demand. With the number of infill lots available in today’s market at a fraction of the cost of creating a new lot, it would take a good number of years before we would expect to run out of existing buildable lot inventory. As the price of existing homes closely approaches the cost of new construction we would expect to see the land inventory drawn down below the current five year level.
Where are the best values for buyers?
The lower price ranges offer fewer choices for Buyers going into next year. I do not expect this to change as there is little if any speculative building going on in the area. The most over-supplied category is the $800,000 + price range and there are also some great buys in the $500,000 - $800,000 range. For Buyers willing to purchase existing homes rather than going through the 1-2 year process of building a luxury custom home, the savings can be considerable. High quality new construction can easily exceed $200 per square foot and there are a number of well-built custom luxury homes on the market that can be purchased for under $150 per square foot.
I feel the best value on the market within this price range today is the home at 783 Oren Road in Piedra Estates (click link for details). This 3 year old custom home has over 5,000 square feet of heated living space and a 2,400 heated and insulated shop building, situated on nearly 7 acres less than 10 minutes from downtown.
This property is priced at less than $127 per square foot or $649,000. Replacement cost for a home such as this in today’s market would easily exceed $950,000.
783 Oren Rd
There are other great values that I am watching for Buyers looking to take advantage of some of the gaps in the market. With a good selection of homes priced far below replacement cost and 30 year fixed rate money available at under 3.5%, there should be little downside risk. Now is the time to buy!
What should sellers do in this market?
If you purchased or built your home in the last five years it is likely it is presently still worth less than your cost. The exceptions to this condition are those homes that were purchased below market and those that have extraordinary features such as unblockable mountain peak views or water frontage. There are very few properties that fit these conditions. For all the rest that don’t, this remains a Buyer’s market with buying decisions largely driven by the value proposition. In order to compete in this market, you really need to know what properties you are competing with, how many there are, how many are likely to sell within that price range in the next year and how your home stacks up against those competing homes.
You want to price your home so that it will be among the top 10% of those in your price range. If you do not price strategically you will likely spend a long time on the market. You do not want to price high and end up chasing the market while it is continuing to drift slightly downward. Don’t pick your Realtor based on which one gives you the highest suggested listing price. Look very carefully at the market data and ask lots of questions. Look at the track records of the brokers you are considering. The market conditions we are in are very different from how things were between 2000- 2007.
Note: Data extracted from CREN MLS Service, Pagosa Source Internal Files and related sources, as of December 26, 2012. Though sources are deemed reliable, accuracy is not guaranteed. Some figures have been rounded.
Mike Heraty is the Managing Broker and Owner of Pagosa Source Real Estate Advisors and has over 30 years experience in the real estate profession. Visit him on the Pagosa Source website or contact him by telephone at 970-264-7000.