Real estate holding steady: Despite median price uptick, 2013 home sales outpacing 2012
Through November, Mesa County home sales maintained the pace set in 2012, but at an increased median price, according to a prominent Grand Junction real estate brokerage.
Bray Real Estate reported 2,415 homes sold by Nov. 30 at a median price of $173,500, based on data maintained by the Grand Junction Area Realtors Association Multiple Listing Service.
In 2012, 2,419 homes sold during the same period at a median price of $165,000. While the number of sales stayed basically the same, the median price was up 5 percent compared to 2012.
Median price is the price below which half of all homes are sold and above which half of all homes are sold.
“A year ago, we were coming out of a pretty big hole and the market was making its turn, and so you saw a little extra acceleration,” Robert Bray said. “I did not expect to see the same transaction growth as last year, but I’m a little surprised to see that it’s flat.”
Flat sales this year compared to last could be attributed to a decrease in the inventory of lower-priced homes, which attracted 13 percent more buyers in 2012 compared to 2011, Bray said.
“The good news is there were 2,400 transactions that happened in the marketplace (this year), which is still very good,” Bray said.
The median price of homes grew by 5 percent in each of the last two years, reflecting fewer lower-priced and more higher-priced residences coming on the market, he said.
“Some people did not have equity in their homes - or very little equity – and could not participate in the marketplace a couple years ago,” Bray said. “Now they’ve brought their homes on the market. Even with a small amount of equity, they want to sell their homes and move on.”
Even though the median price point is up 10 percent in the last two years, it will have to move up even more before the real estate market can be considered healthy again, he said.
“I can remember back in ‘08, we had a median price of around $225,000,” Bray said. “I wouldn’t suggest for (the real estate market) to be healthy, it has to be back at that, but that was the median price point before that market fell.”
Richard Wobbekind, University of Colorado executive director of business research, told the Grand Junction Area Chamber of Commerce Monday that the Denver real estate market has already surpassed the median price point it set in 2008 and now appears to be on a healthy tack.
“I think we’re at least 18 months away from that,” Bray said. “It could take two years.”
An anticipated change in interest rates could motivate buyers to take action during the first half of 2013, he said.
“Everybody expects the feds will begin to taper off on bond buying for those 10-year treasuries,” Bray said. “I think with the change in leadership at the (Federal Reserve) you could see a half to one point (increase) in interest rates by the end of next year.”
“I think it will get some people off the dime to say, we better go do something because the interest rates have just been terribly attractive for several years now - really below-market,” he said.
Even with the expected increase, Bray said interest on mortgage loans of 5, 5.25 and even 5.5 percent is still a very good rate and would not likely discourage home buyers. “I can remember back in the early-1980s, late-1970s, we were selling homes at credit card rates of 16 and 17 percent,” Bray said.
Meanwhile, commercial properties sold at a higher rate through the third quarter this year compared to the same period in 2012, the brokerage reported.
Forty-nine commercial properties sold through the third quarter in 2012 compared to 62 commercial properties that sold during the same period this year, the Bray report said.
Brian Bray, who focuses on commercial property sales, said the increased number of sales is a good sign for the local commercial market.
Like the residential market, Grand Junction’s commercial property market lags the Front Range too, but appears to be headed in the right direction, Brian Bray said.
The local commercial market could catch the market along the Fort Collins-Denver-Colorado Springs corridor within the next 24 months, he said.
The median price for retail space through Nov. 30 was $87.61 per square foot. Office space sold for a median price of $120.68 per square foot and warehouse and industrial space went for a median price of $59.86 per square foot, according to the Bray report.
The most expensive retail space sold so far in 2013 was a building on 6.2 acres at 2502 U.S. Highway 6 & 50. The structure, which is occupied by Comfort Dental and Starbucks, sold for $11,350,000 in August, a rate of $322.12 per square foot.
Brian Bray said the disparity in price is dictated by the level of rent a commercial property can demand. Buildings which rent at higher rates sell at higher prices, he said.
In the rental market, the Grand Junction vacancy rate hovered at 7.8 percent in the third quarter, more than double the rate set through the third quarter of 2012. The vacancy rate statewide stands at 4.5 percent.
Renters in the Grand Junction market pay on average $577.51 per month, Bray reported, while statewide, the average rent is $1,000.49 per month.
“While some landlords have offered incentives to attract renters, rental rates have remained steady,” the report said.
Construction is expected to begin on a new apartment complex on Orchard Mesa and several other projects, which shows an increased demand for rental housing, according to the report.