Real estate market soars
Sales, prices up, but lack of inventory a potential impediment
Story by: Joe Vaccarelli/Special to the Sentinel
Mesa County’s residential real estate market is seeing more sales for more money through the first five months of 2017, but a shortage of for-sale properties could pump the brakes on what otherwise could be a lucrative year for the real estate industry.
“We’re in a very steady market right now with a lack of inventory,” said Mike Burkhard, sales manager for Bray Real Estate. “We’re seeing prices driven up falsely because of demand. That’s not very healthy. The key to us is more properties.”
Through May, 1,396 residential properties were sold, according to a monthly report issued by Bray Real Estate, an increase of 13 percent from this time last year. However, the current active listings leave only two months of inventory — a measure of how long it would take to exhaust the existing properties market if no new properties were listed.
A healthy market will have four to six months of inventory, according to Burkhard, who attributes the lack of homes to owners still being skittish from the economic downturn in 2008 that left many upside down on their mortgages.
“A lot of people lost money when the market crashed. They thought they were upside down,” Burkhard said. “They still think that, and some still are, but there are some out there that are OK to sell.”
In total there are 891 active residential listings, with more than 50 percent in the $100,000 to $299,000 price range. Homes priced $500,000 and above have the most months of inventory.
The median sales price for a home so far in 2017 is $215,000, up 10 percent from last year at this point and approaching the peak $225,000 median price from January-July 2008. The north area of Grand Junction saw the most home sales so far this year with more than 200 sold, followed closely by Fruita with 183. Approximately 80 percent of all homes sold were for less than $300,000.
New home construction is also booming, up 74 percent from this time last year, although Burkhard said construction is not keeping up with the demand in Mesa County. He cites lending restrictions such as the 2010 Dodd-Frank Act that regulates financial markets. Burkhard said this slows down banks lending to potential home builders.
There is also a need for townhomes and condominiums, but the lack of a construction defects bill until last month had quelled development on that end across the state. Many believed it was too easy for homeowners to sue developers, thus driving up insurance costs. Last month, Gov. John Hickenlooper signed a bill that would require a majority of condo owners to take legal action against a developer. Until now, a homeowners association board could take action itself.
“It’s a much more controlled market now, and probably over-controlled,” Burk-hard said.
Additionally, foreclosure filings and sales are down from last year and significantly down from the numbers of 2010. Filings are down 23 percent and sales have decreased 36 percent compared to 2016, although Mesa County Public Trustee Mike Moran believes last year was an outlier because of some layoffs in the oil and gas industry in late 2015.
“Things have come a long way in the last five years,” Moran said. “(The year) 2016 was just a little bit of a local anomaly because of the layoffs in fall 2015.”
There were 178 foreclosure filings and 87 sales through May this year. Those numbers are on pace to come up short of last year’s totals, but are on track to be similar to 2015. This is still significantly less than the nearly 1,600 filings seen in 2010.
“It says that we’re continuing to recover from the 2010 peak of foreclosures, but I see it plateauing just like 2002 to 2008, relatively,” Moran said. “It’s looking better this year, hopefully it will get a little better and hopefully there will be fewer foreclosures next year.”
In commercial real estate, Coldwell Banker Commercial member Dale Beede estimates his firm is doing about one and a half times the volume of last year and is nearly as busy as 2006, but working on fewer deals than at that time.
“The market is not nearly as robust as in those times,” he said, adding that there were some “crazy deals” back then.
Commercial real estate sales so far this year are down a bit from 2016, with 48 sales through May 31, compared to 74 sales through the same time in 2016. This year more closely aligns with 2015, when there were 40 sales during the same time frame, according to the Mesa County assessor’s website.
Beede predicts the commercial market will peak in about 15 years, which is just fine, in his opinion.
“We’re in a normal market right now. It’s not hot or cold,” he said. “There’s nothing wrong with a normal market.”