Real estate sales flat in ‘13
Scarce employment prospects and sputtering energy production prevented the Mesa County real estate market from expanding in 2013, two leading real estate experts said.
Home sales were flat compared to last year while overall sales increased an anemic 3.3 percent, according to reports.
On the bright side, foreclosures continued to have a diminishing impact on prices and single-family building permits continued to grow. Robert Reece of Advanced Title Co. and Robert Bray of Bray Real Estate were both underwhelmed by the local real estate recovery, though separate year-end reports authored by the pair provide some cause for hope.
“Year over year, market improvement was best in 2011 but has diminished the last two years,” Reece said. “The real estate market has lost some of its momentum and appears to be stuck in second gear — moving forward but not at a healthy pace.”
The Grand Junction Area Realtors Association Multiple Listing Service reported 2,596 homes sold in 2013, three fewer than sold in 2012.
“The Denver real estate market is more or less back,” Bray said. “They have exceeded the (number of transactions) from their high time pre-recession and they have exceeded their median price point.”
Denver recorded its highest median home price ever, Reece said.
By comparison. Mesa County came within 10 percent of the pre-recession high for home sales — 2,600 in 2013 compared with 2,860 residential transactions in 2012, Bray said.
The median price point, however, was 22 percent less than the high of 2008 — $222,000 versus $173,500 today, he said.
The median price is the price above which half of all houses are sold and below which half of all houses are sold.
The gap in median price is partly explained by continued high unemployment and a decline in oil and gas production, both experts said.
“Energy companies have redeployed some of their assets from the Western Slope to other areas of the country for more favorable returns, causing some energy workers to leave the area,” Reece said.
“We’re still lagging and we’re still an economy that’s tied largely to energy-related activity, and the energy-related activity that affects the (Grand Valley) has lagged somewhat and continues to lag, and I think that’s probably part of it,” Bray said.
Meanwhile, unemployment on the Front Range is falling more quickly than the Western Slope, where joblessness hovers around 7 percent, according to the Colorado Department of Labor.
“The unemployment rate on the Front Range has continued to move down and ours is sluggishly moving, but it still needs to move some more,” Bray said.
BUILDING PERMITS UP
Home building improved in 2013, but at a slow pace since the low of 2011, with 443 single-family build permits issued last year, according to county records.
There continued to be good opportunities for buyers in 2013, but to a lesser extent than in the previous year.
On the lower end of the market, sellers are beginning to see multiple offers for their properties.
“Sellers are more likely to get multiple offers for homes priced under $250,000 because of a lack of inventory and high demand, which is due to affordability,” Bray said.
“Two companies accounted for 30 percent of all permits issued and, not surprisingly, the houses are focused on entry-level prices,” Reece said. “With existing houses at the low end of the price spectrum being gobbled up at a good pace, some home builders have found an active market for new housing at the same price point.”
Ron Jens of Coldwell Banker Home Owners Realty said he noticed interest in more expensive homes has picked up recently. During the last two months, Jens listed and sold two higher-end residences — one for $472,000 and the other for $545,000.
“Housing affordability is again a plus for Grand Valley residents — for those that may be able to take advantage of it,” Reece said.
WHAT’S IN STORE FOR 2014?
Interest rates have recently trended upward nearly a whole percentage point from the beginning of 2013 and the Federal Reserve seems committed to ushering in a soft landing from the quantitative easing they have directed since 2008.
“We expect any rise of interest rates in 2014 to be modest, leaving rates at still a very attractive level for any borrowers who might qualify. Builders should still be able to move their product in the affordable level as long as interest rates do not spike,” Reece said.
Bray said he expected an increase in interest rates, but probably not more than a half a percentage point.
“Buyers who are interested in buying should move on them now because there’s still some opportunities in the marketplace in terms of pricing,” Bray said. “For sellers, it is a better time today than it was two years ago in that the prices have come up a little bit and foreclosures have diminished. They have a chance of getting some money out of their property that they may not have had two to three years back.”
The Montrose County Planning and Development Department released a detailed comparison of building permits following a successful year in 2013.
The report shows an increase across the board in the number of permits issued, total valuation, single-family residence permits and single-family residence valuation, signifying positive growth for the county, county officials said.
“These numbers are exciting,” said Planning and Development Director Steve White. “What’s most notable is not only the increase in permits, but $2.9 million of increased valuation for properties, which means more money is being spent in our community.”
The total of permits issued in 2013 was 179, compared with 162 permits in 2012, a 10 percent increase. The Montrose Board of County Commissioners voted to waive impact fees for 2011, 2012 and 2013 as a result of the poor economy and have continued that practice for 2014 to encourage growth.
Single-family residence permits saw 31 percent growth in 2013. The number of permits issued in 2012 was 29, whereas 38 new houses were built in Montrose County in 2013.