Low inventory in the residential real estate market helped drive up the area median home price in Mesa County and resulted in a drop in sales throughout the first six months of the year.
At the moment, Mesa County only has two months of inventory for residential real estate, according to a monthly statistics report released by Bray Real Estate. Inventory is determined by looking at the number of available listings compared to the number of sales.
"It's just really low," said Kevin Bray, development coordinator for Bray Real Estate.
Homes priced up to $299,000 have only one month of inventory available while homes priced from $300,000 to $399,000 have only two months. Homes from $400,000 to $750,000 have five months in inventory. At this time last year, Mesa County had three months of inventory.
Bray said a healthy market can have six months of inventory.
As a result of the low inventory, Re/Max Broker Associate Andrew Kramer said he's seeing more higher-priced homes sell in the Redlands Mesa area, where he mostly sells.
"It's hard to find a house under $299,000 and it goes pretty quick," he said.
The median price for a home in Grand Junction is $251,000 through the first six months of the year, a 7% increase compared to the first six months of 2018. At the same juncture in 2018, the median price had risen 9% over the previous year.
"There's still a lot of demand and not a lot of supply, which is part of why those prices continue to go up," Bray said.
Home sales for the year are down 11% compared to 2018 and down 15% for June compared to June 2018. Total sales volume is down 5%.
Bray said the numbers aren't too alarming as homes are hitting the market at lower price points, but they are just moving very quickly. Homes are on the market for an average of 59 days, up from 57 days a year ago. Average days on the market measures the period from when a home is listed until a new owner closes on the property. Once under contract, it can take 30-45 days to close, Bray said.
Building permits have also dropped 15% this year compared to 2018, making it more difficult to replace the inventory. So far, 362 permits have been pulled in 2019 versus 428 through the first half of 2018. The 362 permits are still more than any other year at this point since 2008.
Bray said the market should yield about 1,000 permits per year with Mesa County's population. Last year, there were 802 permits pulled.
"We're really at a bit of a crossroads. We need to have efficient growth. We need the inventory out there," Bray said.
There are several reasons for the drop in permits, including the moisture in the Grand Valley received during the winter and spring seasons. There is also a lack of subcontractors available to work on projects in the area, according to Jessica Haertling, chief operating officer at Porter Homes.
Porter builds higher-end homes in the Grand Valley costing anywhere from $400,000 to $2 million.
"It's been a little slower in the first quarter, but that's because of some bigger builds that are more time- consuming," Haertling said.
She added that Porter has a few homes waiting on final plans. Permits are typically pulled just prior to the start of construction.
Porter mostly builds custom homes, but project manager Rod Porter said the company is building four spec homes that should hit the market soon.
"One of the reasons we're building the four spec homes is that we're trying to get inventory up so Realtors can make a living," Porter said.
Both Bray and Kramer noted the need for homes in lower price ranges as well as locals need an opportunity to buy a "starter home" and build equity before looking to upgrade into a larger house.
The median prices rising faster than median income in the area can price people out of buying their first home.
"People want to buy a house," Kramer said. "Everyone wants to be a first-time homebuyer."
The area is still attractive for homebuyers relocating from the Front Range, Bray said. Those buyers are in a better position to sell their home for higher prices and buy more expensive homes in Mesa County.
"We're still really attractive to people who are migrating here," he said.
While the area needs more moderately priced homes, Kramer said he feels the market overall is still in very good shape.
"I just think it's a good positive market," he said. "I think we're in a good state in our economy and in Grand Junction."