Housing market has chilled in region
High interest rate blamed; Inventory is up, creating shift toward buyer's market
A blazing-hot housing market has chilled in Northeast Colorado and around the state as a doublewhammy of higher interest rates and significantly increased property valuations have put purchases out of reach for some.
“We had placed a home on the market on Thursday and required all offers by Monday,” said Wendy Jerman, broker-owner and Realtor at Town Square Realty in Sterling.
That’s not the case any longer. The average property in Morgan County took 20 days longer to list and sell in October 2022 than a year ago. In Logan County, it is taking eight days longer.
“There’s more new listings and they’re staying on market longer,” said Stacey Martindale, a Realtor at Cornerstone Brokers. “It wasn’t long ago that we could place a property on the market and you better offer in 24 hours if you wanted it.”
A monthly market report released by the Colorado Association of Realtors indicates new listings have fallen by 20% statewide, a result which has not yet been realized in Eastern Colorado. The report measures the housing market both on a yearto-date against the prior year-todate, and a comparative month to the same month a year ago glance.
That report indicates, in Logan County, new listings have risen 7.4% year over year in October, and sold listings have declined by 35.3%. In neighboring Morgan County, listings have increased by 24.3%, while sold listings are down 27.0%.
“We are not seeing homes go under contract as fast,” Martindale said. “You put homes on the market and hope someone will go see it to make an offer for the seller.”
The reason for the cooling, Realtors say, is the federal interest rate being offered to borrowers. In November 2021, that interest rate was 3.10%. The present rate is 7.08%, up nearly four percentage points in a year. It means the mortgage on a $350,000 home a year ago would have been $1,494 not including tax and insurance, and the same home today would
carry a mortgage of $2,348 before tax and insurance. It is a spike of $10,248 on an annual basis.
While homes are taking longer to sell, the average home sold in Morgan County has risen from $312,329 a year ago to $430,283 today, an uptick of 37.8%. Inventory in Morgan County, according to the Colorado Association of Realtors’ report, stands at 109 properties, up 60.3% since October 2021.
“Even though the interest rate is high, this is still the time to buy because you do have some properties to choose from,” Martindale said. “Buyers have some negotiating power.”
In Logan County, the average home was sold for $256,848 in October 2021, with the average ticking up by 11.7% to $286,773 in October 2022. Inventory has increased by 88.6% from a year ago and inventory supply has increased from 1.5 months a year ago to 2.6 months today.
“It is transitioning to a buyer’s market, but I wouldn’t say it is a fullfledged buyer’s market,” Jerman said. “We’re still seeing multiple offers.”
The chilling of the market is largely related to one factor, she adds.
“It is definitely directly connected to interest rates,” Jerman said. “Buyers can’t afford as much and their credit has to be better. We’re seeing more (federal) financing.”
Morgan County may still be seen as a deal for those in the Front Range, Martindale says. The Colorado Association of Realtors’ report indicates the median sales price for a home in Morgan County in 2022 is effectively matching the statewide average sales price of a home in 2017.
“Homes are selling in Wiggins because you can sell a $700,000 home in Denver, move here and still get to areas of Denver faster,” she said, adding Denver International Airport is one of those locations. “Most of the homes we’re seeing sold in Wiggins are to families from the Front Range.”
There’s the possibility that financially the transaction might allow a family to live close to mortgage free in Morgan County and “not sit in traffic all the time,” she said.
The housing report is more favorable to Logan County, than in comparison to metro Denver and Morgan County, Jerman points out.
Single-family home sales are down 32.1% for the year in metro Denver, while inventory is about two-thirds higher than in October 2021. The median sales price of a home sold in October is up 4.5% in metro Denver for the year.
“We typically run a little behind Metro Denver in Logan County,” Jerman said. “We’re a little more insulated. We don’t peak and valley as much. It doesn’t feel like we have slowed quite as much. We may slow more, but it may take a while.”
Some sellers are adjusting to the market, Martindale says, in order to complete a sale.
“We’re seeing some lowering of pricing by $10,000 to $12,000,” she said. “That is evidence of transitioning to a buyer’s market. When interest rates rise as they have, prices will come down. They are coming down, but not significantly.”
She has also noted an oddity in the market which may be leading to an inflated average sale value in Morgan County: higherpriced homes are selling more quickly than homes in the $200,000 to $300,000 range.
“Those who are purchasing the higher-valued home are those who have the kind of down payment that requires,” Martindale said. “Those who would be looking into the $300,000 range can now only afford a $250,000 home. They’re being asked for more down payment and just can’t do it.”
The market is challenging Realtors, Jerman said. When sellers could place homes as-is on the market in the past, now they are being asked for concessions such as for painting and owner-deferred maintenance, she says.
“We’re getting more creative,” Jerman said. “We’re offering more open houses, more agents are sending out email blasts about reduced pricing — the new term is price improvement. We haven’t had to market in the past. Now, we must.”
At least one lender has considered the market and the factors facing Realtors in support of buyers and sellers, developing a program they will soon launch in support. As metro Denver home sales decline, Front Range Realtors have entered the market, to the detriment of the local economy. Some of their signs have popped up recently in Morgan County.
“In times like these, we feel it is important to use a local lender you trust, who has your interests at heart,” said Cameron Armagost, market president at Bank of Colorado in Fort Morgan. “We believe a local realtor, a local lender, and a local title company understanding the local market becomes more important. Local lenders and realtors care about the relationship over the transaction.”
The Colorado Association of Realtors’ market report also includes analysis of the 4th Congressional District, an area from Greeley east to the state border and to the southeast border of Colorado, encompassing 21 counties in about onethird of the state’s land area. It finds new listings are down 8.8% and sold listings are down 28.9% comparing November 2022 to November 2021. It also reports the time from listing to sale is up five days and inventory has increased by 53.5%. The median sales price of a home in the district is about $50,000 less than the state average, likely skewed by the quantity and pricing of homes in Greeley.