Summary:
June results for the overall residential market (Aspen to Parachute) reflected an expanding supply of inventory combined with a modest decline in sales contributing to an increase in the absorption rate to 42 months, just slightly above the YTD average of 40 months. The ratio of new listings to sold transactions grew to 5.71:1 representing the widest margin in over a year and reflective of the disproportionate number of (would be) sellers to buyers. The results are indicative of continued excess capacity in inventory as evidenced by monthly sales volume that was identical to the YTD average and 38% above last year at this time. Conversely, the new added inventory in June was 30% above the YTD average and 7% above June of 2009. Still, YTD averages through Q2 reflect overall improvement year over year in all categories with the exception of average monthly outstanding inventory. For the first 6 months of 2010, the list to sold ratio improved 37% from 6.94 listings per sale through June of 2009 to 4.38:1 in 2010. The absorption rate declined from 57 months to 40 months year over year (-30%).
The Western suburbs (New Castle to Parachute) displayed similar results with respect to an increase in monthly listing volume and a decrease in sales verses the prior month. Noteworthy, however, was a slight decline in total outstanding inventory within this sub-market that continues to reflect considerably better balance, well, less imbalance than the overall market, with a monthly list to sold ratio of about 3:1 and a 24 month absorption rate for June. By all indications, the west market with lower median prices will lead the broader market in terms of recovery though the imbalances that exist even in this market suggest that there will be continued weakness in price for some time to come. Certainly, we have a long way to go. The results of Q3 just ahead, which traditionally represents the peak months for sales activity, may be indicative of just how long that might be as an increasing number of foreclosures will serve to mitigate improvements that might otherwise be realized from increased sales.
The opinions expressed are strictly those of the author. The information and opinions provided are not to be construed as investment advice and no representations or warranties are made as to the accuracy or reliability of information provided.
Joe Carpenter
Special Assets Group
American National Bank
429 Railroad Avenue
Rifle, CO 81650
(970) 625-2895
Joe.Carpenter@anbbank.com