Sales:

Fort Collins CO home sales declined in June 2023. There were 219 sales, down 4.2% from 232 sales in May 2023, and down 19.9% from the 270 sold in June 2022. Of these 232 homes, 192, or 83%, were priced over $500K. 2023 year-to-date sales of 1,029 homes were down 11.6% from 2022’s 1,164 sales for the same period.

Prices:

Home prices were mixed in June 2023. The median price gained 4.0% to $620K from $596K in May 2023, while the average price was essentially unchanged at $697K compared to last month’s $698K. These changes fall within the normal range of month-to-month variations in the prices of homes sold, and are consistent with the recent trend line for this indicator.

Inventory:

Home inventory increased strongly again in Fort Collins CO in June 2023. There were 451 homes for sale at the end of the month, an increase of 35.3% from the 375 for sale at the end of May 2023. The month’s supply of inventory rose to 2.1 months, as inventory gained a bit more than sales. Inventory is now at the highest point in the last 3 years.

Sales Price vs. List Price:

In June 2023, homes in Fort Collins CO sold for 100.6% of asking price, up from the 100.2% of the previous month.

Summary:

Sales were down, inventory up, and prices essentially unchanged, and this during what is normally the best month on the calendar for real estate sales. Here’s what we think is happening:

First of all, uncertainty about the overall economy seems to be affecting home-buying decisions, as potential home buyers are less willing to make big investment decisions. Interest rate increases have taken a toll on the pool of qualified buyers, inflation has not yet been tamed, and job stability concerns remain.

But of more concern is the shift in the structure of our local real estate market. The above-mentioned issues have been magnified by our own recent home price increases, which have moved home ownership beyond the reach of a significant number of area residents who in the past would have been able to afford a home.

The charts above illustrate the current situation. On the one hand, the percentage of homes for sale in the more expensive price range has increased, and last month accounted for a great majority of those homes sold. But the second chart, which shows household income distribution estimates for Fort Collins, shows how little of our population can afford even “inexpensive” homes. For example, to afford a $400K home, a family with a minimum down payment, limited debt and decent credit would need an annual income of around $75K.

What’s happened is simply that a decrease in the number of qualified buyers, combined with increasing prices, has shrunk the real estate market. We’re most likely going to see fewer homes sold, more inventory available, and longer times on market. And it’s unlikely to change significantly until the economy begins improving for everyone.