Two things can be true at once.
The first truth is that active housing inventory was up 57% in January versus a year ago while pendings are only up nominally.
And the second truth is, despite these much higher inventory counts, it's still the best time of year to put a home on the market.
In other words, there are a lot of homes for sale. And with mortgage rates in the 7% range, affordability remains severely constrained.
Historically, we start each year with inventory at its lowest point and then inventory climbs right through the spring and summer, peaking around Labor Day.
Last year, inventory increased 129% between January and August. In 2023, inventory climbed 75% between January and August. If you take the average of the past two years - 102% - and then apply that to our current inventory count, it's not unreasonable to believe we could have more than 14,000 homes on the market by he middle of this summer. That would be the most inventory we have had for sale since 2011.
Now it is also true that demand picks up as you move into spring. In fact, if you're looking for a silver lining, pendings were up 19% in January versus January of 2024. So we actually have more buyers in the market right now than a year ago - we just have more new listings than new buyers.
What this means is if you have a home to sell, you can list in the current environment... with 7,000 other homes for sale. Or wait until summer, when you could see 14,000 (or more) competing listings on the market. The math on that is pretty clear to me.
One significant development at the end of 2024 was that more than 4,600 listings either expired or were withdrawn from the market in December. That's the largest year-end inventory drawdown of inventory I have seen in 19 years in Colorado. To me, this represents the dead underbrush of the market, mostly stale listings that were overpriced or just lacking an overall value proposition.
That means even though there are more listings, there is less junk. And so for attractive homes in good areas, competition can still be a thing. One of my Summit Home Sales partners experienced a five-offer bidding war on a $900k home backing to open space last month. And I showed several homes to buyers in January that came off the market in a week or less.
But it all boils down to value proposition.
Buyers want one of two things... it either has to be in elite condition in a great location... or it needs to be priced more attractively than anything else on the block.
The rest of the market lands in the mushy middle, and even with more buyers coming back, it's the homes with the strongest value propositions which sell first.
