Market Trends

Today’s look at the residential real estate market focuses on the Valley of the Sun subdivision in Fairplay, Colorado 80440. This chart illustrates 136 home sales reported in Summit Association of Realtors MLS database from 4/15/2005 through 4/15/2008. The sample includes sales from Valley of the Sun, Venture 72, Venture 73, and Wilderness Acres. The X axis is $/sq. ft. and the Y axis is time. Each blue dot is a sale and the red line is a trend line. Thus far the overall trend illustrates an increasing market. But let’s look at the next table – the absorption study.

The table below illustrates the monthly absorption rate in terms of sales per month. Over the past thirty-six months the absorption rate has lengthened from an almost twelve month supply to a twenty-two month supply of homes. In a stable market, as many sales occur daily as new listings. When more sales occur each day than new listings the market demand is rising. In a declining market, fewer sales occur than new listings. At this time The Valley of the Sun real estate market is in a state of over-supply. Some may argue the inventory is higher now coming out of the winter months, however the present supply is significantly higher than the levels twelve, twenty-four, or thirty-six months ago.

So, where is the market headed? Nobody can know for sure, but historically inventory build-up occurs prior to measurable market decline.