Economic Factors Affecting the Demand for Housing

It’s no secret that the market is a nightmare for buyers right now and sellers can basically get whatever price they want for their properties. So for lack of a better term, it’s an absolute show out there. Let’s get into it. It’s important to discern the difference between active listings and new listings. The dire situation you’re hearing about on a day-to-day mainly has to do with active listings being down 70 to 80% year over year when looking at a 12 month rolling average, but a silver linings is in that the new listings are only down 20 to 30% over the last few months with the trend line showing even numbers for new listings in our area when compared to the last couple of years. The issue is that these new listings get snapped up immediately and therefore do not add to our month’s supply, but though it may not seem like it, the demand is slowly being vanquished one home buyer at a time. I’d like to discuss a couple of macro economic effects trickling down into the real estate market that are adding to the frenzy. One of those factors is unemployment. It seemingly obvious that almost every business in town is looking to hire right now. Nationally, there are 9.3 million job openings, and quite ironically, there are about the same amount of people unemployed. Then you add in the lowest layoff numbers in history coupled with the highest quit rate ever recorded in May and that’s what we’re looking at as far as some interesting if not uncomfortable employment scenarios. If you were looking for a new gig right now, now’s a great time to get those sweet Benny’s in much needed PTO. While employment is a one-off indicator of overall market health, a more direct situation that you may have been hearing about is that building material prices skyrocketed over the last 12 months. Over the course of the pandemic Lumber shot up 400% to record levels for a thousand board feet of timber. Most recently Lumber has dropped off from its record of 1700 per thousand board feet down to around 900 as of this taping with hopes for it to drop further as the hoarders relinquished their stockpiles of unused material into the market. Most building supplies are still way up when compared to pre pandemic pricing, but materials such as copper seem to be following the Lumber prices down as well. So there’s some hope for you folks in the middle of your building process right now. Demand for new construction remains very strong so we’ll keep a close eye on that sector and provide updates throughout the rest of the year. That brings us to our last item to discuss today, workforce housing. The La Plata County Economic Development Alliance, the City of Durango, and several other major stakeholders in the area have workforce housing at the top of their to-do list. Due to land being scarce and expensive, there haven’t been a whole lot of ideas on how to help the folks making 80 to 120% of the area median income or AMI, get into a home or even a rental right now and this is why everyone in their mother seems to be talking about workforce housing. Ideas from identifying city or county owned parcels to create a public private partnership with developers, to encouraging builders to cultivate deed restricted developments to minimize runaway appreciation are all on the table. If you happen to have any bright ideas on how to help alleviate the pressures feel free to shoot us a note in the comment section below, we’d greatly appreciate it. We’re going to be back next month with Q2 statistics and spoiler alert, pricing is bananas. As always, you can feel free to email me at [email protected] or reach out on any of our social media handles @DurangoBrokers. Happy summer everyone and thank you for watching.

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