Colorado Real Estate Market Update

The following analysis of the Metro Denver & Northern Colorado real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere real estate agent. 

ECONOMIC OVERVIEW

Colorado’s economy picked up, adding 64,900 new non-agricultural jobs over the past 12 months — a growth rate of 2.4%. Over the past three months, the state added an impressive 28,300 new jobs.

In August, the state unemployment rate was 2.8%, down from 3.4% a year ago. Unemployment rates in all the counties contained in this report were lower than a year ago. It is fair to say that all markets are now at full employment.

HOME SALES

  • In the third quarter of 2019, 17,562 homes sold. This is an increase of 5.1% compared to the third quarter of 2018 but 1.6% lower than the second quarter (which can be attributed to seasonality). Pending sales — a sign of future closings —rose 9.7%, suggesting that closings in the final quarter of 2019 are likely to show further improvement.
  • Seven counties contained in this report saw sales growth, while four saw sales activity drop. I am not concerned about this because all the markets that experienced slowing are relatively small and, therefore, subject to significant swings.
  • I was pleased to see an ongoing increase in the number of homes for sale (+16.9%), which means home buyers have more choice and feel less urgency.
  • Inventory levels are moving higher, and demand for housing appears to be quite strong. As I predicted last quarter, home sales rose in the third quarter compared to a year ago.

 

HOME PRICES

  • Home prices continue to trend higher, with the average home price in the region rising 3.8% year-over-year to $477,776.
  • Interest rates are at very competitive levels and are likely to remain below 4% for the balance of the year. As a result, prices will continue to rise but at a more modest pace.
  • Appreciation was again strongest in Park County, where prices rose 7.8%. We also saw strong growth in Weld County, which rose 7.4%. Home prices dropped in Clear Creek County, but, as mentioned earlier, this is a small market so I don’t believe this is indicative of an ongoing trend.
  • Affordability remains an issue in many Colorado markets and this will act as a modest headwind to ongoing price growth.

 

DAYS ON MARKET

  • The average number of days it took to sell a home in the markets contained in this report rose seven days compared to the third quarter of 2018.
  • The amount of time it took to sell a home rose in all counties compared to the third quarter of 2018.
  • It took an average of 30 days to sell a home in the region — an increase of 1 day compared to the second quarter of this year.
  • The Colorado housing market is still performing well, and the modest increase in the length of time it took to sell a home is a function of greater choice in homes for sale and buyers taking a little longer to choose a home.

CONCLUSIONS

This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.

For the third quarter of 2019, I continue the trend I started last summer and have moved the needle a little more in favor of buyers. I continue to closely monitor listing activity to see if we get any major bumps above the traditional increase because that may further slow home price growth. However, the trend for 2019 will continue to be a move toward a more balanced market.

 

 

 

ABOUT MATTHEW GARDNER

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

Posted on November 5, 2019 at 11:54 am
John Taylor | Category: Economy, For Buyers, For Sellers, Housing Trends, market news | Tagged , , ,

Friday Fun Facts – Equity Insights

iStock-177735411.jpg

The real estate research firm Core Logic just produced their latest Homeowner Equity Insights report.

Some interesting tidbits:

  • 63% of all properties nationally have a mortgage
  • Homeowners with mortgages collective realized a $428 billion rise in equity over last year, an increase of 4.8%
  • Only 3.8% of all mortgaged properties have negative equity (where the loan is greater than the value of the home)
  • 10 years ago 26% of all mortgaged properties had negative equity

If you want to see even more insights about the Colorado market so that you can make really good decisions about your real estate, you are welcome to watch this complimentary webinar, just click HERE.

Posted on October 18, 2019 at 5:38 pm
John Taylor | Category: Economy, For Sellers, fun facts, Housing Trends | Tagged , , ,

Big Bounce

Seventy-five major metro markets have seen home prices bounce back to above their pre-recession peaks.


Metro Denver has seen the biggest bounce with home values 91% above its previous high in 2007 , according to the Home Price Recovery Index from HSH.com.

“Aside from routinely strong home price appreciation, it’s important to know that the Denver metro’s housing ‘bust’ in 2008 was relatively short and shallow,” said Keith Gumbinger, the report’s author.

The peak-to-trough for home values was only three years long and the total decline in value was just under 8 percent in Metro Denver, he said.

By contrast, a half-dozen large metros have seen home prices more than double from their lows and still not reach the old highs. On that list are Las Vegas, Sacramento, Calif, and Cape Coral, Fla.

 

Posted on September 27, 2019 at 5:34 pm
John Taylor | Category: Economy, For Sellers, fun facts, Housing Trends | Tagged , , , , , , , , , , ,

Rate Bounce

Rates hit near-historic lows this week and are now at 3.49% for a 30-year mortgage.

There have only been two other times in history when rates have been this low- April 2013 and October 2016.

It’s interesting to see what happened soon after bottoming out these last two times.

In April of 2013 rates hit 3.41%. By August 2013 they had jumped to 4.40%.

Rates bottomed again in October 2016 at 3.42%. Just two months later in December 2016 they were 4.32%.

Each time the increase was nearly 1% within just a few months.

So, if history proves itself as a guide, we can’t expect these rates to last for long.

 

 

Posted on September 18, 2019 at 1:14 pm
John Taylor | Category: Economy, For Buyers, fun facts, Housing Trends, market news, Northern Colorado Real Estate

Friday Fun Fact – Nationally home prices have gone up!

Hot off the Press the new Federal Housing Finance Authority report!

The Federal Housing Finance Authority ranks 241 major metropolitan areas across the United States for yearly home price appreciation. The current report shows that, nationally, home prices have gone up 4.99% over the last 12 months. Colorado has 5 major metropolitan cities ranked in the 241 cities across the United States.

Here’s how the major cities rank:

        #22   Greeley = 7.94%
#27    Colorado Springs = 7.64%
#63    Fort Collins = 6.34%
#133  Denver = 4.83%
#188  Boulder = 3.41%

** Interesting fun fact: In the WORST economy of our lifetime (2008 recession), home appreciation in Fort Collins only went down 2.2%. Compare that to places like Las Vegas that went down by over 35%**
Posted on September 6, 2019 at 4:56 pm
John Taylor | Category: Economy, For Buyers, For Sellers, fun facts, Housing Trends, market news, Northern Colorado Real Estate

Colorado Real Estate Market Update

 

 

The following analysis of the Metro Denver & Northern Colorado real estate market (which now includes Clear Creek, Gilpin, and Park counties) is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere agent.

 

ECONOMIC OVERVIEW

Colorado’s economy continues to grow with the addition of 44,800 new non-agricultural jobs over the past 12 months. This represents a reasonable growth rate of 1.7%. As stated in last quarter’s Gardner Report, we continue to see a modest slowdown in employment gains, but that’s to be expected at this stage of the business cycle. I predict that employment growth in Colorado will pick back up as we move through the year, adding a total of 70,000 new jobs in 2019, which represents a growth rate of 2.6%.

In February, the state unemployment rate was 3.7%, up from 2.9% a year ago. The increase is essentially due to labor force growth, which rose by more than 84,000 people over the past year. On a seasonally adjusted basis, unemployment rates in all the markets contained in this report haven’t moved much in the past year, but Boulder saw a modest drop (2.7%), and the balance of the state either remained at the same level as a year ago or rose very modestly.

 

HOME SALES

  • In the first quarter of 2019, 11,164 homes sold — a drop of 3% compared to the first quarter of 2018 and down 13.5% from the fourth quarter of last year. Pending sales in the quarter were a mixed bag. Five counties saw an increase, but five showed signs of slowing.
  • The only market that had sales growth was Adams, which rose 4.9%. The rest of the counties contained in this report saw sales decline, with a significant drop in the small Park County area.
  • I believe the drop in the number of home sales is partially due to the significant increase in listings (+45.6%), which has given would-be home buyers more choice and less need to act quickly.
  • As mentioned above, inventory growth in the quarter was significant, but I continue to believe that the market will see sales rise. I expect the second half of the year to perform better than the first.

 

 

HOME PRICES

  • Home prices continue to trend higher, but the rate of growth is tapering. The average home price in the region rose just 2.1% year-over-year to $456,243. Home prices were .3% higher than in the fourth quarter of 2018.
  • I anticipate that the drop in interest rates early in the year will likely get more buyers off the fence and this will allow prices to rise.
  • Appreciation was again strongest in Park County, where prices rose 21.9%. We still attribute this rapid increase to it being a small market. Only Clear Creek County experienced a drop in average home price. Similar to Park County, this is due to it being a very small market, making it more prone to significant swings.
  • Affordability remains an issue in many Colorado markets but that may be offset by the drop in interest rates.

 

 

DAYS ON MARKET

  • The average number of days it took to sell a home in Colorado rose five days compared to the first quarter of 2018.
  • The amount of time it took to sell a home dropped in two counties — Gilpin and Park — compared to the first quarter of 2018. The rest of the counties in this report saw days-on-market rise modestly with the exception of the small Clear Creek market, which rose by 26 days.
  • In the first quarter of 2019, it took an average of 42 days to sell a home in the region, an increase of four days compared to the final quarter of 2018.
  • Job growth drives housing demand, but buyers are faced with more choice and are far less frantic than they were over the past few years. That said, I anticipate the late spring will bring more activity and sales.

 

 

CONCLUSIONS

This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.

For the first quarter of 2019, I have moved the needle a little more in favor of buyers. I am watching listing activity closely to see if we get any major bumps above the traditional increase because that may further slow home price growth; however, the trend for 2019 will continue towards a more balanced market.

 

 

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

Posted on May 14, 2019 at 3:30 pm
John Taylor | Category: Economy | Tagged , , , , , ,

Get Real

We’ve seen some headlines recently that suggest home prices along the Front Range have peaked and are starting to decline.

When we dig in and do the research, this is what we find…

Home prices are still going up, just not as fast as they have been.

We’ve known that the double-digit appreciation that we’ve seen for the last several years could not be sustained and we expected the pace of appreciation to slow down.

So far in 2019, this is the case.  Prices still going up, just not as fast.

It’s like running up stairs.  Eventually you will get tired and you will need to start walking (but you’re still going up).

Headlines that suggest that prices have peaked and are falling create unrealistic expectations for buyers and give sellers a skewed perspective on the market.

Here are the numbers…

Average Price:

  • Up 1.53% in Metro Denver
  • Up 6.1% in Larimer County
  • Up 5.1% in Weld County

Months of Inventory:

  • 5 Months in Metro Denver
  • 5 Months in Larimer County
  • 4 Months in Weld County
  • (Remember that 4-6 months of inventory represents a balanced market)

There has been an increase in Days on Market which means that homes are taking longer to sell.  But the increase is measured in days, not months.

Here are those numbers…

Days on Market:

  • Up 4 Days in Metro Denver
  • Up 11 Days in Larimer County
  • Up 3 Days in Weld County

So, be mindful of headlines that can be sensationalized and might suggest that the market is falling.

Bottom line, the market is going up, just not as fast as it was.

Posted on April 29, 2019 at 3:30 pm
John Taylor | Category: Economy | Tagged , , , , , , , , , , , , ,

Vegas Baby!

 

The results are in from FHFA.gov’s latest ranking of the top performing markets in the U.S.

Each quarter they track 245 cities across the country and rank their real estate markets by home price appreciation.

 

What’s the highest performing city the the U.S.

Vegas!  Their prices have gone up 17.63% in the last year.

 

How about the worst?

Bloomington, Illinois sits in dead last where prices went down 3.58%

 

Here’s how Colorado cities are ranked:

• #10 Colo. Springs = 11.41%
• #16 Greeley = 10.68%
• #59 Fort Collins = 8.29%
• #64 Denver = 8.15%
• #97 Boulder = 6.85%

Posted on March 8, 2019 at 8:06 pm
John Taylor | Category: Economy | Tagged , , , , , , , , ,

Misery Index


Last week at our Market Forecast events, Chief Economist Matthew Gardner shared, among many stats, his famous “Misery Index.”

A valuable statistic with a funny title.

The Misery Index simply measures inflation plus unemployment.

It’s an effective way to look at our Nation’s economy.

Today’s Index sits just below 6%. Back in October 2011, it was close to 13%.

The lowest it has been in the last 7 years is October 2015 when it was near 5%.

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If you would like a copy of the entire Forecast presentation, go ahead and reach out to us.

We would be happy to put it in your hands.

Posted on January 30, 2019 at 3:30 pm
John Taylor | Category: Economy | Tagged , , ,

2019 Economic and Housing Forecast

What a year it has been for both the U.S. economy and the national housing market. After several years of above-average economic and home price growth, 2018 marked the start of a slowdown in the residential real estate market. As the year comes to a close, it’s time for me to dust off my crystal ball to see what we can expect in 2019.

The U.S. Economy

Despite the turbulence that the ongoing trade wars with China are causing, I still expect the U.S. economy to have one more year of relatively solid growth before we likely enter a recession in 2020. Yes, it’s the dreaded “R” word, but before you panic, there are some things to bear in mind.

Firstly, any cyclical downturn will not be driven by housing.  Although it is almost impossible to predict exactly what will be the “straw that breaks the camel’s back”, I believe it will likely be caused by one of the following three things: an ongoing trade war, the Federal Reserve raising interest rates too quickly, or excessive corporate debt levels. That said, we still have another year of solid growth ahead of us, so I think it’s more important to focus on 2019 for now.

The U.S. Housing Market

Existing Home Sales

This paper is being written well before the year-end numbers come out, but I expect 2018 home sales will be about 3.5% lower than the prior year. Sales started to slow last spring as we breached affordability limits and more homes came on the market.  In 2019, I anticipate that home sales will rebound modestly and rise by 1.9% to a little over 5.4 million units.

Existing Home Prices

We will likely end 2018 with a median home price of about $260,000 – up 5.4% from 2017.  In 2019 I expect prices to continue rising, but at a slower rate as we move toward a more balanced housing market. I’m forecasting the median home price to increase by 4.4% as rising mortgage rates continue to act as a headwind to home price growth.

New Home Sales

In a somewhat similar manner to existing home sales, new home sales started to slow in the spring of 2018, but the overall trend has been positive since 2011. I expect that to continue in 2019 with sales increasing by 6.9% to 695,000 units – the highest level seen since 2007.

That being said, the level of new construction remains well below the long-term average. Builders continue to struggle with land, labor, and material costs, and this is an issue that is not likely to be solved in 2019. Furthermore, these constraints are forcing developers to primarily build higher-priced homes, which does little to meet the substantial demand by first-time buyers.

Mortgage Rates

In last year’s forecast, I suggested that 5% interest rates would be a 2019 story, not a 2018 story. This prediction has proven accurate with the average 30-year conforming rates measured at 4.87% in November, and highly unlikely to breach the 5% barrier before the end of the year.

In 2019, I expect interest rates to continue trending higher, but we may see periods of modest contraction or levelling.  We will likely end the year with the 30-year fixed rate at around 5.7%, which means that 6% interest rates are more apt to be a 2020 story.

I also believe that non-conforming (or jumbo) rates will remain remarkably competitive. Banks appear to be comfortable with the risk and ultimately, the return, that this product offers, so expect jumbo loan yields to track conforming loans quite closely.

Conclusions

There are still voices out there that seem to suggest the housing market is headed for calamity and that another housing bubble is forming, or in some cases, is already deflating.  In all the data that I review, I just don’t see this happening. Credit quality for new mortgage holders remains very high and the median down payment (as a percentage of home price) is at its highest level since 2004.

That is not to say that there aren’t several markets around the country that are overpriced, but just because a market is overvalued, does not mean that a bubble is in place. It simply means that forward price growth in these markets will be lower to allow income levels to rise sufficiently.

Finally, if there is a big story for 2019, I believe it will be the ongoing resurgence of first-time buyers. While these buyers face challenges regarding student debt and the ability to save for a down payment, they are definitely on the comeback and likely to purchase more homes next year than any other buyer demographic.

Originally published on Inman News.

Posted on January 7, 2019 at 3:30 pm
John Taylor | Category: Economy | Tagged , , ,