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

The Colorado economy continues to grow, adding 69,100 new non-agricultural jobs over the past 12 months, which represents a solid growth rate of 2.6%. That said, we are continuing to see a modest slowdown in employment gains, but that is to be expected at this stage of the business cycle. My latest forecast suggests that Colorado will add a total of 65,000 new jobs in 2019, representing a growth rate of 2.3%.
In November, the state unemployment rate was 3.3%, up from 3% a year ago. The increase is essentially due to an increase in the labor force, which rose by 77,279 people. On an un-seasonally adjusted basis, unemployment rates in all the markets contained in this report dropped between November 2017 and November 2018. The highest rate was in Grand Junction, but that was still a very respectable 4%. Fort Collins and Boulder had the lowest unemployment rate of 2.9%. All the regions contained in this report are essentially at full employment.

HOME SALES ACTIVITY

  • In the fourth quarter of 2018, 12,911 homes sold — a drop of 13.8% compared to the last quarter of 2017 and down 22% from the third quarter.​
  • The only market that saw growth in sales was Clear Creek, which rose by 3.8%. This is a small market, however, and is prone to rapid swings in price as well as sales. There was a significant drop in sales in the Denver market. I will be watching closely to see if this is an anomaly or a longer-term trend. At this time, I believe the former to be true.​
  • Interestingly, this decline in sales in Denver came as inventory levels rose by 37%. For now, I attribute this to seasonality and expect to see sales growth return in the spring.
  • Inventory growth continues to give buyers more choice, allowing them to be far more selective — and patient — before making an offer on a home. That said, well-positioned and well-priced homes are selling relatively quickly.

HOME PRICES

  • Despite the rapid rise in listings and slowing home sales, prices continue to trend higher, though the rate of growth is slowing. The average home price in the region rose 6% year-over-year to $454,903. Home prices were 2% higher than in the third quarter.
  • In all, the data was not very surprising. As with many markets across the country, affordability is starting to become an issue. However, the recent drop in interest rates likely stimulated buyers at the end of 2018 and I expect to see good price growth in the first quarter of 2019.
  • Appreciation was strongest in Park County, where prices rose 28.2%. We can attribute this rapid increase to it being a small market. Only Gilpin County saw a drop in average home price. Though this, too, is due to it being a very small market, making it more prone to significant swings.
  • As mentioned, affordability is becoming an issue in many Colorado markets and I anticipate that we will see some cooling in home price appreciation as we move through late 2019.

 

 

DAYS ON MARKET

  • The average number of days it took to sell a home in Colorado rose by one day compared to the final quarter of 2017.
  • The amount of time it took to sell a home dropped in four counties: Boulder, Larimer, Gilpin, and Park. The rest of the counties in this report saw days on market rise relatively modestly with the exception of the small Clear Creek market, which rose by 20 days.
  • In the fourth quarter of 2018, it took an average of 38 days to sell a home in the region, but it took less than a month to sell a home in five of the eleven counties contained in this report.
  • Housing demand is still there, but buyers appear to have taken a little breather. I anticipate, however, that the spring will bring more activity and rising sales.

CONCLUSIONS

The 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 fourth quarter of 2018, I continue the trend I started last summer and have moved the needle a little more in favor of buyers. I will be closely watching listing activity in the spring to see if we get any major bumps above the traditional increase because that may further slow home price growth — something that would-be buyers appear to be waiting for.

 

 

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 Governor’s 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 February 5, 2019 at 6:33 pm
Julie Maxwell | Category: Buyers, Gardner Report, Real Estate, Sellers | Tagged , , , , , , , , , , , , , , , ,

Our Forecast

Our Forecast

 

This past Wednesday and Thursday evenings we had the pleasure of hosting our annual Market Forecast events in Denver and Fort Collins.

 

Thank you to the 700 people who attended.  We appreciate your support!

 

In case you missed the events, here are some highlights including our forecast for price appreciation in 2019:

 

  • In 2018 Prices went up:
    • 8% in Fort Collins
    • 8% in Loveland
    • 8.5% in Greeley
    • 8% in Metro Denver
  • Inventory is (finally) showing signs of increasing:
    • Up 25% in Northern Colorado
    • Up 45% in Metro Denver
  • There are distinct differences in months of inventory across different price ranges = opportunity for the move up buyer.
  • There are several reasons why we don’t see a housing bubble forming:
    • New home starts along the Front Range are roughly 60% of pre-bubble highs 14 years ago.
    • Americans have more equity in their homes than ever, $6 Trillion!
    • The average FICO score of home buyers is significantly higher than the long-term average.
    • The homeownership rate is back to the long-term average.
  • Our 2019 Price Appreciation Forecast:
    • 6% in Fort Collins
    • 6% in Loveland
    • 7% in Greeley
    • 6% in Metro Denver

If you would like a copy of the presentation, go ahead and reach out to me.  I would be happy to put it in your hands.

Posted on January 18, 2019 at 7:22 pm
Julie Maxwell | Category: Buyers, Fun Facts, Gardner Report, Real Estate, Sellers | Tagged , , , , , , , , , , , , , , , ,

What Our Expert Thinks

 

• Existing Home Sales up 1.9% to 5.4 million units
• Home Prices up 4.4%
• New Home Sales up 6.9% to 695,000 (the highest since 2007)

 

If you want to see all of Matthew’s predictions including where interest rates are headed, get signed up for our annual Forecast. Click the link below!

https://www.eventbrite.com/o/windermere-real-estate-12011801121

The Gardner Report | Metro Denver & Northern Colorado Q3 2018

 

Posted on January 4, 2019 at 6:25 pm
Julie Maxwell | Category: Buyers, Gardner Report, Real Estate, Sellers | Tagged , , , , , , , , , , , , , ,

Still Up

All the talk of the market cooling off might make someone think that prices must be going down.

The truth is prices are still going up.

Here are the latest year-over-year appreciation numbers from the Federal Housing Finance Authority (they track 243 markets all across the Country):

Colorado Springs 11.44%

Greeley 10.53%

Denver 9.97%

Boulder 9.89%

Fort Collins/Loveland 8.64%

Posted on December 21, 2018 at 6:46 pm
Julie Maxwell | Category: Fun Facts, Real Estate | Tagged , , , , , , , , , ,

A History Lesson

One of the most common questions we hear from clients is “Where do you think interest rates are going?”

Virtually all of the experts we follow put rates above 5% going into next year and some see rates approaching 5.5% by the middle of 2019. What’s certain is that there are economic forces at work that are pushing rates higher.

So, how about a little history lesson? How do today’s 30- year mortgage rates compare to this same date in history going all the way back to 1990?

• Today = 4.85%
• 2017 = 3.94%
• 2015 = 3.82%
• 2010 = 4.27%
• 2005 = 5.98%
• 2000 = 7.84%
• 1995 = 7.75%
• 1990 = 10.22%

While today’s rates feel high only because they are higher than 2017, they are quite a bit lower than at many times in history.

Posted on October 19, 2018 at 3:32 pm
Julie Maxwell | Category: Buyers, Fun Facts | Tagged , , , ,

The Cost of Waiting

 The Cost of Waiting

It’s true, certain parts of our market are cooling off. We are seeing fewer multiple offers, fewer bidding wars, and fewer inspection concessions.

However, homes that are priced right and in great condition are selling, and in many cases, selling quickly.

As buyers feel the market cool a bit, it may cause them to want to wait. They sometimes feel like it’s a better choice to ‘wait and see what happens.’

The reality is, there is a real cost to waiting given two specific facts.

1. Interest rates will continue to rise
2. Prices will continue to rise

Interest rates are a little more than 0.5% higher than a year ago and experts predict them to be another 0.5% higher by this time next year.

Prices have been appreciating at roughly 10% per year for the last four years. Based on the numbers, we see that appreciation could be 5% per year for the next two years.

So, let’s look at a house priced at $450,000 today. If prices go up “only” 5% for the next 12 months, that home will cost $22,500 more in a year.

And, if rates go up another half percent, the monthly payment will be $206 higher. That’s an 11% increase!

In an environment of rising prices and rising rates, there is a real cost to “wait and see.”

Posted on September 7, 2018 at 6:53 pm
Julie Maxwell | Category: Buyers, Fun Facts, Real Estate | Tagged , , , , , ,

The Gardner Report – Q2 2018

 

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 continues to see very strong job growth, adding 72,800 non-agricultural jobs over the past 12 months—an impressive increase of 2.7%. Through the first five months of 2018, the state added an average of 7,300 new jobs per month. I expect this growth to continue through the remainder of the year, resulting in about 80,000 new jobs in 2018.

In May, the state unemployment rate was 2.8%. This is slightly above the 2.6% we saw a year ago but still represents a remarkably low level. Unemployment remains either stable or is dropping in all the markets contained in this report, with the lowest reported rates in Fort Collins and Boulder, where just 2.2% of the labor force was actively looking for work. The highest unemployment rate was in Grand Junction, which came in at 3.1%.

 

HOME SALES ACTIVITY

  • In the second quarter of 2018, 17,769 homes sold—a drop of 2.4% compared to the second quarter of 2017.
  • Sales rose in 5 of the 11 counties contained in this report, with Gilpin County sales rising by an impressive 10.7% compared to second quarter of last year. There were also noticeable increases in Clear Creek and Weld Counties. Sales fell the most in Park County but, as this is a relatively small area, I see no great cause for concern at this time.
  • Slowing sales activity is to be expected given the low levels of available homes for sale in many of the counties contained in this report. That said, we did see some significant increases in listing activity in Denver and Larimer Counties. This should translate into increasing sales through the summer months.
  • The takeaway here is that sales growth is being hobbled by a general lack of homes for sale, and due to a drop in housing demand.

 

 

HOME PRICES

  • With strong economic growth and a persistent lack of inventory, prices continue to trend higher. The average home price in the region rose
    9.8% year-over-year to $479,943.
  • The smallest price gains in the region were in Park County, though the increase there was still a respectable 7%.
  • Appreciation was strongest in Clear Creek and Gilpin Counties, where prices rose by 28.9% and 26%, respectively. All other counties in this report saw gains above the long-term average.
  • Although there was some growth in listings, the ongoing imbalance between supply and demand persists, driving home prices higher.

 

 

DAYS ON MARKET

  • The average number of days it took to sell a home remained at the same level as a year ago.
  • The length of time it took to sell a home dropped in most markets contained in this report. Gilpin County saw a very significant jump in days on market, but this can be attributed to the fact that it is a very small area which makes it prone to severe swings.
  • In the second quarter of 2018, it took an average of 24 days to sell a home. Of note is Adams County, where it took an average of only 10 days to sell a home.
  • Housing demand remains very strong and all the markets in this report continue to be in dire need of additional inventory to satisfy demand.

 

 

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 second quarter of 2018, I have moved the needle very slightly towards buyers as a few counties actually saw inventories rise. However, while I expect to see listings increase in the coming months, for now, the housing market continues to heavily favor sellers.

 

 

 

Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has more than 30 years of professional experience both in the U.S. and U.K.

Posted on August 7, 2018 at 6:28 pm
Julie Maxwell | Category: Buyers, Gardner Report, Real Estate, Sellers | Tagged , , , , , , , , , , , , , , ,

Gardner Report – 1st Quarter 2018

 

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 me.

 

ECONOMIC OVERVIEW

It’s good news for the state of Colorado, which saw annual employment grow in all of the metropolitan markets included in this report. The state added 63,400 non-agricultural jobs over the past 12 months, an impressive growth rate of 2.4%. Colorado has been adding an average of 5,300 new jobs per month for the past year, and I anticipate that this growth rate will continue through the balance of 2018.

In February, the unemployment rate in Colorado was 3.0%—a level that has held steady for the past six months. Unemployment has dropped in all the markets contained in this report, with the lowest reported rates in Fort Collins and Denver, where 3.1% of the labor force was actively looking for work. The highest unemployment rate was in Grand Junction, which came in at 4.6%.

 

HOME SALES ACTIVITY

  • In the first quarter of 2018, there were 11,173 home sales—a drop of 5.6% when compared to the first quarter of 2017.
  • With an increase of 5.3%, home sales rose the fastest in Boulder County, as compared to first quarter of last year. There was also a modest sales increase of 1.2% in Larimer County. Sales fell in all the other counties contained within this report.
  • Home sales continue to slow due to low inventory levels, which were down 5.7% compared to a year ago.
  • The takeaway here is that sales growth continues to stagnate due to the lack of homes for sale.

 

 

HOME PRICES

  • Strong economic growth, combined with limited inventory, continued to push prices higher. The average home price in the markets covered by this report was up by 11.7% year-over-year to $448,687.
  • Arapahoe County saw slower appreciation in home values, but the trend is still positiveand above its long-term average.
  • Appreciation was strongest in Boulder County, which saw prices rise 14.8%. Almost all other counties in this report experienced solid gains.
  • The ongoing imbalance between supply and demand persists and home prices continue to appreciate at above-average rates.

 

 

DAYS ON MARKET

  • The average number of days it took to sell a home dropped by three days when compared to the first quarter of 2017.
  • Homes in all but two counties contained in this report took less than a month to sell. Adams County continues to stand out where it took an average of just 17 days to sell a home.
  • During the first quarter, it took an average of 27 days to sell a home. That rate is down 2 days from the fourth quarter of 2017.
  • Housing demand remains strong and would-be buyers should expect to see stiff competition for well-positioned, well-priced homes.

 

 

CONCLUSIONS

This speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors. In the first quarter of 2018, I have left the needle where it was in the fourth quarter of last year. Even as interest rates trend higher, it appears as if demand will continue to outweigh supply. As we head into the spring months, I had hoped to see an increase in the number of homes for sale, but so far that has not happened. As a result, the housing market continues to heavily favor sellers.

 

 

 

Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has more than 30 years of professional experience both in the U.S. and U.K.

Posted on April 30, 2018 at 8:54 pm
Julie Maxwell | Category: Buyers, Real Estate, Sellers | Tagged , , , , , , , , , , , ,

How Tax Reform Affects Homeowners

 

New tax legislation was signed into law at the end of 2017, and it included some significant changes for homeowners. These changes took effect in 2018 and do not influence your 2017 taxes.  Here’s a brief overview of this year’s tax changes and how they may affect you*.

The amount of mortgage interest you can deduct has decreased.

Under the old law, taxpayers could deduct the interest they paid on a mortgage of up to $1 million. The new law reduces the mortgage interest deduction from $1 million to $750,000. These changes do not affect mortgages taken out before December 15, 2017.

The home equity loan deduction has changed.

The IRS states that, despite newly-enacted restrictions on home mortgages, taxpayers can often still deduct interest on a home equity loan, home equity line of credit (HELOC) or second mortgage, regardless of how the loan is labeled. The Tax Cuts and Jobs Act of 2017, enacted December 22, suspends from 2018 until 2026 the deduction for interest paid on home equity loans and lines of credit, unless they are used to buy, build or substantially improve the taxpayer’s home that secures the loan.

The property tax deduction is capped at $10,000.

Previously taxpayers could deduct all the state, local and foreign real estate taxes they paid with no cap on the amount. The new law limits the deduction for all state and local taxes – including income, sales, real estate, and personal property taxes – to $10,000.

The casualty loss deduction has been repealed.

Homeowners previously could deduct unreimbursed casualty, disaster and theft losses on their property. That deduction has been repealed, with an exception for losses on property located in a federally declared disaster area.

The capital gains exclusion remains unchanged.

Homeowners can continue to exclude up to $500,000 for joint filers or $250,000 for single filers for capital gains when selling their primary residence as long as they have lived in the home for two of the past five years. An earlier proposal would have increased that requirement to five out of the last eight years and phase out the exclusion for high-income households, but it was struck down. Find out more about 2018 tax reform.

How does tax reform affect your plans for buying or selling a home?

The changes in real estate related taxes may change your strategy. Contact me to learn more.

Posted on April 3, 2018 at 8:19 am
Julie Maxwell | Category: Real Estate | Tagged , , , , ,

Buying your home: A step-by-step approach

There is a lot to consider when you decide to buy a home, especially if it is your first. How much home you can afford? What kind of loan should you choose? Which neighborhoods are both affordable and a good investment? These are just a few of the questions you’ll be asking yourself. But with an experienced agent to help you, you’ll get the guidance you need to come up with the right answers−and a home you love.

First things first

Before you start shopping, you need to find out how much home you can afford to buy. Your agent can refer you to a loan officer who will help you determine how much of a down payment you can manage, as well as the monthly payment, taxes and insurance costs. Your lender can then pre-qualify you for a dollar amount, which can help you focus your search. You can also get a quick, rough estimate of monthly mortgage costs at Windermere.com; there’s a mortgage rate calculator on every listing detail page.

Create a wish list

Once you know your price range, talk to your agent about the home features you need and the ones you would prefer. The former might include number of bedrooms or suitable space for a home office, while the latter might include hardwood floors or a pantry. By clearly communicating your needs and preferences, you can help you agent narrow down the selection and avoid wasting your time.

Check out a few neighborhoods

Be sure to talk to your agent about what you’re looking for in a neighborhood. Are property values your highest priority? Great schools? A short commute? Small-town atmosphere? Big-city amenities? Your agent will try to narrow down the affordable neighborhoods that fit your criteria. Then you can either explore them with your agent or get a sense of each neighborhood on your own.

Shop for a loan

There are many different loan programs to choose from. You’ll want to find one that offers you the best terms for your current situation and future plans. Your agent can give you the names of several mortgage specialists who can review your options with you and help you determine which loan is the most advantageous. Once you’re approved for a loan, sellers will consider you a more attractive prospective buyer.

Make an offer

You’ve finally found the right house in the right neighborhood. It fits your practical needs, has potential and just feels right. So how do you ensure that you keep the price as affordable as possible without running the risk of losing it? Your agent has the expertise to help you make the right offer. He or she knows what comparable houses are selling for, how long they’ve been on the market, and whether or not the asking price for the home you want is fair. Your agent can also offer excellent advice when it comes to making a counteroffer.

Seal the deal

Once you’ve found the home you want and your offer has been accepted, you give the seller an earnest-money deposit. Your agent draws up a purchase and sale agreement; it’s the contract that outlines the details of the property transfer from the seller to you. This contract is typically contingent on the home passing a structural inspection and you obtaining approval for financing.

The inspection lets you know if the house has any major issues and how well it has been maintained. Remember, no house is perfect. If the inspection uncovers some problems, your agent can help you determine whether to ask the seller to handle or pay for the repairs or to renegotiate the price of the home.

When the inspection is concluded and any loose ends resolved, you “close” on the home. Closing is when you and the seller sign all the papers, you pay your share of the settlement fees, and the documents are recorded. Your agent will be happy to answer any questions throughout this complex process.

Home at last

When you buy a home, you get more than just a place to live. You get the satisfaction of having a place that is truly yours, one that reflects your style and provides a comfortable setting for you and your family. Buying a home also gives you a substantial annual tax deduction and a way to build wealth over the years.

If you have questions about the buying or selling process, or are looking for an agent in your area, I can help you. Contact me here.

Posted on March 5, 2018 at 6:40 pm
Julie Maxwell | Category: Fun Facts, Real Estate | Tagged , , , , , ,