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 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.

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Is There A Bubble?

Economists say there are three reasons why we aren’t in a housing bubble today.

The first reason they mention is the amount of new home construction compared to the 2006 housing bubble.
Today, along the Front Range, new home starts are down 38% compared to 2006. This is despite a much higher population than 12 years ago.
A major factor that caused the bubble was the glut of new construction inventory which doesn’t exist today.
Metrostudy, a leading new home research firm, says that Front Range builders need to have built 30,000 more new homes over the last 5 years to keep up with demand.
To see the whole story about our market along with other stats and trends, watch the recording of Tuesday’s Windermere Workshop right here.


If you want to be totally clear on all the stats, facts and trends in Colorado real estate so that you know what the future value of your home looks like, watch this video.
This is a complimentary service for our clients and friends.

 

 

The post Is There A Bubble? appeared first on Fort Collins Real Estate | Fort Collins Homes for Sale & Property Search.

How are inventory shortages impacting the housing market?

The shortage of homes for sale has been a major concern for buyers and real estate agents over the last few years. Windermere Chief Economist, Matthew Gardner, explains the impact these shortages are having on the housing market.

The post How are inventory shortages impacting the housing market? appeared first on Fort Collins Real Estate | Fort Collins Homes for Sale & Property Search.

Bubbly?

Because our Northern Colorado market has been so active over the last four years, clients often ask us if we think there is a housing bubble forming.

There are several key statistics which we track closely in order to answer that question.

Here is one fact that we find to be insightful…

One of the root causes of the last housing bubble was the glut of inventory, and specifically new home inventory. Quite simply, the market was being oversupplied with new homes. The rules of economics say when there is oversupply, prices must come down.

Are we in a housing bubble?

Today, there are far fewer new home starts compared to 2004 and 2005 when the last bubble was forming – despite there being a larger population.
According to our friends at Metrostudy who track the new home market, Northern Colorado has had 4,452 new home starts in the last 12 months.

That number is only 60% of what it was at the height of construction in early 2005.

It is also interesting to note that over the last 12 months there have been 4,473 new home closings which shows that demand is keeping up with supply.

So when you drive around Northern Colorado and notice all the new homes being built, know that construction activity is far less than what is was during the bubble and that demand is keeping up with supply.

In case you missed our annual real estate Forecast event, you can reach out to us to see the presentation slides or receive a video recap of the information. Just email us at colorado@fortcollins.com

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What it Means

The new tax bill is expected to be signed by the end of the year. Here is a summary of what it means for your real estate…

(By the way, be sure to RSVP for our Market Forecast on January 18th so you can hear our predictions for next year. Click HERE to register)

The new tax bill:

  • Retains the current law for exclusion of capital gains on a principal residence. You still need to live in a home for 2 of the last 5 years to claim a capital gains exclusion. There was a risk that this would be changed to 5 of the last 8 years, but thankfully it did not.
  • Reduces the limit of deductible mortgage debt from $1 Million to $750,000.
  • Retains the ability to deduct mortgage debt on second homes.
  • Allows for an itemized deduction of up to $10,000 for property taxes. When the bill was first introduced, there was no allowance for a property tax deduction.
  • Retains the current 1031 like-kind exchange rules which is terrific news for investors.

The post What it Means appeared first on Best Real Estate Agents in Northern Colorado.

Rate Recap

The Federal Reserve raised interest rates by 0.25% this week. It was their 3rd rate increase this year.

This has us thinking about mortgage rates.

Today, 30-year mortgage rates are 3.93%.

Let’s put this in context with a little history lesson. Mortgage rates were…

  • 3.90% 6 months ago
  • 4.13% 1 year ago
  • 3.54% 18 months ago
  • 3.32% 5 years ago
  • 5.96% 10 years ago
  • 7.15% 20 years ago

So where are rates headed? Given that the Federal Reserve is expected to raise their rate three to four more times in 2018, we expect mortgage rates to be higher one year from today.

The Mortgage Bankers Association predicts rates to be 4.8% in the 4th quarter of next year. Freddie Mac’s prediction is 4.4%. If these predictions are true, that would mean mortgage rates would be back to where there were 6 to 7 years ago.

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