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.
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.
- 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 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.
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.
Property owners all over Colorado have a gift waiting for them in their mailbox- their new property tax notifications.
Every two years, each county in Colorado places a new value on property for property tax purposes.
No surprise, values were up along the Front Range.
Here is the percentage of increase for various Colorado counties (keep in mind that this increase is for two years):
- Adams 24%
- Arapahoe 22%
- Larimer 19%
- Douglas 14%
- Jefferson 14%
- Boulder 12%
If you have questions about how to respond to your tax notification, we can help! We would be happy to provide you with an up-to-date market analysis and walk you through the steps on how to protest your new value if you don’t agree with it.
You can also watch this webinar we put together which shows you everything you need to know about your new property valuation and how to respond.
You can watch it HERE.
The real estate market keeps chugging along.
Here’s news from the Mortgage Banker’s Association…
Last week, applications to purchase a home hit their highest level since April 2010. This is clearly a sign that the spring selling season is starting off in full swing.
You may remember that the reason why April 2010 was so active is because of the Home Buyer Tax Credit that was in effect. In order to get a special income tax incentive, buyers had to go under contract in April 2010 and close by June 30, 2010.
Today, purchase applications are at their highest level in 9 years and are up 14% over last year. Interest rates are roughly 0.5% lower than 6 months ago and roughly 3.0% below their long-term average.
Let the Spring Selling Season begin!
Just a few months ago most people thought mortgage rates were heading to 5% and now they are back to where they were a year ago.
You probably saw this week’s news from the Federal Reserve declaring that they would not raise their Federal Funds rate for the rest of 2019
(just three months after saying they would raise rates at least twice this year).
While this is big news, even bigger news for mortgage rates is that the 10-year Treasury yield just hit its lowest point since January 2018. One thing we’ve learned from our Chief Economist Matthew Gardner is that mortgage rates follow the 10-year treasury (not necessarily the Fed Funds rate).
Last Spring it looked like mortgage rates had bottomed out and they steadily climbed through the Summer and Fall of 2018. It looked certain that they would hit 5% around January.
Instead they started dropping. Now with the 10-year Treasury at a 15-month low, they just dropped a little more and they are back to where they were a year ago.
Great news for buyers! Party like it’s 2018!
If you have been in your home for a while you may be restless for change. The great part about having a home of your own is you can make improvements and give your home a chance to evolve over time. You just need to help your home live up to its potential! Here is a top ten list of improvements that will help you make the most of your home.
- Find your home’s purpose. Each home is as unique as its owners, so in order to fully utilize your home, consider how you view your home’s purpose. Some people like to entertain, others find it a calm space in the frenzy of daily life; some nurture their families and others nurture their creativity. Your home’s purpose can be any combination of these and more, but it helps to consider the function of your space in order to ultimately find its purpose.
- Assemble a list. A list always helps me figure out where to start or prioritize what is the most important project. Think about what you want to change in your home, inspirations, and preferences.
- Make an “inspiration board”. An “inspiration board” is a great way to visualize your home’s decor. You can create a board online with a tool like Pinterest to organize ideas you love or you can do it the old fashioned way with a board, magazine cutouts, color swatches, and fabric samples. Doing this will allow you to see all the elements you like in one place so that you can then tie it all together into a room you love.
- Create a collection. If you have items that you like to collect, think about how to transform that collection into something you can display. If you don’t already have a collection of loved objects think about what this collection would be for you. You can center a room design around your travel souvenirs, old camera collection, figurines, unique plates, or familial objects. Adding to this collection over time can be a great way to keep your spaces new while maintaining a personal feel to your decor.
- Choose a new palate. Shake up your sensibilities and think of a color that will compliment your room while making a statement. It’s easy to fall into the white/beige standby to keep our rooms neutral, but sometimes a color that provides a contrast to your décor will make the room pop.
- Repurpose an old piece of furniture. Instead of replacing your furniture give it a facelift. You can have a sofa or chairs reupholstered or make use of a slip cover. Also, Painting and staining can add new life to your wood pieces.
- Rearrange. Moving furniture around is another easy way to reinvent your space. Try placing your sofa on an angle to open up your entertaining room or move your lamps to improve lighting. You can also think about moving a piece of furniture into a room to give it new life, like using a unique dresser for a credenza or a chair as a side table.
- Make a room of your own. Find some space in your home that is uniquely yours, whether this is the corner of the guest room or an office of your own. It can be very rewarding to have a space that you can organize to fit your personal needs without the worries of others intruding
- Find an inspirational object. Have you ever fallen in love with an object that inspired you to want to completely redo a room to accommodate it? Designing a room around an inspiring object can be a great way to create a space that truly embodies your design sensibility.
- Find design motivation. Home design evolves over time and can be sustained by finding items that inspire you. Read magazines and books that inspire your interests in architecture, design, art, etc. Or find stores and flea markets that sell pieces that influence your aesthetic. Or bring a camera with you when you’re doing your favorite activities and bring back memories or inspirations. Most of all have fun!
What inspires your home design?
Not only because tax returns are due in two weeks but also because you will soon receive your property tax notification in the mail.
Every two years your County re-assesses the value of your property and then sends that new value to you.
When this happens, many of our clients:
- Don’t agree with the new assessed value
- Aren’t sure what to do
- Are confused by the process
- Want to save money on property taxes
Good news! We have a webinar that will help you. On the webinar we will show you:
- How to read the information from the County
- What it means for you
- How to protest the valuation if you want
- How to get an accurate estimate of your property’s value
You can listen to the webinar live or get the recording. In any case, you can sign up atwww.WindermereWorkshop.com
The webinar is April 17th at 10:00. If you can’t join live, go ahead and register so you can automatically receive the recording.
This is a complimentary online workshop for all of our clients. We hope you can join!
While the “Bomb Cyclone” closed roads and schools over the last two days, the “Condo Cyclone” is opening new opportunities for first-time buyers.
What’s the “Condo Cyclone” you ask. It’s the proliferation of multi-family inventory that has come on the market up and down the Front Range.
Compared to last year, multi-family inventory which includes town-homes and condominiums, has increased…
• 79% in Metro Denver
• 34% in Larimer County
• 45% in Weld County
This is terrific news for the market overall, as inventory has been unusually low for several months. It’s especially terrific news for first-time buyers who need this type of product as a stepping stone to home ownership.
What we notice is a $170,000 to $130,000 difference in average price between a single-family home and a multi-family home in Front Range markets.
Specifically, here’s the spread between multi-family and single-family average price:
• $349,801 vs. $512,312 in Metro Denver
• $312,493 vs. $469,294 in Larimer County
• $237,645 vs. $370,027 in Weld County
So as we dig out from the “Bomb Cyclone” we can be happy for the “Condo Cyclone” which brings more affordability and opportunity to our markets!
Just Released (a new resource site just for you…)
• Want to see the latest market trends?
• Curious to see the process of buying or selling a home?
• Interested in what it takes to own investment property?
• Be sure to visit www.ColoradoLivingBlog.com
- New Homes
- New Apartments
- New Medical Facilities
However, you will not notice new office buildings under construction.
What gives? I thought we had a booming economy. Why no new office buildings?
There are a couple of reasons. First, construction costs have sky rocketed. In ten years, construction costs have gone from about $200 per square foot to over $300 per square foot.
Rental rates have not increased at the same pace as construction costs so speculative investors can’t make their numbers work.
It’s too expensive to build compared to the rents that can be charged.
One reason why rental rates haven’t increased at high rate is property taxes. Property taxes on Class A office buildings have basically doubled in the last 10 years in many cases.
So, until rental rates catch up with construction costs, we won’t see many new office buildings under construction.
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%
Metro Denver has 2.1 months of inventory on the market. This means that, at the current pace of sales, it would take just over 2 months to sell every single-family home currently listed for sale.
But that’s not the whole story because inventory levels vary drastically depending upon the price of the home.
When we take a closer look at months of inventory broken down by price range this is what we see:
• Under $400,000 = 0.9 months
• $400,000 to $500,000 = 1.8 months
• $500,000 to $750,000 = 3.1 months
• $750,000 to $1,000,000 = 4.2 months
• Over $1,000,000 = 7.7 months
These numbers represent great news for move-up buyers because they can sell in a strong market and potentially move up to a market that is market that is not as strong.
Below is a short video with a recap of our annual Market Forecast presentation!