- 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!
A lot of our clients are asking how 2019 is starting off.
Here’s one thing we notice…
There are more homes to choose from, which is great news for buyers.
In January alone 4,821 homes came on the market in Metro Denver.
That is a 14% increase compared to one year ago.
At our annual Market Forecast, we predicted a more balanced market in 2019, so far it looks like we are trending that way.
Below is the recap of our Denver Annual Market Forecast!
There are several reasons why our Chief Economist does not believe there is a housing bubble today in the U.S.
Below is a slide he shared at our recent market Forecast events.
It shows U.S. Home ownership rate, which is simply the percentage of the population who own their home (versus renting).
The long-term average is 65% represented by the red line.
In the graph you can clearly see the bubble forming. Starting in the mid-90’s, driven by several political and economic factors, more people than ever before became homeowners.
Then, starting in, 2008, the bubble burst and the percentage tumbled back down.
Now, as you can see, we are back at a “normal” level that resembles the long-term average.
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.
Great news for buyers! There are more homes to choose from. It seems there is relief from the days of drastically low inventory levels.
Compared to a year ago, residential inventory levels are up:
• 9% in Northern Colorado (Larimer & Weld Counties)
• 45% in Metro Denver (wow!)
You can get many more fun facts like these plus get our predictions on the 2019 market by joining our annual Market Forecast. Just click the link below!
Last week, Windermere Real Estate was honored to host a delegation of top reporters from China as part of the East-West Center’s 2018 US Study Tour for Chinese Journalists. Nine journalists, hailing from Beijing, Chengdu, Chongqing, Hong Kong, and Shanghai, visited Washington D.C., Des Moines, Iowa, and Seattle, Washington over 10 days to study the China-U.S. relationship in trade, security, media, and culture.
Their visit to Seattle connected them with Windermere and our Chief Economist, Matthew Gardner, to lean on his expertise about Seattle’s economy and real estate market. Mr. Gardner discussed the economic influence of Seattle-based companies Amazon and Boeing, as well as other internationally impactful companies like Facebook and Google, both of which have a sizable presence in Seattle. He also discussed the factors that caused the real estate boom of the past half-decade and what we can expect from the housing market in 2019.
Mr. Gardner shared data on the rising percentage of Chinese and East Asian-born individuals making up the population of the greater Seattle area, the factors that have contributed to that number’s rise in recent years, and the impact on our real estate market. Citing the differences between real estate norms and financial realities in much of China compared to Seattle, Mr. Gardner enjoyed a productive dialogue with the visiting delegation of journalists.
Windermere was honored to host the East-West Center’s 2018 US Study Tour for Chinese Journalists and to have the opportunity to discuss the role of Chinese foreign nationals in Seattle’s economy and housing market. As much as we shared, we also enjoyed learning more about China’s housing market and the evolving relationship between our two countries.
The Front Range may have lost out on Amazon’s HQ2, but that doesn’t mean their company won’t affect our economy.
Denver was in the running for Amazon’s massive new second headquarters that supposedly would bring 50,000 new high-paying jobs and $5 Billion of investment.
In the end Amazon chose to split the headquarters among two East-Coast cities and many in Colorado breathed a sigh of relief.
But they are will continue to be an economic force in our state.
Over the past two years, Amazon has greatly expanded its footprint in Metro Denver, opening up a sorting center in Aurora, fulfillment centers in Aurora and Thornton, a Prime Now center in Denver and a new delivery center in Centennial.
They will soon have 3,000 workers here and that number is expected to grow significantly.
Pretend you have been driving on the Interstate at 100 miles per hour.
Also, pretend you have been doing that for a long time.
Now pretend you slow down to 83 miles per hour.
How would that feel?
It would probably feel slow, right?
83 miles per hour is a 17% decrease from 100. It may feel slow, but it’s still pretty fast.
How does this relate to real estate?
Well, the market has been moving fast for a long time.
It’s been going 100 miles per hour for at least two years (some would argue even longer).
We’ve recently seen a 17% change in terms of number of transactions that are occurring.
There were 17% fewer sales in October 2018 versus October 2017 in Metro Denver.
It feels slow because we’ve been driving so fast for so long. But, our market is still moving.
For example, prices are still up. So, remember, that it’s all relative.