If you missed our Annual Forecast Review last month, click the link below to get a recap of the event:
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 both events. 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:
o 8% in Fort Collins
o 8% in Loveland
o 8.5% in Greeley
o 8% in Metro Denver
• Inventory is (finally) showing signs of increasing:
o Up 25% in Northern Colorado
o 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:
o New home starts along the Front Range are roughly 60% of pre-bubble highs 14 years ago.
o Americans have more equity in their homes than ever, $6 Trillion!
o The average FICO score of home buyers is significantly higher than the long-term average.
o The home ownership rate is back to the long-term average.
• Our 2019 Price Appreciation Forecast:
o 6% in Fort Collins
o 6% in Loveland
o 7% in Greeley
o 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!
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.
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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.”
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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 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.
- 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.
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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We thought this article may make you curious to know what the average prices are in each specific city in Northern Colorado:
- Fort Collins = $453,051
- Loveland = $402,132
- Windsor = $463,769
- Greeley = $310,785
- Timnath = $604,481
- Wellington = $338,999
- Boulder = $1,105,634
source = IRES
Contact me today to find out what your home would be valued at in today’s market!
Fort Collins, over the last 12 months, has seen sales of homes priced $1,000,000 and over almost double.
There have been 47 sales of these luxury properties during the last year compared to 24 sales the year before that.
The current pace of roughly 4 of these properties selling per month is both unprecedented and very different compared to the other Northern Colorado markets.
Loveland, Greeley and Windsor have only seen very slight increases in sales of homes priced over $1,000,000.
So where are these homes selling in Fort Collins? These are the top neighborhoods for luxury sales:
- Fossil Lake Ranch
- Old Town
- The Hill at Cobb Lake
- Linden Lake