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Colorado Real Estate Market Update
This analysis of the Metro Denver and Northern Colorado real estate markets 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 us.
ECONOMIC OVERVIEW
Colorado added 45,300 non-agricultural jobs over the past 12 months, a growth rate of 1.7%. Although that is a respectable number, employment growth has been trending lower in 2017 as the state reaches full employment. Within the metropolitan market areas included in this report, there was annual employment growth in all areas other than Grand Junction, where employment was modestly lower. There was solid growth in Greeley and Fort Collins, where annual job growth was measured at 4% and 2.7%, respectively.
In November, the unemployment rate in the state was a remarkably low 2.9%, down from 3% a year ago. The lowest reported unemployment rates were seen in Fort Collins and Boulder, where only 2.5% of the labor force was actively looking for work. The highest unemployment rate (3.7%) was in Grand Junction.
The state economy has been performing very well, which is why the wage growth over the past year has averaged a very solid 3.3%. I expect the labor market to remain tight and this will lead to wages rising at above-average rates through 2018.
HOME SALES ACTIVITY
- In the fourth quarter of 2017, there were 14,534 home sales—a drop of 2.0% compared to a year ago.
- Sales again rose the fastest in Boulder County, which saw sales grow 17.9% versus the third quarter of 2016. There were also reasonable increases in Weld and Larimer Counties. Sales fell in all other counties contained within this report because there is such a shortage of available homes for sale.
- As I discussed in my third quarter report, sales slowed due to the lack of homes for sale. The average number of homes for sale in the markets in this report is down by 8.2% from the fourth quarter of 2016.
- The takeaway is that sales growth has moderated due to the lack of homes for sale.
HOME PRICES
- With continued competition for the limited number of available homes, prices continued their upward trend. Average prices were up 9.8% year-over-year to a regional average of $431,403, which was slightly higher than the third quarter of 2017.
- There was slower appreciation in home values in Boulder County, but the trend is still positive.
- Appreciation was strongest in Weld County, which saw prices rise 14.3%. There were also solid gains in almost all other counties considered in this report.
- The ongoing imbalance between supply and demand persists, which means we can expect home prices to continue appreciating at above-average rates for the foreseeable future.
DAYS ON MARKET
- The average number of days it took to sell a home rose by two days when compared to the fourth quarter of 2016.
- Homes in all but three 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 21 days for homes to sell.
- It took an average of 29 days to sell a home last quarter. This is up nine days over the third quarter of 2017.
- Housing demand remains strong in Colorado and this will continue with well-positioned, well-priced homes continuing to sell very quickly.
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.
For the fourth quarter of 2017, I have chosen to leave the needle where it was in the previous quarter. Listings remain scarce, but this did not deter buyers who are still active in the market. As much as I want to see more balance between supply and demand, I believe the market will remain supply-constrained as we move toward the spring, which will continue 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.
Get Real
A story ran this week which highlighted the number of people who have moved out of Colorado.
Let’s get real, there are still a large number of people moving to Colorado.
In fact, 223,000 moved to Colorado from another state last year according to the latest American Community Survey from the U.S. Census Bureau.
The net migration into our state (after subtracting out people who left) was 30,859 people.
In Northern Colorado the net migration looks like this:
- Larimer County = 7,001 people
- Weld County = 7,117 people
So what does that mean for housing? Knowing that, on average, 2.5 people live in each household, the number of new housing units required for these new residents looks like this:
- Larimer County = 2,800 new housing units
- Weld County = 2,847 new housing units
Short vs Long
There are short-term questions about real estate and there are long term questions about real estate.
Clients often have short-term questions like…
How much will prices go up next year? Should I sell my house this Fall or next Spring? Will interest rates go up next week?
We encourage our clients to evaluate those questions in the context of the long-term. There are decades of data on the Northern Colorado market which reveal certain patterns.
When we show our clients these patterns they feel confident and secure in the investment they have made into their home and their rental properties.
For example, the long-term appreciation rates based on up to 41 years of research are as follows:
- Larimer County = 5.36%
- Weld County = 4.25%
- Metro Denver = 5.56%
So over the course of a year prices may go up a lot or go up a little, but in the long term they will stay true to these long term averages.
To see an update as to what is happening in the Northern Colorado market, contact me to receive our quarterly “Scoop” report.
Price Per Square Foot
At some point this weekend it’s likely you will make a stop at the local grocery store. When you are there you might pick up some produce. That produce, as you know, is priced by the pound.
Homes, aren’t priced by the pound of course. But they are priced by the foot.
An interesting way to examine an entire real estate market or a specific home is to look at the price per square foot.
For example, right now our company has a 2,470 square foot home right on the water in Seattle listed at $4,995,000. That comes to $2,022 per square foot.
Meanwhile, we also have a 2,549 square foot home for sale in Timnath priced at $445,000 which is $175 per square foot.
Price per foot is driven by many factors the most important ones being location and finishes.
Here is the average price per foot for our main markets across Northern Colorado:
- Fort Collins = $181
- Loveland = $160
- Greeley = $126
- Windsor = $136
If you would like to know what your home is worth, per square foot, contact me and I will get that information into your hands right away.
Greeley’s Major Milestone
The Greeley market is about to hit a major milestone.
Today the average price sits at $289,870.
Fall vs Spring
A question we start to hear from clients this time of year is “am I better off waiting until the Spring to sell my home?”
The perception is that Spring is the busy time for home sales and that a Seller would be better served waiting to sell their home.
The reality is the numbers show that your odds of selling your home in the fall (and even the Winter) are just as good as the Spring. The reason is that the competition from other sellers is much lower in the Fall and Winter.
Let’s see what the numbers say…
We did an analysis of the number of homes that sold last year in each month versus the homes for sale that month and then looked at the ratio. For example, if 500 homes were for sale and 250 of them sold, the ratio would be 50%.
Here are the ratios for certain months in our 3 major Northern Colorado markets:
Fort Collins
- March = 38%
- October = 38%
- December = 55%
Loveland
- March = 39%
- October = 43%
- December = 46%
Greeley
- March = 48%
- October = 49%
- December = 82%
So the numbers tell us that there is no advantage of waiting until the Spring.
Also, all of our clients who are listing their home now see the advantage of dealing with the “known” versus the “unknown” when it comes to interest rates, demand levels and other market factors.
If you would like to see the odds of selling in your particular neighborhood and your particular price range, contact me today.
Colorado Home Price Appreciation
New Rankings
The new rankings are out from the Federal Housing Finance Authority which ranks all 50 states plus 
close to 300 individual metropolitan markets for home price appreciation.
Check out the FHFA recap video here:
Here is the data straight from FHFA’s report:
U.S. house prices rose 1.6 percent in the second quarter of 2017 according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI). House prices rose 6.6 percent from the second quarter of 2016 to the second quarter of 2017. FHFA’s seasonally adjusted monthly index for June was up 0.1 percent from May.
The HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. FHFA has produced a video of highlights for this quarter.
Significant Findings
- Home prices rose in 48 states and the District of Columbia between the second quarter of 2016 and the second quarter of 2017. The top five states in annual appreciation were: 1) Washington 12.4 percent; 2) Colorado 10.4 percent; 3) Idaho 10.3 percent; 4) Florida 9.4 percent; and 5) Utah 9.2 percent.
- Among the 100 largest metropolitan areas in the U.S., annual price increases were greatest in the Seattle-Bellevue-Everett, WA (MSAD), where prices increased by 15.7 percent. Prices were weakest in New Haven-Milford, CT, where they rose by 0.1 percent.
- Of the nine census divisions, the Pacific division experienced the strongest increase in the second quarter, posting a 2.6 percent quarterly increase and a 8.9 percent increase since the second quarter of last year. House price appreciation was weakest in the Middle Atlantic division, where prices rose 0.8 percent from the last quarter.
Source: FHFA
Should You Wait or Buy Now?
The housing market is remarkably tight across the U.S., and you may be wondering if you should wait for home prices to slow before making your move. Windermere’s Chief Economist, Matthew Gardner, shares why waiting could end up costing you more money in the long run.
Should You Wait out the Housing Market?
The housing market is remarkably tight across the U.S., and you may be wondering if you should wait for home prices to slow before making your move. Windermere's Chief Economist, Matthew Gardner, shares why waiting could end up costing you more money in the long run.
Posted by Windermere Real Estate on Friday, August 18, 2017
No two alike
Anyone who has more than one child is frequently amazed by the difference between the children. How is it that two kids from the same parents are so different from each other?
Same goes in our Northern Colorado market. We see a major difference between certain price ranges and certain locations right here in our little neck of the woods.
Clients are constantly reading about and hearing about the “hot” market. They make assumptions that every price range and every location in Larimer and Weld Counties are on fire. Not true!
Just like two kids from the same parents are different, two price ranges in the same place are very different.
To make this point, let’s look at months of inventory. This statistic simply measures how long it would take to sell the current inventory of homes at the current pace of sales.
Across all price ranges, months of inventory in Larimer County = 2.0. Meaning it would take two months to sell all the homes currently for sale. But this is misleading, because months of inventory…
- Under $500,000 is 1.2
- Between $500,000 and $1,000,000 is 4.2
- Over $1,000,000 is 11.7
So, the $1,000,000 seller who hears that the market is “hot” is actually faced with a year’s inventory currently on the market!
This is a very high-level look at the differences in our market. I am happy to give you a detailed look at your exact neighborhood in your exact price range. Let us know if we can help!
Gardner Report – Market Analysis
