For home sellers who would like to move to a new home this year, there is a window of time that is closing as we head into the Fall months.
Most people know that the Spring and Summer are the most active months for real estate and that activity trails off into the Fall and Winter.
Here are the specific numbers behind this…
The number of homes sold along the Front Range in November tends to be between 15% and 29% lower than September.
That means the best window of time for current sellers to obtain a contract from a buyer and close by the end of the year will occur over the next 45 days.
For sellers who have homes on the market today, it is time to ensure that:
- The home is priced right versus the competition
- All of the marketing elements are in place
- It is easy for a buyer to make an offer on the home
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So how much real estate is sold in Northern Colorado?
As it turns out, a lot!
Last month alone there were 1,099 single family homes that sold in Larimer and Weld Counties
The average price was $429,144 which means the total sales volume for one month was $471,629,129 (almost a half a billion)!
Over the last 12 months, just over $4.5 billion worth of single-family homes have sold.
That’s a lot of real estate!
With interest rates so low, one could argue that money is essentially on sale.
It’s actually half off.
30-year mortgage rates hit 3.75% which is exactly half of their long term average.
Rates have averaged 7.5% over the last 40 years so today buyers are getting half of that rate.
The “sale” on mortgage rates creates a significant savings in monthly payment because of the 1%/10% rule.
For every 1% change in interest rate, the monthly payment will change roughly 10%.
So when rates go up to 4.75%, a buyer’s payment will be 10% higher.
For example, the principal and interest payment on a $400,000 home with a 20% down payment at today’s rates is $1,482.
If rates were 1% higher, the payments jump up to $1,669.
Here are some observations we have about the market right now:
- Inventory is up, price reductions are up, the length of time to sell a home is up
- Seller concessions are more prevalent
- Sellers are more willing to accept contingent offers (especially in higher price ranges)
- If a home doesn’t sell within a week, it often becomes stigmatized by the market and potential buyers assume there must be something wrong with it
- Homes that likely would have sold within hours a year ago, are now sitting on the market
- Condition is super-important as buyers become even more picky
- Pricing a property correctly on day one is paramount
- Sellers who over-price their property are finding themselves chasing the market
An interesting stat which can give some insight to the national market is the Homeownership Rate.
It simply looks at the percentage of Americans who own their home instead of rent.
The most recent report from the Census Bureau shows the rate at 64.2%.
Most importantly, this number is showing stability after many years of change.
After many years of hovering around 64%, the Homeownership Rate started increasing in 1996 and reached as high as 69.5% in 2005.
2008 started several years of declining back to the pre-1996 levels of 64%.
So today it’s back to what seems to be “normal” based the long-term average.
WELCOME TO “THE SCOOP”
Everything You Need to Know About the Northern Colorado Real Estate Market – Produced Quarterly by Windermere Real Estate in Northern Colorado
The 10-Year Rhythm
As we study 40 years of price appreciation data for Larimer County, an interesting pattern emerges. We call this pattern the 10-Year Rhythm. It shows that price appreciation in ten-year segments tends to closely mirror the 40-year average of 5.42%. This demonstrates that our market grows in a steady, predictable way instead of taking wild swings like other markets.
Long Term Home Prices
A trusted resource is the Federal Housing Finance Authority (FHFA) which tracks nearly 300 markets across the country and produces a quarterly price appreciation index.
According to the Federal Housing Finance Authority, these are the top 5 states for home price appreciation over the last 5 years:
A Mile High
Did you know our state grows by a Mile-High Stadium’s-worth of people each year? That’s right, we’ve been growing by about 75,000 people each year, and we will keep growing. The State Demography office estimates we will have 7.5 million people living here by 2040.
Each quarter. our Chief Economist Matthew Gardner produces his economic report for Metro Denver and Northern Colorado. Inside you will find his market speedometer. 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.
According to Gardner, “I have moved the needle very slightly towards buyers as a few Front Range counties saw home inventories rise. However, while I expect to see listings increase in the coming months, for now, the housing market continues to heavily favor sellers.”
What’s Up With Down Rates
It was only a few months ago when experts predicted that 30-year mortgage rates would hit five percent by the end of 2019. For many, it was a foregone conclusion. At the end of 2018, they were already in the high fours. It appeared as if the low interest rate party was over. Then along came mid-2019 and rates kept going lower and lower. Now they are in the high threes and back to where they were in the fall of 2016. What gives? It turns out that trade tensions between the
U.S. and China have caused concerns about a global economic slowdown which, in turn, have pushed rates lower. Lower rates are of course great news for buyers and people thinking about refinancing.
A Unique Solution
If you have driven on I-25 lately you may have noticed that the Front Range is a popular place.
The projections show that it will only get more popular in the future.
Today, 4.8 million people live along the Front Range from Fort Collins down to Pueblo.
In 2030, just 11 short years from now, 5.7 million people will live here. Yes, that’s almost 1 million more than today.
This is all according to the Colorado State Demographers Office.
While this seems like a big increase, keep in mind that this assumes that population growth occurs at a fairly modest 1.7% per year.
It seems that our state will continue to grow and there will continue to be a demand for housing.
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