Re Bubble

The activity in the Front Range market is causing us to hear the bubble question again.

People are curious to know, based on recent growth in price appreciation, if we are in a housing bubble.

This questions seems to crop up when prices go up.

While we do not believe that the current double-digit price appreciation is sustainable, we firmly believe we will not see prices crash or see any kind of a bubble bursting.

Here’s why we think that…

This past Tuesday we hosted a private online event for our clients which featured our Chief Economist Matthew Gardner.

Matthew is well-known and well-respected in the industry.  He is often quoted in leading real estate publications.

He sees four reasons why there is no real estate bubble that is about to pop in Colorado.

  1. Inventory is (incredibly) low. The number of homes for sale is down over 40% compared to last year. The market is drastically under-supplied.  Based on simple economic principles of supply and demand, inventory would need to grow significantly for prices to drop.
  2. Buyers’ credit scores are very high. The average credit score for buyers last month, for example was 759. So, by definition, average buyers today have excellent credit which means there is low risk of them walking away from their mortgage and causing a foreclosure crisis.
  3. Buyers have high down payments. On average, buyers are putting 18% down on their purchases. This means that prices would need to fall by a considerable amount in order for the average buyer to be ‘upside down’ on their mortgage.
  4. Owners are equity rich. Well over a third of property owners along the Front Range have more than 50% equity in their homes. This means that a severe economic downturn causing a slew of distressed properties to hit the market is highly unlikely.

Bottom line, as Matthew Gardner reminded us, what we are experiencing in the economy today is a health crisis not a housing crisis.

If you would like a recording of the private webinar, we would be happy to send it to you.  Just reach out and let us know.

Posted on October 9, 2020 at 1:03 pm
Paul Hunter | Category: About the area, Blog, Buyer Tips, Friday Fun Facts, Homes for Sale, Real Estate, Seller Tips | Tagged , , , , , , , , ,

New Home Surge

Sales of new homes have jumped to their highest levels in 14 years.

The annualized rate of single-family new construction homes is now at 901,000 according to the new Census Bureau report.

This means that across the U.S., at the current pace of sales, there will be almost 1,000,000 new homes built and sold over the next 12 months.

This pace is 36% higher than one year ago and the highest it has been since the end of 2006.

Given the low inventory levels of previously-owned homes that most of the Country is experiencing, this uptick in new home activity is welcome news.

Posted on September 4, 2020 at 9:05 am
Paul Hunter | Category: About the area, Friday Fun Facts, Real Estate, Uncategorized | Tagged , , , , ,

Start it UP!

Start it Up

As further evidence that the housing market is more than alive and well, new home starts have recently jumped across the U.S.

Building of residential properties is up 23.4% compared to last year and up 22.6% from last month.

Pre-pandemic demand for new homes was very high. Now, record-low interest rates are fueling the market to new highs.

Posted on August 21, 2020 at 8:40 am
Paul Hunter | Category: About the area, Blog, Buyer Tips, Friday Fun Facts, Real Estate | Tagged , , , , ,

At Least List

Periodically we track a stat which we find to be quite interesting.

It answers this question – how many properties are selling for at least list price (asking price or higher)?

This stat tells us how active the market is and helps our buyers to realize that, in some cases, they will be in a competitive situation.

When we look at single-family home sales so far this month, this is what we find:

57% of properties in Larimer County sell for at least list price

62% of properties in Weld County sell for at least list price

So, in well over half of the transactions, buyers need to offer list price or higher to acquire the property.

The data gets even more interesting when this information is broken out by price range.

To no one’s surprise, the percentage increases for properties priced under $400,000:

81% in Larimer County

70% in Weld County

We find that for properties over $400,000 the percentages still tell a story of a very active market:

47% in Larimer County

56% in Weld County

Bottom line, in most locations and price ranges we see a strong sellers’ market where buyers need to be prepared to make a strong offer and to also compete.

 

Posted on August 14, 2020 at 2:03 pm
Paul Hunter | Category: Buyer Tips, Friday Fun Facts, Homes for Sale, Real Estate, Seller Tips | Tagged , , , ,

Spring in Summer

This year the Spring market is occurring in the Summer.

Typically the busiest months for real estate along the Front Range are April, May and June.

This year, because showing activity was restricted in the Spring months, we are seeing robust activity this Summer.

Here’s an indicator.  Sales through July 2020 versus July 2019 are up:

12.6% in Metro Denver

13.7% in Northern Colorado

To see double-digit increases in sales despite was is occurring in the National economy, is nothing short of remarkable.

Posted on July 31, 2020 at 8:30 am
Paul Hunter | Category: About the area, Buyer Tips, Friday Fun Facts, Homes for Sale, Real Estate, Seller Tips | Tagged , , , , , ,

Caught Up

We’ve been waiting for June to catch up. It finally happened (almost).

Back in April, real estate activity was significantly limited and the showing of property was restricted which caused the number of closed properties in May and early June to be much lower than last year.

Bottom line, fewer properties going under contract in April caused fewer closings 30 to 45 days later.

Closed properties in May were down compared to 2019 by 44% in Northern Colorado and 43% in Metro Denver.

Then activity jumped significantly in May. The number of properties going under contract was way up compared to last year.

We’ve been wondering when we would see this sales activity reflected in the number of closed properties.

Well, it finally happened (almost).

The number of closings so far in June compared to the same time period through June of 2019 is only down 1.8% in Northern Colorado and 1.6% in Metro Denver.

In both markets, there are only a handful of closings separating activity in June 2020 versus June 2019.

By the end of the month, when all the transactions are tallied up, we expect that June of this year will out pace June of last year in terms of number of transactions.

This is significant not only because of COVID-19, but also because of the reduced inventory compared to last year. Quite simply, there are fewer homes to buy.
All of this speaks to the health and resiliency of the Front Range market.

At Windermere Real Estate we are taking Safer at Home and Social Distancing very seriously. Our people are following our Safe Showings protocol, staying connected to their clients, and providing help wherever needed.

Posted on June 26, 2020 at 1:35 pm
Paul Hunter | Category: About the area, Homes for Sale, Real Estate | Tagged , , , , , , ,

Rate Meaning

Mortgage interest rates have hit another record low this week.

Mortgage applications for purchases just hit an 11-year high.

Rates are at a level that many people could never have imagined.

Here’s something that is surprising to many people…

Rates are 1.5% lower than they were just two years ago.

Here’s what that means for buyers…

Pretend someone is looking at a $500,000 home and they will have a 20% down payment.

The difference in monthly payment is $320 between two years ago and today.

Obviously that is a significant amount of money.

Imagine what a person could do with $320 per month.

The fact that rates are at record lows is one of many reasons that the market is so strong right now and prices continue to appreciate at healthy levels.

Posted on June 19, 2020 at 12:24 pm
Paul Hunter | Category: About the area, Buyer Tips, Friday Fun Facts, Homes for Sale, Real Estate | Tagged , , , , , ,

On Sale

On Sale

Money is on sale (again).

30-year mortgage rates now sit at 3.3%.

This is less than half of the long-term, 40-year average.

This is also almost a full percentage point lower than they were one year ago (which was still very low).

Let’s put this in real numbers.

A $300,000 loan at today’s rates has a $1,313 monthly principal and interest payment.

One year ago, that same loan would be $1,432 per month.

That’s a 8.3% difference in monthly payment.

The fact that money is on sale is one of many reasons that the housing market remains very strong right now.
At Windermere Real Estate we are taking Safer at Home and Social Distancing very seriously. Our people are following our Safe Showings protocol, staying connected to their clients, and providing help wherever needed.

Posted on May 29, 2020 at 1:16 pm
Paul Hunter | Category: Buyer Tips, Friday Fun Facts, Homes for Sale, Real Estate, Seller Tips | Tagged , , , , ,

Faster

 

Here’s something true about today’s market. Properties are selling fast.

Compared to one year ago, the number of days it takes for a property to sell is significantly lower.

The industry term is “Days on Market” or DOM.

DOM is way down.

Here is the comparison of May 2020 versus May 2019:

• Metro Denver down 22%
• Larimer County down 19%
• Weld County down 16%

Initially, this may seem counter-intuitive. How could homes be selling faster in today’s environment?

Here’s the deal. The buyers and sellers who are active in today’s market are serious.

There really aren’t ‘tire-kicker’ buyers out looking at properties just for the fun of it.

There really aren’t sellers testing the market to ‘see what they can get.’

For the most part, buyers and sellers are on a specific mission and this mindset is showing up in the numbers.

For sellers especially, this is no time to test the market and be overly aggressive on price.

Properties that are priced right and in good condition are selling and often selling fast.

 

At Windermere Real Estate we are taking Safer at Home and Social Distancing very seriously. Our people are following our Safe Showings protocol, staying connected to their clients, and providing help wherever needed.

Posted on May 22, 2020 at 12:50 pm
Paul Hunter | Category: Buyer Tips, Friday Fun Facts, Homes for Sale, Real Estate, Seller Tips | Tagged , , , , , , ,

Pent Up Demand

We notice a very interesting dynamic in the market right now.

There was clearly a pent-up real estate demand created during the recent time when in-person showings were not allowed. The numbers back it up.

First, a little background. During a portion of “Shelter in Place,” all in-person viewing of properties ceased. Instead, buyers spent time online viewing virtual tours and 3-D photography.

Even though clients could view homes virtually, purchase activity did slow down.

Today, showings are allowed again as long as clear protocols are followed. We’ve implemented a Safe Showings program to keep our clients protected.

Now, to the numbers.

Through the first two weeks of May 2020, the number of closed properties is down compared to the same time period in 2019.

In most cases these closed properties are a result of purchase agreements that were written in April- a time when in-person showings were restricted.

So, a decrease in closings was expected.

However, the number of new written contracts so far this month is up considerably compared to the same time frame last year.

Specifically,

• Metro Denver closed properties down 47%
• Metro Denver new contracts up 6%

• Northern Colorado closed properties down 41%
• Northern Colorado new contracts up 19%

So, buyer activity is up compared to last year, even in our current environment.
This speaks to the resiliency of our market and the effect of low interest rates.

At Windermere Real Estate we are taking Safer at Home and Social Distancing very seriously. Our people are following our Safe Showings protocol, staying connected to their clients, and providing help wherever needed

Posted on May 15, 2020 at 10:10 am
Paul Hunter | Category: Buyer Tips, Friday Fun Facts, Homes for Sale, Real Estate, Seller Tips | Tagged , , , , ,