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The following analysis of the Metro Denver & Northern Colorado real estate market 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 real estate agent.
Colorado’s economy picked up, adding 64,900 new non-agricultural jobs over the past 12 months — a growth rate of 2.4%. Over the past three months, the state added an impressive 28,300 new jobs.
In August, the state unemployment rate was 2.8%, down from 3.4% a year ago. Unemployment rates in all the counties contained in this report were lower than a year ago. It is fair to say that all markets are now at full employment.
In the third quarter of 2019, 17,562 homes sold. This is an increase of 5.1% compared to the third quarter of 2018 but 1.6% lower than the second quarter (which can be attributed to seasonality). Pending sales — a sign of future closings —rose 9.7%, suggesting that closings in the final quarter of 2019 are likely to show further improvement.
Seven counties contained in this report saw sales growth, while four saw sales activity drop. I am not concerned about this because all the markets that experienced slowing are relatively small and, therefore, subject to significant swings.
I was pleased to see an ongoing increase in the number of homes for sale (+16.9%), which means home buyers have more choice and feel less urgency.
Inventory levels are moving higher, and demand for housing appears to be quite strong. As I predicted last quarter, home sales rose in the third quarter compared to a year ago.
Home prices continue to trend higher, with the average home price in the region rising 3.8% year-over-year to $477,776.
Interest rates are at very competitive levels and are likely to remain below 4% for the balance of the year. As a result, prices will continue to rise but at a more modest pace.
Appreciation was again strongest in Park County, where prices rose 7.8%. We also saw strong growth in Weld County, which rose 7.4%. Home prices dropped in Clear Creek County, but, as mentioned earlier, this is a small market so I don’t believe this is indicative of an ongoing trend.
Affordability remains an issue in many Colorado markets and this will act as a modest headwind to ongoing price growth.
DAYS ON MARKET
The average number of days it took to sell a home in the markets contained in this report rose seven days compared to the third quarter of 2018.
The amount of time it took to sell a home rose in all counties compared to the third quarter of 2018.
It took an average of 30 days to sell a home in the region — an increase of 1 day compared to the second quarter of this year.
The Colorado housing market is still performing well, and the modest increase in the length of time it took to sell a home is a function of greater choice in homes for sale and buyers taking a little longer to choose a home.
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 third quarter of 2019, I continue the trend I started last summer and have moved the needle a little more in favor of buyers. I continue to closely monitor listing activity to see if we get any major bumps above the traditional increase because that may further slow home price growth. However, the trend for 2019 will continue to be a move toward a more balanced market.
ABOUT MATTHEW GARDNER
As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.
In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.
In times of change (like now), it’s valuable to look at the fundamentals of our market.
Let’s have some fun with fundamentals…
1. Our economy is healthy – since 1990, the unemployment rate in Colorado has never been higher than the U.S. unemployment rate. Ever. Unemployment in Colorado sits at 2.7% today while the rate across the U.S. is 4.0%.
2. People keep moving here – since 2005 our population has grown by just over a million people which is roughly 77,000 per year (about the size of Mile High Stadium).
3. Our real estate outperforms other places – according the Federal Housing Finance Authority, Colorado is the #1 state for home price appreciation since 1990.
The Federal Reserve raised interest rates by 0.25% this week. It was their 3rd rate increase this year.
This has us thinking about mortgage rates.
Today, 30-year mortgage rates are 3.93%.
Let’s put this in context with a little history lesson. Mortgage rates were…
3.90% 6 months ago
4.13% 1 year ago
3.54% 18 months ago
3.32% 5 years ago
5.96% 10 years ago
7.15% 20 years ago
So where are rates headed? Given that the Federal Reserve is expected to raise their rate three to four more times in 2018, we expect mortgage rates to be higher one year from today.
The Mortgage Bankers Association predicts rates to be 4.8% in the 4th quarter of next year. Freddie Mac’s prediction is 4.4%. If these predictions are true, that would mean mortgage rates would be back to where there were 6 to 7 years ago.
To hear our predictions for the 2018 market, join our live Market Forecast event on January 18th at the Marriott in Fort Collins. Back by popular demand is Windermere’s Cheif Economist Matthew Gardner who will give you valuable and interesting insights into the real estate market. Reserve your spot at www.windermereforecast.com
The following analysis of the Metro Denver and Northern Colorado real estate market 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 me.
Annual employment in Colorado grew by a respectable 2.3% in February, which equated to about 64,000 new jobs over the past 12 months. Within the metropolitan market areas included in this report, employment has been mixed, with Denver, Fort Collins, and Colorado Springs reporting above-average growth. However, Greeley and Grand Junction saw a modest decline in employment.
In February, the unemployment rate in Colorado was 2.9%, down from 3.3% a year ago. The lowest reported unemployment rates were in Fort Collins and Boulder, at just 2.6%. The highest rate was in Grand Junction, but it was still a respectable 4.7%.
There were 11,640 home sales during the first quarter of 2017, an annual increase of 2.2%.
Arapahoe County saw sales grow at the fastest rate over the past 12 months, with a 7.9% increase. There were also impressive increases in Douglas County. There were very modest sales declines in the relatively small Larimer and Weld Counties.
Listing activity remains well below historic averages, with the total number of homes for sale in the first quarter 10.7% below that seen a year ago.
Home sales are generally higher than seen a year ago, but inventory levels are well below where they need to be to satisfy would-be buyers.
With demand remaining strong, home prices continue to escalate. In the first quarter of this year, average prices rose by 8% when compared to a year ago. Average home prices across the region broke the $400,000 barrier at $402,273.
Home prices remain well above historic highs and continue to trend upward. While there are very modest slowdowns in price growth—possibly a function of rising interest rates—they should continue to appreciate at above-average rates throughout 2017.
Appreciation was strongest in Arapahoe and Weld Counties, where prices rose by 12.2% and 10.1% respectively.
The housing market remains strong and this will continue until we see a substantial increase in the number of homes for sale, which is unlikely in the near-term.
DAYS ON MARKET
The average number of days it took to sell a home dropped by one day when compared to the first quarter of 2016.
Homes in a majority of the counties took less than a month to sell.
During the first quarter, it took an average of 30 days to sell a home. This is down by one day compared to the same time last year.
Demand remains very strong across the region, which is evident by the remarkably short amount of time that it takes to sell a home.
This speedometer reflects the state of the region’s housing market using housing inventory, price gains, home sales, interest rates, and larger economic factors.
In the first quarter of 2017, the needle remains well into seller’s territory. The recent increases in mortgage rates have not had any dampening effect on either demand or home prices, and I expect this will remain unchanged through the end of the year.
ABOUT MATTHEW GARDNER
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 over 25 years of professional experience both in the U.S. and U.K.