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War and Interest Rates
Our clients are curious to know what the conflict in the Ukraine will mean for mortgage rates.
The short answer is down in the near term and up in the long term.
Generally speaking, economic and political uncertainty drive people to invest in bonds rather than stocks, which puts downward pressure on interest rates.
So, in the near term, the conflict in the Ukraine will push rates down slightly. We have already seen this happen as 30-year rates have dipped in the last few days.
The conflict is likely to push oil prices up which means higher gasoline prices. This will cause upward pressure on inflation, which ultimately causes upward pressure on interest rates.
So, the longer the war lasts in Europe, the more likely it is to push interest rates even higher.
Zillow’s Shut Down
On Wednesday Zillow announced the shut down of its iBuying program because of mounting financial losses and increasing complexity in the real estate market.
The goal of this program was to buy properties directly from Sellers and then re-sell them for a profit.
Before looking at the interesting facts and numbers associated with this news, we want to acknowledge the people who are affected by this.
Zillow’s workforce will be reduced by 25%. Many people will be laid off and our heart goes out to them. We certainly wish them only the best.
Within our company we are not surprised by Zillow’s announcement. We observed many cases where they over-paid for a property, re-listed it for an unrealistic price, dropped the price over time to meet the market, and then sold at an amount much less than what they paid.
It actually became difficult to find specific scenarios where they sold the home for more than their acquisition cost. It was not uncommon to see losses of $50,000 per home or more.
Here is a quote from their CEO: “Our observed error rate has been far more volatile than we thought possible. Fundamentally, we have been unable to predict future pricing of homes to a level of accuracy that makes this a safe business to be in.“
In the third quarter of 2021 alone, their iBuying division lost $328 million.
Bottom line, their valuations were off.
It is a reminder that pricing requires a hyper-local scientific approach versus a generic algorithm
Homes are not commodities. Each home is highly unique. Each has its own highly unique location, features, amenities, condition and timing.
Homes can’t be priced like a book or a plane ticket. Every unique feature must be taken into account.
Nationally, Zillow has about 7,000 homes in backlog which it hopes to sell over the next several months.
Other players remain in the iBuying game and we are more than happy to help you understand those options if you are curious.
Windermere Northern Colorado Foundation Tailgate Party 2021
September signifies something different for everyone: for some it’s the beginning of football season, for others it’s the end of summer, but for our Northern Colorado team, September means it’s time to tailgate! Each September, for the past five years, we have hosted our Windermere Foundation Tailgate Party to raise funds and spread awareness in support of a local organization dedicated to the betterment of our community.
This year, we teamed up with ChildSafe Colorado, a non-profit that provides resources, education and treatment to victims of childhood abuse. For such an amazing organization, we had no choice but to go all out. On September 17th, 2021 we joined together as a community on to party with a purpose. Our guests enjoyed complimentary drinks, complimentary food from Pepe’s Tacos and the Ball Joint, and live music performed by Kelsey Jo and the Wildcards. Special entertainment was also available for the kids in the form of balloon art, face painting and a petting zoo!
To raise funds, custom-made cups were available for purchase and prizes donated by local businesses were raffled off. Otterbox, Walmart, Pure Barre Fort Collins, Orangetheory Fitness, Board 30 Fort Collins, Ascent Climbing & Fitness Studio, Pure Drip IV, The Cupboard, Butter Cream Cupcakery, Rally5 Crafted Eats & Bar, Jax Outdoor Gear, New Belgium Brewery, Odell Brewing Co, Coyote Gold, Smilin Faces Face Paint, Painting with a Twist, Amy Vandegrift with Skin Pretty Aesthetics, and Kali Johnson with Salon One Ten were among the generous donor who contributed to the event.
With the help of our platinum donors Elevations Credit Union and Fidelity National Title Company in Northern Colorado, we were able to raise over $4,000 dollars in support of this wonderful organization.
Want to get involved? Click here for more information.
Words Matter
A common phrase that is being used right now to describe the market is ‘no inventory.’
‘There’s no inventory’ is said frequently among those inside and outside of the real estate industry.
The problem with this phrase is that it is untrue.
There is inventory. Meaning, there are a significant number of new listings hitting the market.
However, there is low standing inventory. Meaning, the listings that do hit the market don’t stick around for very long before they are purchased.
Standing inventory, which is the number of active properties on the market, is down roughly 70% along the Front Range.
However, the number of new listings coming on the market is essentially:
- Double compared to December 2020
- Only 20% to 25% less than this time of year in 2017, 2018, and 2019
So, there is inventory available, it just sells quickly because demand is historically high right now.
Q1 2021 Colorado Real Estate Market Update
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.
REGIONAL ECONOMIC OVERVIEW
Following the decline in employment last winter, Colorado has started to add jobs back into its economy. The latest data shows that the state has now recovered more than 219,000 of the 376,000+ jobs that were lost due to COVID-19. This is certainly positive, but there is a long way to go to get back to pre-pandemic employment levels. Denver and Fort Collins continue to have the greatest improvement in employment, but all markets show job levels well below pre-pandemic levels. With total employment levels rising, the unemployment rate stands at 6.6%, down from the pandemic peak of 12.1%. Regionally, unemployment levels range from a low of 5.6% in Fort Collins and Boulder to a high of 6.7% in Greeley. COVID-19 infection rates have started to increase again, and this has the potential to negatively impact the job market. I am hopeful that the state will not be forced to pull back reopening, but this is certainly not assured.
COLORADO HOME SALES
❱ 2021 started off on a bit of a sour note, with total sales down 1.2% compared to the same period in 2020. Sales were 29.2% lower than in the final quarter of 2020 as 8,645 homes sold.
❱ Sales were higher in four of the counties contained in this report, were essentially flat in one, and dropped in seven. It was pleasing to see significant sales growth in the large counties of Denver and Adams.
❱ Another positive was that pending sales, which are an indicator of future closings, were 4.8% higher than in the fourth quarter of 2020 and 5% higher than a year ago.
❱ The disappointing number of home sales overall can primarily be attributed to the woeful lack of inventory. Listings in the quarter were down more than 61% year over year and were 40.6% lower than in the fourth quarter of 2020.
COLORADO HOME PRICES
❱ Prices continue to appreciate at a very rapid pace, with the average sale price up 16.5% year over year, to an average of $556,100. Home prices were also 4.4% higher than in the fourth quarter of 2020.
❱ Buyers appear to be out in force, and this demand—in concert with very low levels of inventory—continues to heat the market.
❱ Prices rose over last year across all markets covered by this report, with the exception of the very small Gilpin County. All other counties saw sizeable gains and the trend of double-digit price growth continued unabated.
❱ Affordability levels are becoming a greater concern as prices rise at a far faster pace than wages. Even though mortgage rates have started to rise, they haven’t yet reached the level needed to take some of the heat out of the market.
DAYS ON MARKET
❱ The average time it took to sell a home in the markets contained in this report dropped 20 days compared to the first quarter of 2020.
❱ The amount of time it took to sell a home dropped in every county contained in this report compared to the fourth quarter of 2020.
❱ It took an average of 25 days to sell a home in the region, down one day from the fourth quarter of 2020.
❱ The Colorado housing market remains very tight, as demonstrated by the fact that it took less than a month for homes to sell in all but two counties.
CONCLUSIONS
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.
The relatively low level of home sales is not a surprise given how few choices there are for buyers. Sellers are certainly benefitting from strong demand, as demonstrated by the significant price growth. I maintain my belief that there will be an increase in inventory as we move through the year, but it is highly unlikely that we will see a balanced market in 2021.
Given these factors, I am moving the needle a little more in favor of sellers, as demand is likely to continue to exceed supply.
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.
Economic Update with Matthew Gardner
Exclusive Invitation!!!
Tune in on Tuesday, October 6, 2020 at 9:00am to meet with Matthew Gardner, Windermere Real Estate’s Chief Economist LIVE and get your chance to ask him questions. He’ll be discussing the housing market, employment and the effects of COVID-19 on the local and national economy.
As one of the only real estate companies in the US that has a Chief Economist on staff, we have exclusive insights into the housing market, economy and government happenings. This is a one of a kind event for clients and friends of Windermere Real Estate in Colorado.
To sign up, please contact your Windermere Agent or message us to get the link. Seating is limited in digital meeting room so get your seat!
(If you can’t attend live, you can register to automatically get the recording.)
How to Improve Your Curb Appeal
Image Source: Canva
When it comes time to sell your home, first impressions are crucial. Improving your curb appeal helps to make the most of a buyer’s first glance and sets the stage for their interest in purchasing your home. The following projects are simple and inexpensive ways to enhance both your home’s first impression and its value.
Landscaping
- Lawn: A healthy, well-tended lawn goes a long way towards improving your curb appeal. Clean up all weeds, leaves and debris, and consistently water your lawn to give it that fresh green look. If you live in an arid climate, consider grass alternatives like artificial turf for the best lawn aesthetic.
- Plant colorfully: Adding color variety to your front yard will grab buyers’ attention. Align smaller plants, like groundcover and flowers, neatly within your flower beds, aiming for symmetry when possible. Use larger plants and trees to frame in your entryway or walkup. If your front yard doesn’t have flower beds, try adding hanging planters or window boxes.
- Lighting: Landscaping lighting boosts your curb appeal during nighttime, accentuates your shrubbery, and adds a welcoming touch for visitors as potential buyers, lighting the way to your door.
Image Source: Canva
Porch
Front porches set the stage for all your home has to offer. Improvements here will play a significant role in how comfortable potential buyers feel about the property and how inspired they are to explore the inside of the house.
- Door: Your front door is an opportunity to make a tasteful statement. Look at bold color choices that are within or slightly stretch your home’s exterior color palette. Take time to prepare the surface for a fresh coat of paint to make the color pop as much as possible. Try stylish doorknob options that accentuate the aesthetic to give your door some added flair.
- House numbers: New and stylish house numbers are an easy, eye-catching touch to the look of your porch. Look for styles that match with your exterior color palette and any exterior lighting fixtures.
- Go for comfort: Incorporating classic front porch elements like a porch swing, sitting bench, and other outdoor furniture gives a welcoming aura to the front of your home and creates a sense of comfort for prospective buyers.
- Shutters: Windows are the gateway to the inside of your home. Shutters of delicate fabric will bring elegance to your front porch, while wooden shutters deliver a solid, cozy vibe.
Other
These miscellaneous projects will add the finishing touches to your home’s curb appeal and get it in prime selling condition.
- Quick maintenance: Small chores and minor fixes like cleaning gutters, repairing chipped paint, and cleaning windows are important for buyers with a detailed eye.
- Staining: Instead of replacing fences or garage doors, look into applying a fresh stain. This brings a refreshed look and is much cheaper than a full renovation or replacement.
- Power wash: Power washing your walkways and driveways makes a significant difference in curb appeal. If buying a power washer is outside your budget, explore rental options from the big-name hardware stores.
Colorado Real Estate Market Update
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 agent.
ECONOMIC OVERVIEW
COVID-19 had significant negative impacts on employment in Colorado. The pandemic caused the loss of over 342,000 jobs in March and April as unemployment rose to 12.2%. For comparison, peak unemployment following the Great Recession was 8.9%. However, it appears as if the massive contraction in employment is behind us (at least for now). Employment in Colorado rose in May by 68,800 jobs, a monthly increase of 2.8%, pushing the unemployment rate down to 10.2%. Regionally, the Denver metro area added 18,600 jobs in May and the Fort Collins metro area added 3,500 jobs. It is certainly too early to say that we are out of the woods, but we seem to be headed in a positive direction. Colorado’s COVID-19 infection rates started increasing again in June, which could slow down the economic recovery. However, I do not believe that it is likely to have any substantial impact on the housing market.
HOME SALES
- In the second quarter of 2020, 9,867 homes sold. This represents a drop of 20.7% compared to the second quarter of 2019, but sales were 7.4% higher than in the first quarter of this year.
- Sales dropped across all markets compared to the second quarter of 2019. I do not find this concerning as the drop can be attributed to limited supply and COVID-19.
- Inventory levels remain tight, with the average number of homes for sale in the quarter down 21.3% from the same period in 2019. However, listings were up an impressive 15.6% over the first quarter of 2020.
- I was pleased to see total pending sales in the quarter increase 16.3% compared to the first quarter, suggesting closing data for the third quarter will be better than we are currently experiencing.
HOME PRICES
- Home prices held steady compared to the second quarter of 2019 at an average of $480,831. Prices were up 0.7% compared to the first quarter of this year.
- Interest rates remain at very low levels and will stay in the low 3% range for the balance of the year, if not longer. This can allow prices to pick back up.
- Price growth across the region was varied. Seven counties saw price growth and five experienced a drop in average sale price. Clear Creek County again saw prices rise substantially. However, as you are likely aware, it is a very small market and subject to wild swings. Prices dropped most in the equally small Gilpin County.
- I am still watching affordability in many Colorado markets and will take this temporary “pause” as a good thing.
DAYS ON MARKET
- The average number of days it took to sell a home in the markets contained in this report dropped by only one day compared to the second quarter of 2019.
- The amount of time it took to sell a home dropped in eight counties, remained static in one, and rose in three compared to the second quarter of 2019.
- It took an average of 29 days to sell a home in the region.
- The Colorado housing market is demonstrating solid demand, and listing activity is trending higher. I expect that the summer market will be brisk.
CONCLUSIONS
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.
Demand appears to be returning, which—combined with historically low interest rates—should lead to a brisk summer housing market. Assuming that the state gets new infection rates under control, I do not see why the housing market wouldn’t perform well this summer. As such, I have moved the needle just a little more in favor of home sellers.
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.
Matthew Gardner’s 2020 Real Estate Forecast
It’s that time of year when Windermere’s Chief Economist Matthew Gardner dusts off his crystal ball and peers into the future to give us his predictions for the 2020 economy and housing market.
Our Favorite Real Estate Podcasts
Podcasts are a growing medium as listeners search for new sources of entertainment and information. In 2018 there were about 550,000 podcasts, in 2019 there are more than 750,000. Listeners are growing too, an estimated 20 million more people in the U.S. are listening to podcasts this year as compared to2018.
This growth in audio entertainment inspired us to pull together a few of our favorite real estate podcasts. Whether you’re interested in investing in real estate, looking to make a move to a new home, or just want to know what’s happening in the market, here are our recommendations:
For Investors:
The Millennial Real Estate Investor
Find your niches in Real Estate with Dan Mackin and Ben Welch, who host experts with stories about their investing successes and challenges. Learn from the experienced guests on this show the many ways to get into investing and succeed at it.
Listen to Millennial Real Estate Investor wherever you get your podcasts (Icon linked):
Cash Flow Connection
If you’re drawn to the commercial side of real estate, Cash Flow Connections with host, Hunter Thompson, is an informative podcast that interviews leading investors, sponsors and managers. Learn about all the aspects of commercial real estate from all viewpoints to find the right fit for you.
Windermere’s Chief Economist, Matthew Gardner, was just interviewed about the state of the real estate market, and what to expect in the next recession (hint: it won’t be driven by housing). You can listen to that episode here.
Listen to Cash Flow Connection wherever you get your podcasts:
For Those About to Move
Windermere Home and Wealth
Host Brian Bushlach interviews business owners, local guides, and Windermere agents in each episode about different areas throughout the Western U.S. and what they have to offer to those who live or visit there. Learn about what’s attracting newcomers to the area, and what the local real estate market looks like. This podcast is sure to stir your wanderlust.
Listen to Windermere Home and Wealth wherever you get your podcasts:
Finding Home with 106.1 KISS FM
Join first-time home buyers, and radio personalities, Anthony and Carla Marie from 106.1 KISS FM, as they walk through the home buying journey with their Windermere agents. This podcast is both entertaining and informative as they ask the questions you’ve always wanted answers to. With their knowledgeable real estate agents by their sides, they’re taking you along as they get approved, look for houses, and even put an offer on a home.
Listen to Finding Home on iHeartRadio:
Stay Informed
Housing Developments
Hosted by National Association of Home Builders CEO Jerry Howard and Chief Lobbyist Jim Tobin, this podcast covers updates in the housing market and building industry across the nation. Learn from experts in the field about recent laws and the news of the industry.
Listen to Housing Developments wherever you get your podcasts:
Real Estate News with Kathy Fettke
This podcast is aimed at real estate investors who want to stay curren on the latest real estate news. Presented in bite sized episodes, listeners can learn about laws, regulations, and economic events that affect real estate and their local market.
Listen wherever you get your podcasts:
