Real Estate Market Update May 2, 2022

Q1 2022 Colorado Real Estate Market Update

The following analysis of select counties of the 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

The most recent jobs data showed that by February of this year Colorado had recouped all of the more than 375,000 jobs that were shed due to the pandemic and had added an additional 6,000 positions. The recovery in employment was faster than I had expected, which has led me to revise my 2022 forecast: I now predict that the Colorado job market will increase by 4% this year and will add more than 112,000 new jobs. The state unemployment rate in February was 4%, which is well below the pandemic peak of 11.8% but still above the 2.6% average in 2019. Regionally, unemployment rates ranged from a low of 3.1% in Boulder to a high of 4% in the Colorado Springs and Greeley metropolitan areas.

Colorado Home Sales

❱ In the first quarter of the year, 8,178 homes sold, representing a drop of 6.3% compared to the same period a year ago and 30% lower than in the fourth quarter of 2021.

❱ Sales increased in 4 of the 12 counties covered by this report but fell in the balance of the market areas.

❱ Similar to last quarter, low inventory levels continue to constrict sales. Listing activity was 17.3% lower than the same period in 2021 and 29.5% lower than in the fourth quarter of 2021.

❱ Pending sales, which are an indicator of future closings, also declined, though the drop of 4.3% is not that significant. That said, unless we see a surge in inventory levels in the spring, second quarter sales may also be light.

A bar graph showing the annual change in home sales for various counties in Colorado between Q1 2021 and Q1 2022.

Colorado Home Prices

❱ With limited inventory and rising mortgage rates, buyers were motivated, as demonstrated by the 14.9% increase in average prices compared to a year ago. Home prices in first quarter averaged $637,963, which is 4.5% higher than last quarter.

❱ Boulder County continues to see average sale prices holding above $1 million. Although we have seen some softening in list prices, I expect this market to remain above the $1 million mark as we move through the year.

❱ Year over year, prices rose by double-digits across all markets covered by this report, with a huge jump in the small Gilpin market.

❱ With little in the way of choice for buyers—as well as a “fear of missing out” given rising mortgage rates—it’s no surprise there was such solid price appreciation. That said, there is normally a lag between rising rates and any impact on home prices. The second quarter should indicate if the jump in rates has had a softening effect on price growth.

A map showing the year-over-year real estate market percentage changes in various counties in Colorado for Q1 2022.

A bar graph showing the annual change in home sale prices for various counties in Colorado from Q1 2021 to Q1 2022.

Mortgage Rates

Average rates for a 30-year conforming mortgage were 3.11% at the end of 2021, but since then have jumped over 1.5%—the largest increase since 1987. The surge in rates is because the market is anticipating a seven- to eight-point increase from the Federal Reserve later this year.

Because the mortgage market has priced this into the rates they are offering today, my forecast suggests that we are getting close to a ceiling in rates, and it is my belief that they will rise modestly in the second quarter before stabilizing for the balance of the year.

A bar graph showing the average rates for a 30-year conforming mortgage, plus Matthew Gardner's mortgage rate forecasts for Q2 2022 through Q1 2023.

Colorado Days on Market

❱ The average number of days it took to sell a home in the markets contained in this report fell four days compared to the first quarter of 2021.

❱ The length of time it took to sell a home dropped in every county other than Gilpin compared to the same quarter a year ago.

❱ It took an average of only 21 days to sell a home in the region, matching the previous quarter.

❱ Compared to the final quarter of 2021, average market time fell in Clear Creek, Adams, Denver, Jefferson, and Arapahoe counties, but rose in the balance of the markets contained in this report.

A bar graph showing the average days on market for homes in various counties in Colorado during Q1 2022.

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.

With Colorado on solid economic footing, I expect housing demand to remain strong even in the face of rising financing costs. Inventory levels remain very low, and new home construction has not expanded enough to meet demand, which continues to put upward price pressure on resale homes. The market appears to have shrugged off the jump in mortgage rates in the first quarter, but the full effects won’t be felt until later this spring. We’ll have to wait and see what impact, if any, there will be, but data on listing prices shows that home sellers remain bullish.

A speedometer graph indicating a seller's market in Colorado during Q1 2022.

Given all these factors, I am leaving the needle in the same position as last quarter. The market clearly still favors sellers, but we need a few more months of information to determine how rising mortgage rates may impact home sales and/ or prices.

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

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.

Colorado Real Estate March 7, 2022

Q4 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 a decent summer when Colorado added around 14,000 jobs each month, the pace of recovery has slowed. That said, the latest data shows that more than 320,000 of the 376,000 jobs shed due to the pandemic have now returned. The state still needs to add a little more than 54,000 jobs in order to get back to pre-pandemic employment levels. Even though there has been a slowdown in the job recovery, which is likely due to the rise of new COVID-19 variants, I am still forecasting the state will return to its prior employment peak by the end of the summer. As jobs return, the employment rate continues to drop; it was 5.1% in November, well below the pandemic peak of 12.1%. Although it would be nice to see a lower rate, more people have returned to the workforce and are actively looking for work, which can stall job growth rates. From a regional perspective, unemployment levels range from a low of 3.8% in Boulder, to a high of 5.2% in Grand Junction.

 

Colorado Home Sales

❱ In the final quarter of the year, 11,714 homes sold, representing a drop of 5.3% compared to the fourth quarter of 2020 and a drop of 17.6% compared to the third quarter of the year.

❱ While sales slowed region-wide, 4 of the 12 counties included in this report actually experienced significant sales increases.

❱ I’m not concerned that sales slowed compared to third quarter, as seasonal factors were likely the cause. It’s also likely that the year-over-year decline was due to the fact that there were 30% fewer homes for sale in the fourth quarter of 2021 than there were the previous year.

❱ Pending sales, which are an indicator of future closings, fell 29% compared to the third quarter, suggesting that closings in the first quarter of 2022 may also be light.

 

 

A bar graph showing the annual change in home sales for various counties in Colorado during the fourth quarter of 2021.

 

Colorado Home Prices

A map showing the real estate market percentage changes in various counties in Colorado during the fourth quarter of 2021.

 

❱ The pace of home-price growth continued to slow, albeit modestly. The average sale price rose 14.8% year over year, to an average of $610,275. Prices also rose .8% from the previous quarter.

❱ Boulder County’s price growth was noteworthy, but of even greater interest was that average sale prices are holding above the $1 million ceiling.

❱ Year-over-year, prices rose across all markets covered by this report, with double-digit gains in all but three counties.

❱ The number of homes for sale remains woefully low in most areas, which continues to put upward pressure on home prices. That said, the pace of appreciation slowed through most of 2021. This trend is likely to continue in 2022.

 

A bar graph showing the annual change in home sale prices for various counties in Colorado during the fourth quarter of 2021.

 

Days on Market

❱ The average number of days it took to sell a home in the markets contained in this report fell five days compared to the final quarter of 2020.

❱ The length of time it took to sell a home dropped in every county other than Clear Creek County compared to the same quarter a year ago.

❱ It took an average of only 21 days to sell a home in the region. Although the pace dropped year over year, it rose 9 days compared to the previous quarter.

❱ Ongoing supply limitations and strong demand have caused the pace of sales to remain brisk. That said, the length of time it took to sell a home rose compared to the third quarter. I don’t think this is a major concern and can likely be attributed to seasonal factors.

 

A bar graph showing the average days on market for homes in various counties in Colorado during the fourth quarter of 2021.

Conclusions

A speedometer graph indicating a seller's market in Colorado during the fourth quarter of 2021.

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.

Inventory is still lacking, which is causing prices to rise at well-above-average rates. That said, despite how few homes are for sale, the pace of appreciation has been slowing and will likely continue to do so as mortgage rates climb.

My current forecast is for 30-year rates to stairstep higher as we move through the year, which will act as a headwind to price growth. Although I do not see rates getting above 4% until 2023, the increase in borrowing costs will start to have a greater impact on home prices.

In addition to rising mortgage rates, the significant growth in prices over the past year has started to impact housing affordability. Although the market will continue to perform well, rising financing costs and lower affordability may slowly move the market back toward some sort of balance.

All things considered, I am moving the needle a little toward buyers, but it still heavily favors home sellers.

 

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

 

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.

FinanceFor Buyers & Sellers February 15, 2022

What are Closing Costs?

The closing process in a real estate transaction finalizes the terms of an agreement between the buyer and seller, leading to the transfer of the property’s title. This step of the buying/selling process comes with its own set of costs. Before a buyer can hold the keys to their new home, and before a seller can celebrate the sale of their property, closing costs must be paid.

What are closing costs?

The term “closing costs” refers to the various expenses, taxes, and fees paid by both the buyer and the seller to finalize a real estate transaction. The purchase agreement—signed by both parties—will dictate the terms of how the closing costs are paid, but there are some standards about who pays what.

In general, buyers can expect to pay about 2-5% of the total purchase price in closing costs, while sellers’ costs can range anywhere from about 6-10%; the difference being that buyers are using extra cash to pay for their closing costs while the amount sellers owe is typically deducted from the proceeds of the sale of their home. Note—these percentages may vary depending on property taxes, insurance rates, and other factors involved in the transaction.

Closing Costs for Buyers

Typical mortgage-related closing costs for buyers include an application fee, an underwriting fee, and prepaid interest (the accrued interest cost between your settlement date and first monthly payment). If you make less that a 20% down payment on the home, you can expect to pay your lender for private mortgage insurance (PMI), as well.

Two main property-related closing costs for buyers are the appraisal and the home inspection. Lenders will require an appraisal to double-check that the value of the property matches your mortgage loan amount, which will typically cost you a few hundred dollars. A home inspection provides the buyer with a clear understanding of the home’s condition and what repairs need to be made, either in the future or before closing. In competitive markets (a seller’s market), it’s more common for sellers to conduct pre-listing inspections and for buyers to waive the inspection contingency to make their offer more appealing. Buyers will also pay a variety of title, insurance, attorney, escrow, and property tax fees to finalize the home purchase. Usually, your lender will require you to purchase homeowners insurance before settlement to protect against insured disasters that may occur on the property.

These are just some of the costs inherent in the closing process for buyers, which are a fraction of the total costs of buying a home. Working with a Buyer’s Agent will help you stay organized as you navigate through these crucial final steps of your home purchase.

 

A young man and woman shake hands with their real estate agent at their kitchen table.

Image Source: Getty Images – Image Credit: PeopleImages

 

Closing Costs for Sellers

The seller will pay the agent commissions on the sale, typically to both the buyer’s agent and the listing agent. Agent commissions usually come in at around 4-6% of the sale price of the home. Other closing costs for sellers may include attorney fees, title insurance, a transfer tax, and the home’s property taxes for the current year if they have not yet been paid. The terms of the agreement will spell out what the seller is additionally responsible for, including HOA fees if applicable and any escrow money promised to the buyer.

Typically, escrow fees are shared between the buyer and seller, which cover the costs of distributing the funds involved in the transaction. In buyer’s markets, it’s more common for sellers to agree to pay for a portion of the closing costs—what is known as “seller concessions.” A common example of a seller concession is when the seller agrees to pay for repairs discovered during the buyer’s home inspection. 

 

So, whether you’re buying or selling a home, it’s important to remember that a series of fees and payments must be completed to finalize the transaction. Learn more about the costs of buying and selling a home here:

For Sellers January 26, 2022

Should I Remodel or Sell My Home As Is?

Homeowners who are preparing to sell are often faced with a dilemma about whether to remodel or sell their home in its current state. Each approach has its respective advantages and disadvantages. If you decide to remodel your home, it will likely sell for more; but the increased selling price will come at the cost of financing the remodeling projects. If you decide to sell without remodeling, you won’t spend as much money putting your home on the market, but the concern is whether you’re leaving money on the table.

Should I Remodel or Sell My Home As Is?

To answer this question, it’s important to understand the factors that could influence your decision and to work closely with your agent throughout the process.

Cost Analysis: Home Remodel vs. Selling Your Home As Is

Home Remodel

When you remodel your home before selling, you’re basically making a commitment to spend money to make money. So, it’s important to consider the kind of ROI you can expect from different remodeling projects and how much money you’re willing to spend. Start by discussing these questions with your agent. They can provide you with information on what kinds of remodels other sellers in your area are making and the returns they’re seeing as a result of those upgrades. This will help you determine the price of your home once your remodel is complete.

Then, there’s the question of whether you can complete you remodeling projects DIY or if you’ll need to hire a contractor. If hiring a contractor seems expensive, know that those costs come with the assurance that they will perform quality work and that they have the skill required to complete highly technical projects. 

According to the Remodeling 2021 Cost vs. Value Report (www.costvsvalue.com1), on average, homeowners paid roughly $24,000 for a midrange bathroom remodel and about $26,000 for a minor kitchen remodel nationwide, with a 60.1% and 72.2% ROI respectively. This data shows that, for these projects, you can recoup a chunk of your costs, but they may not be the most cost-effective for you. A more budget-friendly approach to upgrading these spaces may look like repainting your kitchen cabinets, swapping out your old kitchen backsplash for a new one, refinishing your bathroom tub, or installing a new showerhead. Other high-ROI remodeling projects may allow you to get more bang for your buck, such as a garage door replacement or installing stone veneer. To appeal to sustainable-minded buyers, consider these 5 Green Upgrades that Increase Your Home Value

 

A man and woman look at blueprint plans with a contractor inside a room that’s being remodeled.

Image Source: Getty Images – Image Source: stevecoleimages

 

Selling Your Home As Is

Deciding not to remodel your home will come with its own pros and cons. By selling as is, you may sell your home for less, but you also won’t incur the cost and headache of dealing with a remodel. And since you’ve decided to sell, you won’t be able to enjoy the fruits of the remodel, anyway. If you sell your home without remodeling, you may forego the ability to pay down the costs of buying a new home with the extra money you would have made from making those upgrades.

Market Conditions: Home Remodel vs. Selling Your Home As Is

Local market conditions may influence your decision of whether to remodel before selling your home. If you live in a seller’s market, there will be high competition amongst buyers due to a lack of inventory. You may want to capitalize on the status of the market by selling before investing time in a remodel since prices are being driven up, anyway. If you take this approach, you’ll want to strategize with your agent, since your home may lack certain features that buyers can find in comparable listings. In a seller’s market, it is still important to make necessary repairs and to stage your home.

In a buyer’s market, there are more homes on the market than active buyers. If you live in a buyer’s market, you may be more inclined to remodel your home before selling to help it stand out amongst the competition.

Timing: Home Remodel vs. Selling Your Home As Is

Don’t forget that there is a third option: to wait. For all the number crunching and market analysis, it simply may not be the right time to sell your home. Knowing that you’ll sell your home at some point in the future—but not right now—will allow you to plan your remodeling projects with more time on your hands which could make it more financially feasible to complete them.

For more information on how you can prepare to sell your home, connect with a local Windermere Real Estate agent below:

 

 

  1. “© 2021 Hanley Wood, Complete data from the Remodeling 2021 Cost vs. Value Report can be downloaded free at www.costvsvalue.com.”
BlogColorado Real EstateReal Estate Market Update November 1, 2021

Q3 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

The rise in COVID-19 infections due to the Delta variant caused Colorado’s job recovery to slow, but not as much as in many other states. The latest data (for August) shows that more than 293,000 of the 376,000+ jobs that were shed due to COVID-19 have returned. This is good news, with only 83,000 jobs needed to return to pre-pandemic employment levels. The metro areas contained in this report have recovered 243,700 of the 310,000 jobs lost, and I expect the state will recover the remaining jobs by next summer. With employment levels improving, the state unemployment rate currently stands at 5.9%—down from the pandemic peak of 12.1%. Regionally, unemployment levels range from a low of 4.4% in Boulder to a high of 6.1% in Grand Junction.

 

__________

 

Colorado Home Sales

❱ In the third quarter, 14,209 homes sold. This was 6.8% lower than a year ago, but 5.8% higher than the second quarter of 2021.

❱ Compared to a year ago, listing activity was down more than 30%. However, inventory levels were up 38.3% compared to the second quarter of this year, suggesting that buyers have more choice now than they have seen in some time.

❱ Although comparing current sales activity with that of a year ago is not that informative—given that the country was experiencing a massive rebound in housing demand following the outbreak of COVID-19—it was pleasing to see sales up in every county other than Denver and Douglas compared to the second quarter of this year.

❱ Pending sales (an indicator of future closings) were down 5.4% compared to the second quarter of the year, suggesting that closings in the final quarter may well be a little soft.

 

A bar graph showing the annual change in home sales for various counties in Colorado during the third quarter of 2021.

__________

 

Colorado Home Prices

A map showing the real estate market percentage changes in various counties in Colorado during the third quarter of 2021.

❱ Prices continue to appreciate at a very rapid pace, with the average sale price up 15.8% year over year to an average of $605,576. Sale prices were 1.6% lower than in the second quarter of 2021.

❱ Four counties—Arapahoe, Douglas, Weld, and Park—saw the average home sale price pull back between the second quarter and the third, but I am not overly concerned by this at the present time.

❱ Year-over-year, prices rose across all markets covered by this report. All counties except Arapahoe saw double-digit gains, but even that market saw an increase in sale prices.

❱ Several counties are experiencing a drop in average list prices, which is a leading indicator of future activity. As such, I expect to see the rise of sale prices start to slow, which will be a welcome sight for many buyers.

 

A bar graph showing the annual change in home sale prices for various counties in Colorado during the third quarter of 2021.

__________

 

Days on Market

❱ The average number of days it took to sell a home in the markets contained in this report dropped 17 days compared to the third quarter of 2020.

❱ The length of time it took to sell a home dropped in every county contained in this report compared to both the same quarter a year ago and the second quarter of this year.

❱ It took an average of only 12 days to sell a home in the region, which is down 2 days compared to the second quarter of 2021.

❱ The Colorado housing market remains very tight as demonstrated by the fact that it took less than three weeks for homes to sell in all counties contained in this report.

 

A bar graph showing the average days on market for homes in various counties in Colorado during the third quarter of 2021.

__________

 

Conclusions

A speedometer graph indicating a seller's market in Colorado during the third quarter of 2021.

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 job market continues to improve, which is always a stimulant when it comes to home buying. Inventory levels have improved, and lower pending sales suggest that buyers are taking a little longer to decide on a home. That said, the market is still bullish as indicated by the short length of time it took to sell a home in the quarter. Mortgage rates will start to creep higher as we move into the winter months, and this may stimulate additional buying activity. In the last edition of The Gardner Report, I suggested we would see more homes come to market and that has proven to be accurate. Given these factors, I am moving the needle a little toward buyers, but it remains a staunchly seller’s market.

 

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

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.

BlogReal Estate Market UpdateReal Estate Statistics September 10, 2021

Staggering Stat

By definition, a real estate market is balanced when there is 4 to 6 months of inventory currently for sale.

Anything less than 4 to 6 months means a Sellers’ market, anything more means a Buyers’ market.

For example, if there are 1,000 closings per month in a market, the market would be balanced if 4,000 to 6,000 homes were available for sale.

Here is a staggering stat for you…

At the current pace of sales, the Front Range market would need 6 to 7 times more inventory for the market to be balanced.

This is why we don’t see any sort of significant market correction or anything resembling ‘the market crashing.’ Bottom line, the market is still undersupplied.

Here are the numbers:

• Larimer County has 441 properties for sale and would need 2,200 to be balanced.
• Weld County has 322 properties for sale and would need 2,000 to be balanced.
• Metro Denver has 3,023 properties for sale and would need 20,000 to be balanced.

BlogFor Buyers & SellersHome Owner September 1, 2021

Buying and Selling a Home at the Same Time

Successfully selling a home and buying a home are significant accomplishments on their own, but when their timelines cross it can be difficult to manage both. If you’re thinking about doing both simultaneously, it’s equally important to understand the steps you can take to make the process go smoothly as it is to have a backup plan in case it doesn’t. Above all, the balancing act required to pull off both deals highlights the importance of working closely with a trusted and experienced real estate agent.

Do I buy or sell first?

One can imagine a perfect world in which the two transactions go through one right after the other. However, this is not usually the case. So, should you list your current home first or start by putting in offers on a new one? There are pros and cons to both.

Selling your current home first allows you to make offers on a new home with cash in your pocket, increases your buying power, and avoids having to juggle two mortgages simultaneously. On the other hand, it creates a gap of residence, often leaving homeowners wondering where they’ll stay until they move into their new home or whether they may need to rent before they can buy again. Sellers may also negotiate a rent-back agreement with the buyers, allowing them to rent the house from the new owners before they move in.

Buying before selling solves the need for any temporary housing and makes the overall moving process much easier. Having a residence established ahead of time means you’ll only have to move once, which can save you some serious stress during this time of transition. Oppositely, buying a new home before you sell your current one will put an added strain on your finances. Having two concurrent mortgages equates to taking on more debt, which could result in less-than-favorable loan terms for purchasing your new home. Without the lump sum generated by a home sale in your pocket, coming up with enough money for a down payment may be a challenge and obtaining private mortgage insurance (PMI) may be in the cards. Finally, buying before selling comes with an obvious assumption—that your current house will sell.

Ultimately, the order of operations depends on your situation. Perhaps you’re moving due to a change of employment, and you need to direct all your energy toward buying a new home by a certain date before you can even think about selling your current one. No matter which route you take, it’s important to communicate your timeline to your listing agent or your buyer’s agent so they can strategize accordingly.

Buying and Selling a Home at the Same Time 

Local Market Conditions

Buying and selling at the same time will come with a certain duality: at each step in the process, you’ll have to balance your responsibilities as both a buyer and a seller. For example, when assessing your local market conditions, you’ll be looking at not one, but two housing markets.

  • Seller’s Market: Selling in a seller’s market means that that you’ll need to be prepared to move once you list, since you could be looking at a short selling timeline. However, relying too heavily on the assumption that your house will sell quickly could make things dicey down the road. If you’re buying in a seller’s market, finding a new home may take longer than expected. You could potentially be waiting weeks or months for an offer to get accepted.
  • Buyer’s Market: Selling in a buyer’s market typically means that homes stay on the market longer. If you proceed with a new home purchase just after you’ve listed your current house, know that it may take a while to sell. If you’re buying in a buyer’s market you can afford to be picky, knowing that time is on your side. With fewer people buying homes, sellers will be more flexible, giving you leverage to negotiate your contingencies.

Having a Backup Plan

If only you could wave a magic wand and make both transactions go through as planned. That’s why it’s important to have a backup plan in place to right the ship should things go sideways at any point in the buying or selling process. Talk to your agent about which options may be right for you. Here are a few:

  • Sales Contingency: Buying your new home with a sales contingency allows you to opt out of the purchase contract if your home doesn’t sell by a specified date. Purchasing contingent on the sale is rare in highly competitive markets.
  • Bridge Loan: If your current home hasn’t sold yet and you’re not able to afford the down payment on a new home, a bridge loan may be a fitting solution. Bridge loans can be used to cover the down payment on a new house and are repaid once your existing home has sold.
  • Rent-Back Agreement: A rent-back agreement is a clause in the sales contract that allows the seller to rent their old home from the buyer for an agreed-upon period of time before the buyer moves in. This can be especially helpful in situations when the seller is having trouble finding a new home.

For more information on buying and selling a home at the same time, give your local Windermere office a call to get connected with an experienced agent!

BlogColorado Real EstateEconomics 101Market News August 17, 2021

Q2 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

Although the post COVID-19 job recovery took a step backward last winter, it has since picked up again, which is very pleasing to see. At the end of the second quarter, the state had recovered more than 276,000 of the 376,000+ jobs that were shed due to COVID-19. Even though employment levels are still almost 100,000 lower than the pre-pandemic peak, they are heading in the right direction. Looking at the markets contained in this report, current employment levels in Colorado Springs are only 2.2% below the pre-pandemic peak, followed by Denver and Fort Collins, which are both down 3.6% from the 2020 peak. I would add that all markets showed jobs continuing to return. With total employment levels rising, the unemployment rate stands at 6.2%, down from the pandemic peak of 12.1%. Regionally, unemployment levels range from a low of 4.8% in Boulder to a high of 6.3% in Grand Junction. COVID-19 infection rates dropped during the quarter, which is certain to lead to employment levels continuing to rise unless we see another significant increase in infection rates due to the rise of new variants across the country.

 

COLORADO HOME SALES

❱ The late spring/early summer market was a good one for home sales, which were up 33.9% from a year ago. Comparing the current quarter to a period when COVID-19 was widespread is not that informative, but, with sales up more than 55% from the first quarter of this year, the market appears to be very buoyant.

❱ Sales were higher in all counties other than the very small Clear Creek County. Where sales rose, they did so at double-digit rates in all markets other than Weld.

❱ During the second quarter, 13,428 homes sold. This is very impressive but not overly surprising, given that the average number of homes for sale was up 45% from the first quarter.

❱ Another positive was that pending sales, which are an indicator of future closings, were 42.8% higher than in the first quarter. This suggests that closings next quarter should be positive as well.

 

A bar graph showing the annual change in home sales for various counties in Colorado.

 

COLORADO HOME PRICES

A map showing the real estate market percentage changes in various counties in Colorado.

❱ Prices continue to appreciate at an impressive pace, recording an increase of 28.1% year over year to an average of $615,409. Home prices were also 10.7% higher than the first quarter of this year.

❱ Buyer demand remains very strong, likely exacerbated by the drop in mortgage rates in the second quarter and improving levels of inventory.

❱ Year-over-year, prices rose across all markets covered by this report, with the exception of Clear Creek County. Of the markets that saw prices rise, all did so by double digits, with very notable gains in Boulder, Gilpin, and Park counties.

❱ Affordability levels continue to trouble me, and the pace of price appreciation has to slow at some point. The market is clearly still out of balance, but as long as the credit quality of buyers remains high, I do not see any cause for concern.

 

A bar graph showing the annual change in home sale prices for various counties is Colorado.

 

DAYS ON MARKET

❱ The average number of days it took to sell a home in the markets contained in this report dropped 14 days compared to the second quarter of 2020.

❱ The amount of time it took to sell a home dropped in every county contained in this report compared to the second quarter of 2020. The exception was Gilpin County, where it rose by only two days.

❱ It took an average of only 14 days to sell a home in the region, which is down 11 days compared to the first quarter of this year.

❱ The Colorado housing market remains very tight, as demonstrated by the fact that it took less than a month for homes to sell in every county other than one.

 

A bar graph showing the average days on market for homes in various counties in Colorado.

 

CONCLUSIONS

A speedometer graph indicating a seller's market in Colorado.

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.
Sales rose on the back of lower mortgage rates and higher levels of homes available to buy. Although this should signify a move back to a more balanced market, we are not there yet as price growth remains well above the long-term average.

With solid demand and favorable financing rates, the market is expected to remain active as we move through the balance of the year. That said, housing affordability is becoming an increasingly large concern. According to the Colorado Association of REALTORS®, statewide affordability for single-family homes has dropped almost 20% year-over-year and is down 17.8% for multi-family homes.

At some point, an affordability ceiling will be reached, which will slow home-price appreciation—but not yet. As such, I am moving the needle a little more in favor of home sellers, as they remain in the driver’s seat, for now.

 

ABOUT MATTHEW GARDNER

Matthew Gardner - Chief Economist for Windermere Real Estate

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.

BlogFor BuyersFor Sellers May 26, 2021

What is a Seller’s Market?

When the housing market favors sellers, a seller can expect ideal conditions for selling their home. However, that’s not to say that a seller’s market doesn’t come with its own unique set of challenges for parties on both sides of the transaction. That’s why it’s critical for buyers and sellers to work with an agent who not only understands their wants and needs but who can also help them navigate highly competitive market conditions.

What is a Seller’s Market?

A seller’s market occurs when demand exceeds supply. When inventory is limited, competition amongst buyers is fierce. Median sales prices increase, days on market decrease, and homes commonly receive multiple offers, often over their original asking price.

Selling in a Seller’s Market

Though demand is high in a seller’s market, staging and making any necessary repairs are still important steps to take before hitting the market. An agent can help a seller make important decisions about which repairs and updates help add value to the home.

When it comes to offers and negotiations in a seller’s market, sellers have the leverage. It’s common for homes to fetch more than their asking price with multiple offers on the table. Though prices are being driven up by demand, a seller may choose to list their home at or just below fair market value with the hopes of starting a bidding war. Because competition is so high, buyers may be willing to waive an inspection contingency to help make their offer stand out. Agents can help sellers decide whether they should conduct a pre-listing inspection, which sometimes helps the seller get more offers and command a higher price.

With multiple offers on the table, it may be tempting to simply choose the one with the highest figure; however, the best offer is also the one that removes risk and aligns with the seller’s goals. Whether that entails waived contingencies, a shorter closing window, or an all-cash offer, in a seller’s market, the seller has the power to choose. Sellers should fully review each offer with the help of their agent before proceeding.

Buying in a Seller’s Market

Buyers in a seller’s market must act fast. Due to the high level of competition, they must be prepared for a frustrating scenario where their offers may not win out. This emphasizes the importance of working with a buyer’s agent. In a seller’s market, it’s more likely that the buying process will include such factors as seller review dates and escalation clauses. A buyer’s agent will help navigate these challenges while working with their client to make their offer stand out. They will formulate a strategy, comparing their client’s wish list and budget against the limited number of homes available and proceeding accordingly. A buyer’s agent will also set the expectation that, due to the competitive nature of the market, finding the right home may take longer than expected.

In a seller’s market, the buyer is at a disadvantage when it comes to negotiations. The chance of getting a contingent offer is minimal and pushing for certain closing dates and specific repairs may do more harm than good to their offer. A cash offer has significant power in a seller’s market. If a buyer can make a cash-heavy or even all-cash offer, it is likely to stand out to the seller. It gives the buyer more buying power and greatly increases their chances of winning a bidding war.

For more information on the conditions of your local market, visit our website for Quarterly Real Estate Market Updates from our Chief Economist, Matthew Gardner. For assistance planning a home sale or purchase, connect with a Windermere Real Estate agent here: Connect With an Agent

BlogColorado HousingColorado Real EstateColorado Real Estate Market UpdateFor Buyers & SellersMarket News April 28, 2021

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.