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 me.
Colorado’s economy added 57,100 new non-agricultural jobs over the past 12 months, a growth rate of 2.1%. The pace of job growth has been moderating and I anticipate this trend will continue as we move through 2020. My current forecast is for Colorado to add around 57,000 new jobs in 2020, a growth rate of 2.1%.
In November, the state unemployment rate was 2.6%, down a full percentage point from the same month in 2018. Unemployment rates in all the counties contained in this report were lower than a year ago and it is fair to state that all markets are now at full employment.
- In the final quarter of 2019, 14,279 homes sold, representing an impressive increase of 9.2% compared to the final quarter of 2018. However, sales were 18.7% lower than the third quarter, which I attribute to seasonality. Pending sales — a sign of future closings — dropped 26.7% compared to the third quarter, suggesting that closings in the first quarter of 2019 are likely to come in below current levels.
- It is notable that all counties contained in this report saw sales growth compared to the same period a year ago.
- Listing activity in the quarter essentially matched the same period in 2018 but the number of homes for sale was 26% lower than in the third quarter of the year. Again, this is a function of seasonality.
- Inventory levels are holding steady, and demand for housing continues to be strong. I would certainly like to see inventory levels rise and I remain modestly hopeful that this will be the case, but likely not until the second half of 2020.
- Home prices continue to trend higher, with the average home price in the region rising 4.3% year-over-year to $473,264.
- Interest rates remain at very competitive levels and are likely to stay below 4% through 2020. This will allow prices to continue to rise, though I expect more modest price growth if there is an increase in the number of homes for sale.
- Appreciation was strongest in Boulder County, where prices rose 7.4%. Home prices dropped in Clear Creek, Park, and Gilpin counties, but these are small markets so I don’t believe it’s 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 three days compared to the final quarter of 2018.
- The amount of time it took to sell a home rose in all counties other than Clear Creek when compared to the fourth quarter of 2018.
- It took an average of 41 days to sell a home in the region, an increase of 11 days compared to the third 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 not a concern at the present time.
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 fourth quarter of 2019, I am leaving the needle at the same level as in the third quarter. Listing activity has not grown, and this has led to higher prices in general. Although market time has risen, the market still favors 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.
Colorado added 45,800 non-agricultural jobs over the past 12 months, a growth rate of 1.8%. Within the metropolitan market areas included in this report, annual employment growth was seen in all areas other than Grand Junction (where employment was stable) with substantial growth seen in Fort Collins (4.6%) and Greeley (3.5%).
In August, the unemployment rate in the state was 2.2%, down from 3.1% a year ago. The lowest reported unemployment rates were again seen in Fort Collins at just 1.8%. The highest rate was in Grand Junction, at a very respectable 3.0%. It is still reasonable to assume that all the markets contained within this report will see above-average wage growth given the very tight labor market.
HOME SALES ACTIVITY
- There were 17,140 home sales during the third quarter of 2017, which was a drop of 3.3% from the same period in 2016.
- Sales rose the fastest in Boulder County, which saw sales grow 4% more than the third quarter of 2016. There were marginal increases in Weld and Larimer Counties. Sales fell in all the other counties contained within this report.
- Home sales slowed due to very low levels of available inventory. Listing activity continues to trend at well below historic averages, with the total number of homes for sale in the third quarter 5.5% below the level seen a year ago.
- The takeaway here is that sales growth has stalled due to the lack of homes for sale.
- With substantial competition for the few available homes, prices continue to rise. Average prices were up 7.5% year-over-year to a regional average of $428,602.
- Slower appreciation in home values was again seen in Boulder County, but the trend is still positive.
- Appreciation was strongest in Weld County, which saw prices rise 12%.
- Due to an ongoing imbalance between supply and demand, home prices will continue to appreciate at above-average rates for the foreseeable future.
DAYS ON MARKET
- The average number of days it took to sell a home dropped by one day when compared to the third quarter of 2016.
- Homes in all counties contained in this report took less than a month to sell. Adams County continues to stand out as it took an average of just two weeks to sell a home there.
- During the third quarter, it took an average of 20 days to sell a home. This is up by 3 days compared to the second quarter of this year.
- Demand remains strong, and well-positioned, well-priced homes continue to sell very quickly.
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 third quarter of 2017, I have chosen to leave the needle where it was in the second quarter. Homes are still scarce; however, there is a small slowdown in price growth and a decline in both closed and pending sales. This may suggest the market is either getting weary of all the competition or that would-be buyers are possibly putting off buying until they see more choices in the number of homes for sale.
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 more than 30 years of professional experience both in the U.S. and U.K.
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