Colorado Real Estate Market Update

Housing Market

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

What a difference a quarter makes! Following the massive job losses Colorado experienced starting in February—the state shed over 342,000 positions between February and April—the turnaround has been palpable. Through August, Colorado has recovered 178,000 of the jobs lost due to COVID-19, adding 107,500 jobs over the past three months, an increase of 4.2%. All regions saw a significant number of jobs returning. The most prominent was in the Denver metropolitan service area (MSA), where 78,800 jobs returned in the quarter.

Although employment in all markets is recovering, there is still a way to go to get back to pre-pandemic employment levels. The recovery in jobs has naturally led the unemployment rate to drop: the state is now at a respectable 6.7%, down from a peak of 12.2%. Regionally, all areas continue to see their unemployment rates contract. I would note that the Fort Collins and Boulder MSA unemployment rates are now below 6%. Cases of COVID-19 continue to rise, which is troubling, but rising rates have only slowed—not stopped—the economic recovery. Moreover, it has had no noticeable impact on the state’s housing market.

 

HOME SALES

  • In the third quarter of 2020, 15,065 homes sold. This represents an increase of 20.4% over the third quarter of 2019, and a remarkable 52.7% increase over the second quarter of this year.
  • Home sales rose in all markets other than El Paso compared to the second quarter of 2019. I believe sales are only limited by the number of homes on the market.
  • Inventory levels remain remarkably low, with the average number of homes for sale down 44.5% from the same period in 2019. Listing activity was 17.8% lower than in the second quarter of 2020.
  • Even given the relative lack of inventory, pending sales rose 17.8% from the second quarter, suggesting that closings for the final quarter of the year will be positive.

 

HOME PRICES

  • After taking a pause in the second quarter, home prices rose significantly in the third quarter, with prices up 11.9% year-over-year to an average of $523,193. Prices were up 7.4% compared to the second quarter of this year.
  • Interest rates have been dropping. Although I do not see there being room for them to drop much further, they are unlikely to rise significantly. This is allowing prices to rise at above-average rates.
  • Year-over-year, prices rose across all markets covered by this report. El Paso, Clear Creek, and Gilpin counties saw significant price appreciation. All but four counties saw double-digit price gains.
  • Affordability in many Colorado markets remains a concern, as prices are rising at a faster pace than mortgage rates have been dropping.

DAYS ON MARKET

  • The average number of days it took to sell a home in the markets contained in this report dropped one day compared to the third quarter of 2019.
  • The amount of time it took to sell a home dropped in nine counties, remained static in two, and rose in one compared to the third quarter of 2019.
  • It took an average of 29 days to sell a home in the region.
  • The Colorado housing market continues to demonstrate solid demand, and the short length of time it takes to sell a home suggests buyers are competing fiercely for available inventory.

 

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 for housing is significant, and sales activity is only limited by the lack of available homes to buy. Prices are rising on the back of very competitive mortgage rates and a job market in recovery. I suggested in my second-quarter report that the area would experience a “brisk summer housing market” and my forecast was accurate. As such, I have moved the needle 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.

Posted on October 28, 2020 at 9:52 pm
Windermere Colorado |

Posted on October 29, 2020 at 12:43 pm
Windermere DTC | Posted in Market News | Tagged , , , , , , , , , , , , , ,

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.


Posted on July 23, 2020 at 1:03 pm
Windermere DTC | Posted in Market News |

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 me.

 

A MESSAGE FROM MATTHEW GARDNER

Needless to say, any discussion about the U.S. economy, state economy, or housing markets in the first quarter of this year is almost meaningless given events surrounding the COVID-19 virus.

Although you will see below data regarding housing activity in the region, many markets came close to halting transactions in March and many remain in some level of paralysis. As such, drawing conclusions from the data is almost a futile effort. I would say, though, it is my belief that the national and state housing markets were in good shape before the virus hit and will be in good shape again, once we come out on the other side. In a similar fashion, I anticipate the national and regional economies will start to thaw, and that many of the jobs lost will return with relative speed. Of course, all of these statements are wholly dependent on the country seeing a peak in new infections in the relatively near future. I stand by my contention that the housing market will survive the current economic crisis and it is likely we will resume a more normalized pattern of home sales in the second half of the year.

 

HOME SALES

  • In the first quarter of 2020, 9,189 homes sold. This is an increase of 9.5% compared to the first quarter of 2019. ​
  • Ten counties contained in this report saw sales grow, one remained static, and one saw fewer transactions. Sales rose most in the small Park County area. There was a small drop in sales in El Paso County.
  • The average number of homes for sale in the quarter was down 12.9% from the same period in 2019.
  • Inventory levels have not improved and, given the fallout from COVID-19, it is hard to put a date on when we will see a resumption of normal activity in the housing market. Though sales are sure to return, we may well see a gradual increase in listings rather than a surge.

 

 

HOME PRICES

  • Home prices continue to trend higher, with the average home price in the region rising 6.7% year-over-year to $477,495.
  • Interest rates remain at very competitive levels and are certain to remain well below 4% for the balance of the year. This can allow prices to continue to rise but much will be dependent on the fallout of COVID-19.
  • Appreciation was again strongest in Clear Creek County, where prices rose a remarkable 27.1%. This market is small though and subject to wild swings, so this jump is not surprising. We also saw strong growth in Park County, which rose 21.8%. Home prices rose by double digits in an additional three counties.
  • Affordability remains an issue in many Colorado markets, which could 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 by only one day compared to the first quarter of 2019.
  • It took an average of 46 days to sell a home in the region.
  • The amount of time it took to sell a home dropped in six counties and rose in six counties compared to the first quarter of 2019.
  • The Colorado housing market was performing well before the onset of the pandemic and is likely to resume reasonable performance once we resume normal operations. That said, it will be interesting to see if home sellers or buyers are the first to reengage.

 

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.

Given the current economic environment, I have decided to freeze the needle in place until we see
a restart in the economy. Once we have resumed “normal” economic activity, there will be a period of adjustment with regard to housing. Therefore, it is appropriate to wait until later in the year to offer my opinions about any quantitative impact the pandemic will have on the housing 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.

Posted on April 24, 2020 at 6:11 pm
Windermere Colorado

Posted on May 4, 2020 at 12:56 pm
Windermere DTC | Posted in Market News | Tagged , , , , ,

The Gardner Report – Q4 2019

 

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.

 

ECONOMIC OVERVIEW

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.

 

HOME SALES

  • 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

  • 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.

 

 

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.

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.


Posted on January 28, 2020 at 3:48 pm
Windermere DTC | Posted in Market News |

Gardner Report – Q3 2019

Colorado Real Estate Market Update 2019

 

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. 

 

ECONOMIC OVERVIEW

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.

 

HOME SALES

  • 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

  • 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.

 

 

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.

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.


Posted on October 24, 2019 at 2:09 pm
Windermere DTC | Posted in Market News | Tagged , , , , ,

The Gardner Report – Q1 2019

 

The following analysis of the Metro Denver & Northern Colorado real estate market (which now includes Clear Creek, Gilpin, and Park counties) 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

Colorado’s economy continues to grow with the addition of 44,800 new non-agricultural jobs over the past 12 months. This represents a reasonable growth rate of 1.7%. As stated in last quarter’s Gardner Report, we continue to see a modest slowdown in employment gains, but that’s to be expected at this stage of the business cycle. I predict that employment growth in Colorado will pick back up as we move through the year, adding a total of 70,000 new jobs in 2019, which represents a growth rate of 2.6%.

In February, the state unemployment rate was 3.7%, up from 2.9% a year ago. The increase is essentially due to labor force growth, which rose by more than 84,000 people over the past year. On a seasonally adjusted basis, unemployment rates in all the markets contained in this report haven’t moved much in the past year, but Boulder saw a modest drop (2.7%), and the balance of the state either remained at the same level as a year ago or rose very modestly.

 

HOME SALES

  • In the first quarter of 2019, 11,164 homes sold — a drop of 3% compared to the first quarter of 2018 and down 13.5% from the fourth quarter of last year. Pending sales in the quarter were a mixed bag. Five counties saw an increase, but five showed signs of slowing.
  • The only market that had sales growth was Adams, which rose 4.9%. The rest of the counties contained in this report saw sales decline, with a significant drop in the small Park County area.
  • I believe the drop in the number of home sales is partially due to the significant increase in listings (+45.6%), which has given would-be home buyers more choice and less need to act quickly.
  • As mentioned above, inventory growth in the quarter was significant, but I continue to believe that the market will see sales rise. I expect the second half of the year to perform better than the first.

 

 

HOME PRICES

  • Home prices continue to trend higher, but the rate of growth is tapering. The average home price in the region rose just 2.1% year-over-year to $456,243. Home prices were .3% higher than in the fourth quarter of 2018.
  • I anticipate that the drop in interest rates early in the year will likely get more buyers off the fence and this will allow prices to rise.
  • Appreciation was again strongest in Park County, where prices rose 21.9%. We still attribute this rapid increase to it being a small market. Only Clear Creek County experienced a drop in average home price. Similar to Park County, this is due to it being a very small market, making it more prone to significant swings.
  • Affordability remains an issue in many Colorado markets but that may be offset by the drop in interest rates.

 

 

DAYS ON MARKET

  • The average number of days it took to sell a home in Colorado rose five days compared to the first quarter of 2018.
  • The amount of time it took to sell a home dropped in two counties — Gilpin and Park — compared to the first quarter of 2018. The rest of the counties in this report saw days-on-market rise modestly with the exception of the small Clear Creek market, which rose by 26 days.
  • In the first quarter of 2019, it took an average of 42 days to sell a home in the region, an increase of four days compared to the final quarter of 2018.
  • Job growth drives housing demand, but buyers are faced with more choice and are far less frantic than they were over the past few years. That said, I anticipate the late spring will bring more activity and sales.

 

 

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.

For the first quarter of 2019, I have moved the needle a little more in favor of buyers. I am watching listing activity closely 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 towards a more balanced market.

 

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.


Posted on May 9, 2019 at 10:36 am
Windermere DTC | Posted in Housing Market, Market News | Tagged , , , ,

Investing In a Green Home Will Pay Dividends in 2019

As we step forward into 2019, eco-friendly “green homes” are more popular than ever. Upgrading your home’s sustainability improves quality of life for those residing in it, but it is also a savvy long-term investment. As green homes become more popular, properties boasting sustainable features have become increasingly desirable targets for homebuyers. Whether designing a new home from scratch or preparing your current home for sale, accentuating a house with environmentally-friendly features can pay big dividends for everyone.

While the added value depends on the location of the home, its age, and whether it’s certified or not, three separate studies all found that newly constructed, Energy Star, or LEED-certified homes typically sell for about nine percent more than comparable, non-certified new homes. Plus, one of those studies discovered that existing homes retrofitted with green technologies, and certified as such, can command a whopping 30-percent sales-price boost.

There are dozens of eco-friendly features that can provide extra value for you as a seller. To name a few:

Cool roof

Cool roofs keep the houses they’re covering as much as 50 to 60 degrees cooler by reflecting the heat of the sun away from the interior, allowing the occupants to stay cooler and save on air-conditioning costs. The most common form is metal roofing. Other options include roof membranes and reflective asphalt shingles.

Fuel cells

Fuel cells may soon offer an all-new source of electricity that would allow you to completely disconnect your home from all other sources of electricity. About the size of a dishwasher, a fuel cell connects to your home’s natural gas line and electrochemically converts methane to electricity. One unit would pack more than enough energy to power your whole home.

For many years, fuel cells have been far too expensive or unreliable. But as technology has improved, so too has reliability. Companies like Home Power Solutions and Redbox Power Systems have increased the reliability of these fuel sources while reducing their size. Much like we’ve seen computers and cell phones shrink in size while improving reliability and power, fuel cells continue to be refined.

Wind turbine

A wind turbine (essentially a propeller spinning atop an 80- to 100-foot pole) collects kinetic energy from the wind and converts it to electricity for your home. And according to the Department of Energy, a small version can slash your electrical bill by 50 to 90 percent.

But before you get too excited, you need to know that the zoning laws in most urban areas don’t allow wind turbines. They’re too tall. The best prospects for this technology are homes located on at least an acre of land, well outside the city limits.

Green roof

Another way to keep the interior of your house cooler—and save on air-conditioning costs—is to replace your traditional roof with a layer of vegetation (typically hardy groundcovers). This is more expensive than a cool roof and requires regular maintenance, but young, environmentally conscious homeowners are very attracted to the concept.

Hybrid heating

Combining a heat pump with a standard furnace to create what’s known as a “hybrid heating system” can save you somewhere between 15 and 35 percent on your heating and cooling bills.

Unlike a gas or oil furnace, a heat pump doesn’t use any fuel. Instead, the coils inside the unit absorb whatever heat exists naturally in the outside air, and distributes it via the same ductwork used by your furnace. When the outside air temperature gets too cold for the heat pump to work, the system switches over to your traditional furnace.

Geothermal heating

Geothermal heating units are like heat pumps, except instead of absorbing heat from the outside air, they absorb the heat in the soil next to your house via coils buried in the ground. The coils can be buried horizontally or, if you don’t have a wide enough yard, they can be buried vertically. While the installation price of a geothermal system can be several times that of a hybrid, air-sourced system, the cost savings on your energy bills can cover the installation costs in five to 10 years.

Solar power

Solar panels capture light energy from the sun and convert it directly into electricity. Similarly to wind turbines, your geographical location may determine the feasibility of these installments. Even on cloudy days, however, solar panels typically produce 10-25% of their maximum energy output. For decades, you may have seen these panels sitting on sunny rooftops all across America. But it’s only recently that this energy-saving option has become truly affordable.

In 2010, installing a solar system on a typical mid-sized house would have set the homeowner back $30,000. But as of December 2018, the average cost after tax credits for solar panel installation was just $13,188! Plus, some companies are now offering to rent solar panels to homeowners (the company retains ownership of the panels and sells the homeowner access to the power at roughly 10 to 15 percent less than they would pay their local utility).

Solar water heaters

Rooftop solar panels can also be used to heat your home’s water. The Environmental Protection Agency estimates that the average homeowner who makes this switch should see their water bills shrink by 50 to 80 percent.

Tax credits/rebates

Many of the innovative solutions summarized above come with big price tags attached. However, federal, state and local rebates/tax credits can often slash those expenses by as much as 50 percent. So before ruling any of these ideas out, take some time to see which incentives you may qualify for at dsireusa.org and the “tax incentives” pages at Energy.Gov.

Regardless of which option you choose, these technologies will help to conserve valuable resources and reduce your monthly utility expenses. Just as importantly, they will also add resale value that you can leverage whenever you decide it’s time to sell and move on to a new home.


Posted on January 25, 2019 at 9:33 am
Windermere DTC | Posted in Design, Market News | Tagged , ,

2019 Economic and Housing Forecast

What a year it has been for both the U.S. economy and the national housing market. After several years of above-average economic and home price growth, 2018 marked the start of a slowdown in the residential real estate market. As the year comes to a close, it’s time for me to dust off my crystal ball to see what we can expect in 2019.

The U.S. Economy

Despite the turbulence that the ongoing trade wars with China are causing, I still expect the U.S. economy to have one more year of relatively solid growth before we likely enter a recession in 2020. Yes, it’s the dreaded “R” word, but before you panic, there are some things to bear in mind.

Firstly, any cyclical downturn will not be driven by housing.  Although it is almost impossible to predict exactly what will be the “straw that breaks the camel’s back”, I believe it will likely be caused by one of the following three things: an ongoing trade war, the Federal Reserve raising interest rates too quickly, or excessive corporate debt levels. That said, we still have another year of solid growth ahead of us, so I think it’s more important to focus on 2019 for now.

The U.S. Housing Market

Existing Home Sales

This paper is being written well before the year-end numbers come out, but I expect 2018 home sales will be about 3.5% lower than the prior year. Sales started to slow last spring as we breached affordability limits and more homes came on the market.  In 2019, I anticipate that home sales will rebound modestly and rise by 1.9% to a little over 5.4 million units.

Existing Home Prices

We will likely end 2018 with a median home price of about $260,000 – up 5.4% from 2017.  In 2019 I expect prices to continue rising, but at a slower rate as we move toward a more balanced housing market. I’m forecasting the median home price to increase by 4.4% as rising mortgage rates continue to act as a headwind to home price growth.

New Home Sales

In a somewhat similar manner to existing home sales, new home sales started to slow in the spring of 2018, but the overall trend has been positive since 2011. I expect that to continue in 2019 with sales increasing by 6.9% to 695,000 units – the highest level seen since 2007.

That being said, the level of new construction remains well below the long-term average. Builders continue to struggle with land, labor, and material costs, and this is an issue that is not likely to be solved in 2019. Furthermore, these constraints are forcing developers to primarily build higher-priced homes, which does little to meet the substantial demand by first-time buyers.

Mortgage Rates

In last year’s forecast, I suggested that 5% interest rates would be a 2019 story, not a 2018 story. This prediction has proven accurate with the average 30-year conforming rates measured at 4.87% in November, and highly unlikely to breach the 5% barrier before the end of the year.

In 2019, I expect interest rates to continue trending higher, but we may see periods of modest contraction or levelling.  We will likely end the year with the 30-year fixed rate at around 5.7%, which means that 6% interest rates are more apt to be a 2020 story.

I also believe that non-conforming (or jumbo) rates will remain remarkably competitive. Banks appear to be comfortable with the risk and ultimately, the return, that this product offers, so expect jumbo loan yields to track conforming loans quite closely.

Conclusions

There are still voices out there that seem to suggest the housing market is headed for calamity and that another housing bubble is forming, or in some cases, is already deflating.  In all the data that I review, I just don’t see this happening. Credit quality for new mortgage holders remains very high and the median down payment (as a percentage of home price) is at its highest level since 2004.

That is not to say that there aren’t several markets around the country that are overpriced, but just because a market is overvalued, does not mean that a bubble is in place. It simply means that forward price growth in these markets will be lower to allow income levels to rise sufficiently.

Finally, if there is a big story for 2019, I believe it will be the ongoing resurgence of first-time buyers. While these buyers face challenges regarding student debt and the ability to save for a down payment, they are definitely on the comeback and likely to purchase more homes next year than any other buyer demographic.

Originally published on Inman News.


Posted on January 23, 2019 at 4:32 pm
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How Restrictive Growth Policies Affect Housing Affordability in Many Cities

Windermere Real Estate Chief Economist Matthew Gardner explains how restrictive growth policies are affecting housing affordability in many cities.​


Posted on October 4, 2018 at 9:14 am
Windermere DTC | Posted in Market News | Tagged , , ,

5 Reasons Rising Interest Rates Won’t Wreck the Housing Market

Interest rates have been trending higher since the fall of 2017, and I fully expect they will continue in that direction – albeit relatively slowly – as we move through the balance of the year and into 2019. So what does this mean for the US housing market?

It might come as a surprise to learn that I really don’t think rising interest rates will have a major impact on the housing market. Here is my reasoning:

1. First Time Home Buyers 

As interest rates rise, I expect more buyers to get off the fence and into the market; specifically, first time buyers who, according to Freddie Mac, made up nearly half of new mortgages in the first quarter of this year. First-time buyers are critical to the overall health of the housing market because of the subsequent chain reaction of sales that result so this is actually a positive outcome of rising rates.

2. Easing Credit Standards

Rising interest rates may actually push some lenders to modestly ease credit standards. I know this statement will cause some people to think that easing credit will immediately send us back to the days of sub-prime lending and housing bubbles, but I don’t see this happening. Even a very modest easing of credit will allow for more than one million new home buyers to qualify for a mortgage.

3. Low Unemployment 

We stand today in a country with very low unemployment (currently 4.0% and likely to get close to 3.5% by year’s end). Low unemployment rates encourage employers to raise wages to keep existing talent, as well as to recruit new talent. Wage growth can, to a degree, offset increasing interest rates because, as wages rise, buyers can afford higher mortgage payments.

4. Supply

There is a clear relationship between housing supply, home prices, and interest rates. We’re already seeing a shift in inventory levels with more homes coming on the market, and I fully expect this trend to continue for the foreseeable future. This increase in supply is, in part, a result of homeowners looking to cash in on their home’s appreciation before interest rates rise too far. This, on its own, will help ease the growth of home prices and offset rising interest rates. Furthermore, if we start to see more new construction activity at the lower end of the market, this too will help.

National versus Local

Up until this point, I’ve looked at how rising interest rates might impact the housing market on a national level, but as we all know, real estate is local, and different markets react to shifts in different ways. For example, rising interest rates will be felt more in expensive housing markets, such as San Francisco, New York, Los Angeles, and Orange County, but I expect to see less impact in areas like Cleveland, Philadelphia, Pittsburg, and Detroit, where buyers spend a lower percentage of their incomes on housing. The exception to this would be if interest rates continue to rise for a prolonged period; in that case, we might see demand start to taper off, especially in the less expensive housing markets where buyers are more price sensitive.

For more than seven years, home buyers and real estate professionals alike have grown very accustomed to historically low interest rates. We always knew the time would come when they would begin to rise again, but that doesn’t mean the outlook for housing is doom and gloom. On the contrary, I believe rising interest rates will help bring us closer to a more balanced real estate market, something that is sorely needed in many markets across the country.


Posted on October 3, 2018 at 9:12 am
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