Colorado Market Insights
for the month of September 2015
There are times when every compass needle points south but you are definitely heading in a northerly direction. That is a bit how this summer season real estate market has felt. While the main headlines and even isolated monthly statistics could easily leave a dismal impression, the seasonal numbers taken all together tell a much happier story.
While June and July suffered some lower numbers than anticipated concerning resale and housing starts, add in the August end of season sales and you discover it has in fact painted a rather pretty summer season picture.
Financial analysts keep insisting that interest rates will begin ticking upwards soon enough, but for now, these low rates are buoying consumer demand in the mortgage industry.
The tighter real estate inventories have created a false ceiling to contend with as well. Consider there were just 6,474 active listings in Colorado’s Front Range as compared to 7,289 last year! Low inventory effectively keeps the sale numbers from rising in any significant way that would shake off the gloomies in the market; but – and this is an important caveat – strong employment growth coupled with slow but steady economic growth, coupled with steady supply/demand by ready, willing and able consumers are feeding optimistic expectations.
The buyers continue to swarm, there just aren’t enough hives to go around. While this causes house prices to rise and makes sellers happy, so far it hasn’t caused enough of them to flood the market with more resale homes.
However, new construction has begun making a strong break out statement in the real estate market. New homes sales nationally are expected to rise almost 26% over last year. This upsurge in new housing in Colorado is a welcome relief for many buyers and includes new design concepts based on consumer preferences.
One such design accommodates multiple generations of family banding together and purchasing one big home. Not a duplex and not a traditional multi-family unit, the design allows grandparents live-in access to their grandkids, alleviates financial stresses on the traditional two parent household, and yet grants privacy to each generation.
The August residential real estate median sale price of $326,970 reflects this stable economic growth. Resale averages finished the summer season strong at 5,598 housing units sold and closed this month after a short median time of 12 days on the market. Sale prices jumped from a median of $289,122 last year at this same time.
These robust spring and summer market statistics continue to reflect that self-correction we know happens in the normal cycles of real estate seasons.
Along with increased demand for new built housing, another trend we’re experiencing is increased remodeling resulting in income property. Those once upon a time in-law apartments are transforming into above garage, garage conversions, attic remodels and basement refinishing for self-contained rentable income units within the family home.
While sellers seek ways to generate greater equity gains, buyers remain constrained by inventory levels. Rising rental costs, with Colorado at almost three times the national average, are pushing more buyers into the marketplace.