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What Our Expert Think
Here’s what our Chief Economist, Matthew Gardner, thinks about the 2019 U.S. Housing Market. He is regarded as one of the Country’s experts on real estate and is frequently quoted by leading industry publications.
• Existing Home Sales up 1.9% to 5.4 million units
• Home Prices up 4.4%
• New Home Sales up 6.9% to 695,000 (the highest since 2007)
If you want to see all of Matthew’s predictions including where interest rates are headed, get signed up for our annual Forecast. Click the link below!
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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.
ECONOMIC OVERVIEW
It’s good news for the state of Colorado, which saw annual employment grow in all of the metropolitan markets included in this report. The state added 63,400 non-agricultural jobs over the past 12 months, an impressive growth rate of 2.4%. Colorado has been adding an average of 5,300 new jobs per month for the past year, and I anticipate that this growth rate will continue through the balance of 2018.
In February, the unemployment rate in Colorado was 3.0%—a level that has held steady for the past six months. Unemployment has dropped in all the markets contained in this report, with the lowest reported rates in Fort Collins and Denver, where 3.1% of the labor force was actively looking for work. The highest unemployment rate was in Grand Junction, which came in at 4.6%.
HOME SALES ACTIVITY
- In the first quarter of 2018, there were 11,173 home sales—a drop of 5.6% when compared to the first quarter of 2017.
- With an increase of 5.3%, home sales rose the fastest in Boulder County, as compared to first quarter of last year. There was also a modest sales increase of 1.2% in Larimer County. Sales fell in all the other counties contained within this report.
- Home sales continue to slow due to low inventory levels, which were down 5.7% compared to a year ago.
- The takeaway here is that sales growth continues to stagnate due to the lack of homes for sale.
HOME PRICES
- Strong economic growth, combined with limited inventory, continued to push prices higher. The average home price in the markets covered by this report was up by 11.7% year-over-year to $448,687.
- Arapahoe County saw slower appreciation in home values, but the trend is still positiveand above its long-term average.
- Appreciation was strongest in Boulder County, which saw prices rise 14.8%. Almost all other counties in this report experienced solid gains.
- The ongoing imbalance between supply and demand persists and home prices continue to appreciate at above-average rates.
DAYS ON MARKET
- The average number of days it took to sell a home dropped by three days when compared to the first quarter of 2017.
- Homes in all but two counties contained in this report took less than a month to sell. Adams County continues to stand out where it took an average of just 17 days to sell a home.
- During the first quarter, it took an average of 27 days to sell a home. That rate is down 2 days from the fourth quarter of 2017.
- Housing demand remains strong and would-be buyers should expect to see stiff competition for well-positioned, well-priced homes.
CONCLUSIONS
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 first quarter of 2018, I have left the needle where it was in the fourth quarter of last year. Even as interest rates trend higher, it appears as if demand will continue to outweigh supply. As we head into the spring months, I had hoped to see an increase in the number of homes for sale, but so far that has not happened. As a result, the housing market continues to heavily favor sellers.
Do You Have ‘Average’ Credit? If so, Getting a Mortgage May Be Tough
This article originally appeared on Inman.com
In the early 2000s, getting a mortgage was hardly difficult thanks in great part to lax lending standards.
This practice eventually led to a bubble forming in the nation’s housing market — which, as we all know, subsequently burst.
Since that time, the pendulum has swung the other way — to an extreme.
Today, lenders require nothing short of pristine credit to obtain a mortgage. We can never return to the reckless lending policies of the past, but I believe they’ve gone too far, and it concerns me.
What will your credit score get you?
I took a look at data produced by the Federal Reserve and was shocked by what I saw. Of the $426.6 billion in mortgage origination during the second quarter of this year, almost 62 percent went to households with a credit rating of 760 or higher.
Borrowers with a credit score in the range of 620 to 659, which many lenders view as below-prime credit, received just 6.3 percent of the dollar volume of mortgages in the second quarter.
Now, when we compare that with the same quarter of 2004, the group with 760-or-higher credit received 23.5 percent of the mortgages, and the 620-to-659 borrowers received 8 percent.
Although surveys say credit is loosening for some types of loans, standards are still far tighter than necessary.
Too risk-averse?
The data raises questions about whether regulators and banks have become too risk-averse. It’s also possible that borrowers without prime credit have just given up owning a home for now.
Figures from property-data provider CoreLogic show that home-purchase mortgage applications from borrowers with credit scores below 640 fell to 6 percent in 2015, from 29 percent in 2005. In other words, lower-rated borrowers aren’t even applying.
But why?
Rising home values might simply be putting property out of reach for a lot of lower-income people.
For example, prices in Seattle are up 55 percent from their 2012 post-crisis low, according to the Case-Shiller Index. Nationally, prices are up 35 percent from their 2012 low.
Higher prices require larger down payments and bigger mortgage payments, especially for borrowers with lower credit scores.
But equally as culpable as rising home prices are homeowners who went through a foreclosure between 2004 and 2015.
Of these 7 million homeowners, only 7.3 percent have obtained a mortgage again, and 69 percent still have a foreclosure on their credit score, thus precluding them from buying again.
The market is making it remarkably hard for many families to buy a home.
I would never suggest that we consider returning to the “old days” of sub-prime lending, but understanding that there are a large number of families who want to buy — and who meet acceptable standards for risk — should give lenders some pause for thought.
Matthew Gardner is the Chief Economist for Windermere Real Estate, the second largest regional real estate company in the nation. Matthew specializes 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 over 25 years of professional experience both in the U.S. and U.K.
