A year ago this time, this headline wasn't imaginable. We were in the throes of one of the worst recessions of our time and the market was at a near standstill.
But what a difference a year makes. Today our market is seeing drastic signs of recovery and we are finally moving in a positive direction. To build on that momentum, I've put together my top five reasons why I believe it's going to be a good spring real estate market. Only time will tell if my theory is correct but until then, let's take a look at the facts:
1. Tax Credits Are Helping Drive the Entry Level Market - Thanks to the $8,000 first time home buyer tax credit and the $6,500 existing home buyer tax credit, we are seeing some very strong signs of recovery in these two market niches. With the impending expiration set for April 30, we anticipate that the next two months will bring a surge of buyers looking to get in on a home prior to the credit's expiration. That results in good news for our market and will help to decrease some of the surplus inventory and bring greater demand for those entry level sellers.
2. Interest Rates Remain Low - Even though we have seen interest rates tick up a bit in recent months, rates are still relatively low. When rates are low, it means a buyer has increased purchasing power and ultimately can get more home for less money.
3. Affordability Remains High - Due to the market correction we've seen over the last few years, affordability remains quite high. What this means is a larger percentage of individuals are able to purchase a home.
4. Despite Unemployment Figures, Housing Demand Will Eventually Rise - Yes, unemployment figures are high comparative to the earlier part of the decade. In fact, on a national level, the latest counts were approximately 9%, according the United States Bureau of Labor. Here in Colorado we're running at about a 7.7% unemployment rate. While yes I would agree that the number is concerning, on the flipside it means that 93% of Coloradans are employed. If the economic outlook continues to improve, that's going to boost the confidence of the 93%. That's a lot of people who can boost housing demand.
5. Colorado is an Awesome Place to Call Home - It sounds a little trite and yes, I may be a bit biased, but it's a fact. Colorado offers one of the most diverse and unique living experiences and economies in the country. From our beautiful terrain, our diverse blend of activities and our overall thriving economy, we are fortunate to live in somewhat of a thriving microclimate comparative to the rest of the country. That all adds up to a demand for housing that will help to drive our market towards recovery, possibly sooner than other states.
Let me remind all of us that the current housing is in a place of recovery. Overall what we're seeing is a tale of two markets. The luxury market is generally seeing increased inventory and price discounting is the norm. Last I checked we had far above a six-month supply of inventory of our luxury homes. In some cases anywhere from 9-12 months+.
However, if you look at our entry level market, things really haven't slowed down much at all. In fact, in many cases, they're rising! We’re still seeing lots of interest for well-priced properties in good neighborhoods.
Overall, the state of the housing market in Colorado remains relatively healthy and strong and I believe we have a good Spring ahead. Now, let's take a look at this week in real estate:
* Boulder/Longmont - Boulder reported our inventory stayed flat for the last two weeks of February but sales & showings both took big leaps. A solid 30% increase in sales in Boulder county from the first two weeks of the month to the second. Showings on our listings went from 671 to 796, a 20% increase. Our Agents report several multiple offer situations on lower priced properties and foreclosures. Longmont reports buyers are looking. Showings are up 9% week over week. The steady increase in activity continues through February. The best news is the price point of the homes being shown is increasing into the $300,000 plus range. One of our top ten shown properties is on the market for $899,000. It's really good to see this activity! Short sales still continue to enter the market inventory and they remain difficult deals to get closed. Buyers are waiting months and months for these purchases to be completed. Right now, foreclosed are great deals and are often subject to multiple offers.
* Evergreen/Conifer - Conifer reported there were a total of 123 showings for the month with six new listings. Activity is up significantly in the last two weeks with 4 listings going under contract including two with back-up offers. A total of seven buyers put under contract including three of our own listings. A mix of both out of state as well as local buyers including 1st time home buyers. Evergreen reported listing activity continues to increase with 162 showings during the prior two week period for a total of 319 for the month, representing a 28% increase over the same month last year. There were a total of 11 new listings put on the market in February and 10 listings put under contract during the same period. Four buyers put under contract during the prior two week period including one bank REO and one short sale. Increasing activity from local buyers, especially in the mid-range of $400,000 to $800,000.
* Denver Central - Showings are up year over year on our existing inventory. In January & part of February we had a little bit of a lull with first time home buyers but we've had a significant increase in activity during the last 2 weeks of February. The April 30th under contract deadline for the tax credits is fast approaching & buyers are realizing that with low inventory they need to start the process of looking for property now. The inventory shortages in the lower end market has created multiple offer situations for most homes in that market. It might take a couple of offers before Buyers find the right property. Over 50% of the home sales in the Denver metro area continue to be under $250,000. If you're looking to sell a home that is priced under $300,000 this is a great time. This is definitely a great market to move up to a higher priced home. Your financial gain in getting a higher priced home for less should be a big reason to make a move now & take advantage of the slower high-end market.
* Denver West - No information reported.
* Devonshire - Can you believe that March is here and Spring is on its way?! We are definitely feeling the change in the attitudes of buyers & sellers. It's the BEST time to get your home on the market if you have any interest in making a move. Before the end of the tax credit & before interest rates sneak up on us. We believe we'll be seeing motivated buyers out there. With a lack of inventory we need homes on the market right away. Indecision will hurt sellers & prevent them from making a move to their new homes. We're telling sellers to spruce up their homes, declutter all rooms and get ready for activity. We're hearing that there will not be another extension of the tax incentive so time is of the essence. March is upon us and Spring is typically a time for sellers & buyers to be very active in the market.
* Douglas County - Our Southwest Metro office reports our showings have been steadily increasing. Traffic at our open houses has been great. Several agents report great traffic as well as very good leads that have been obtained from their open houses. Our floor calls continue to be great. Several floor Agents have obtained buyers and were able to find homes for them. We're having lots of phone calls & emails regarding the tax credit and buyers wanting to take advantage of it before the deadline. Our mortgage rep is very busy processing approval letters. We're also seeing some movement in homes priced above the $450,000 level as well as the ones listed around $250,000. Our agents are busy and there is a good buzz in the office that March will be a great month.
* El Paso County - Colorado Springs reports seeing an increase in listing activity due to many national news articles stating we're in a recovery and now is the time to sell. Buyers are out actively looking, but do not seem to have the urgency for purchasing since the First Time Homebuyer credit was extended. I think we'll see an uptick in sales activity as we get closer to the April 30th deadline.
* Larimer County - Our Fort Collins/Loveland offices report it's getting busy!! We had an extremely strong showing the last two weeks. We took more listings the last two weeks and put more homes under contract than we had the previous seven weeks. In addition, several homes were subject to multiple offers. I would say that spring is showing strong signs of life and we better hold on for the next couple of months -especially with the first time home buyer & the move up tax credits expiring. There is very little talk of the government extending this fantastic deal. Those interested had better act sooner than later as April 30th is approaching fast. There will be a rush on homes trying to close in the last month!
* North Metro - No information reported.
* Parker - Showings dropped off slightly, however we're still maintaining a strong pace. Listings are coming on strong & there are many contracts being written. Bank-owned listings have dropped off slightly but we anticipate another surge soon.
There's lots of very positive energy in our office right now about the market.
* Southeast Metro - No information reported.
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