It’s true, certain parts of our market are cooling off. We are seeing fewer multiple offers, fewer bidding wars, and fewer inspection concessions.
However, homes that are priced right and in great condition are selling, and in many cases, selling quickly.
As buyers feel the market cool a bit, it may cause them to want to wait. They sometimes feel like it’s a better choice to ‘wait and see what happens.’
The reality is, there is a real cost to waiting given two specific facts.
1. Interest rates will continue to rise
2. Prices will continue to rise
Interest rates are a little more than 0.5% higher than a year ago and experts predict them to be another 0.5% higher by this time next year.
Prices have been appreciating at roughly 10% per year for the last four years. Based on the numbers, we see that appreciation could be 5% per year for the next two years.
So, let’s look at a house priced at $450,000 today. If prices go up “only” 5% for the next 12 months, that home will cost $22,500 more in a year.
And, if rates go up another half percent, the monthly payment will be $206 higher. That’s an 11% increase!
In an environment of rising prices and rising rates, there is a real cost to “wait and see.”
The Zillow Group just completed an extensive survey of home buyers and sellers. Here are some interesting takeaways from the research:
- Half of today’s home buyers are under the age of 36, and 47 percent are first-time buyers. Solo home buyers are in the minority; most buyers are shopping with a spouse or partner (73 percent).
- Eighty-three percent of buyers are shopping for a single-family house. Their top considerations are affordability and being in a safe neighborhood.
- Today’s sellers are most often members of Generation X (38 percent), and the majority (63 percent of all sellers) are listing a home for the first time.
- Most sellers are trading their homes for one they see as an upgrade, seeking a median of 100 more square feet and a home that costs an average of 11 percent more.
- Sellers’ top regret was that they didn’t take more time to prepare for a sale (30 percent). (By the way, Windermere’s Certified Listing is a proven 10-step process which prepares both the home and our clients for the sale. Let us know if you want to know more about it.)
A new report from Veros Real Estate Solutions, which works in enterprise risk management and collateral valuation services, shows the strongest and weakest markets for the next 12 months ending in Sept. 1, 2017.
Their Top 5 Markets:
At the bottom of their list is… Atlantic City.
Where are the hottest markets in Northern Colorado?
Hint – it starts with “W”
Turns out the communities with the largest increase in year over year sales are… (drum roll please)
All other NoCo communities are flat or lower than last year.
For example, Boulder transactions are down 9% compared to 2015.
So, while prices are up everywhere, only two places have seen more sales than last year.
It’s not just temperatures cooling off as we transition from summer to fall, there are signs that the market is cooling as well.
Fort Collins had their slowest August since 2011 with 206 single family sales. This is 13% lower than last year.
This is good news for buyers who may have been reluctant to enter the multiple-offer frenzy that occurred this past spring. It looks like we are moving toward a more “normal” market.
With fall right around the corner many of us will be trekking up to Estes Park to see the Aspen leaves turning.
As you drive through Estes you may wonder “how’s the mountain market?”
Here are some fun facts about real estate in Estes Park.
- The average price today is $394,046 – not that different than Fort Collins.
- Average prices have gone up $60,000 in the last three years.
- Their market has about 300 sales per year- roughly a tenth of the amount in Fort Collins.
- If you were looking for a home in Estes between $300,000 and $500,000, you would have 15 to choose from.
Now you know about the Mountain Market!
After a very active (to say the least) spring and summer, the door has now opened for buyers in our market.
Buyers who were frustrated during the first half of the year with low inventory and bidding wars now realize a better environment. It’s time to step off the sidelines and take a fresh look at what the market has to offer.
The first piece of good news is that rates have dropped to near all-time lows. Rates today are 0.6% lower than they were on January 1st. What this means on a $400,000 home with a conventional loan is a monthly savings of $110!
The second piece of good news is that inventory levels are coming up. There are more homes on the market to pick from and lower demand because of seasonal slowing. Months of inventory in Larimer County markets have bounced up 20% to 33%.
August marks the end of the busy real estate selling season and the beginning of the traditional seasonal slowdown in our market.
The four months of April, May, June and July tend to produce 45% of the year's total sales. This is based on looking back at 5 years of data.
If 2016 holds true to form, the next five months from now until the end of the year will be progressively slower.
No surprise that December tends to be the slowest month with a third of the number of sales compared to a typical July.
Here's what we will be watching closely over the next few months – is this year's seasonal slowdown "normal", or, because the market has been so hot this year, is it breaking traditional trends.
We will be sure to keep you informed!
Our market is under-supplied. Plain and simple. There is a 1 to 2-month supply of homes across Northern Colorado. A balanced market would have 6 months.
Builders are faced with high land costs, high materials cost, high labor costs, high permitting costs and high water costs. It’s pretty much impossible, in most parts of our market, to deliver a new home under $400,000.
So, condominiums to the rescue right? Not so fast. Because of onerous construction defect laws, developers do not want to build multi-family, for sale product. It’s too risky. They’d rather build apartments.
Our market is under-supplied. Plain and simple.
This is really good news if you are a seller who wants to move up. This is especially good news if you are a seller of a condominium.
Contact us to find out what our under-supplied market has done to the value of your home. We’ll put together an Equity Snapshot which will show you, in detail, what your home is worth in today’s market. It’s valuable information to have whether you are thinking of selling or not. Just call 970-460-3033 or e-mail us at firstname.lastname@example.org.