Economic • Market Data • May 11, 2023

NOCO Gardner Report Q1 2023

by Brandon Bidwell

The following analysis of select counties of the 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.

Regional Economic Overview

The pace of employment growth in Colorado continues to slow. Though this is not totally unexpected, I will be keeping an eye on it as annual job growth has now fallen below the long-term trend. Over the past year, the region added 46,700 jobs, which is the slowest annual pace since 2012. Part of the reason job growth has slowed so significantly is that the labor market remains extremely tight; the unemployment rate in February was only 2.9%. Regionally, jobless rates ranged from a low of 2.7% in Fort Collins and Boulder to a high of 3.4% in the Grand Junction metropolitan area.

Colorado Home Sales

❱ In the first quarter of 2023, 6,545 homes sold, representing a fall of 23.9% from the same period in 2022. Sales were down 8.4% from the final quarter of 2022.

❱ Year over year, sales fell across all the markets covered by this report except El Paso. Compared to the fourth quarter of 2022, sales fell in all markets except Douglas County, where they rose 2.7%.

❱ The year-over-year decline in sales is not surprising given that mortgage rates started to rise in early 2022, causing a flood of buyers to lock in historically low rates while they could. The quarter-over-quarter sales decline was likely due to the 38.9% drop in active listings, as well as seasonal factors. The market remains tight.

❱ Pending sales, which are an indicator of future closings, jumped 31.8% from the fourth quarter of 2022, suggesting that sales may improve in the second quarter.

A bar graph showing the annual change in home sales for various counties in Colorado from Q1 2022 to Q1 2023. All counties have a negative percentage year-over-year change, except El Paso County at 5.1%. Here are the totals: Larimer at -10%, Clear Creek at -13.3%, Adams -22%, Jefferson -22.8%, Park -23.8%, Douglas -26.7%, Arapahoe -27%, Boulder -27.2%, Weld -28.9%, Denver -33.9%, Gilpin -52.9%.

Colorado Home Prices

❱ The average home price fell 1.8% from the same period in 2022 to $625,213. Prices were .4% lower than in the fourth quarter of 2022.

❱ Compared to the final quarter of 2022, prices rose in Jefferson, Arapahoe, Boulder, Larimer, Gilpin, and Park counties, but fell in the other market areas.

❱ Year over year, prices rose in four counties, but fell in the rest of the markets. Home prices in Gilpin County rose dramatically, but the small size of this market makes it prone to significant swings.

❱ Median listing prices rose 3% compared to the fourth quarter of 2022, suggesting that sellers are not overly concerned by higher financing costs. The fact that both listing prices and sale prices are not falling tells me that the price correction that followed the jump in mortgage rates is likely coming to an end.

A map showing the real estate home prices percentage changes for various counties in Colorado. Different colors correspond to different tiers of percentage change. Clear Creek County has a percentage change in the -16.5% to -8.1% range, Adams, El Paso, Park, Douglas, and Jefferson are in the -8% to -3.1% change range, Denver, Weld, and Arapahoe are in the -3% to 1.9% change range, Larimer and Boulder are in the 2% to 6.9% change range, and Gilpin is in the 7%+ change range.

A bar graph showing the annual change in home sale prices for various counties in Colorado from Q1 2022 to Q1 2023. Most counties have a negative percentage year-over-year change. Here are the totals: Gilpin at 22.8%, Boulder at 6.6%, Larimer 3.9%, Arapahoe 0.8%, Weld -0.9%, Denver -1.1%, Adams -3.4%, Jefferson and Douglas - 5.5%, Park -5.6%, El Paso -7.6%, and Clear Creek -12.7%.

Mortgage Rates

Rates in the first quarter of 2023 were far less volatile than last year, even with the brief but significant impact of early March’s banking crisis. It appears that buyers are jumping in when rates dip, which was the case in mid-January and again in early February.

Even with the March Consumer Price Index report showing inflation slowing, I still expect the Federal Reserve to raise short-term rates one more time following their May meeting before pausing rate increases. This should be the catalyst that allows mortgage rates to start trending lower at a more consistent pace than we have seen so far this year. My current forecast is that rates will continue to move lower with occasional spikes, and that they will hold below 6% in the second half of this year.

A bar graph showing the mortgage rates from Q1 2021 to the present, as well as Matthew Gardner's forecasted mortgage rates through Q1 2024. After the 6.79% figure in Q4 2022 and 6.37% in Q1 2023, he forecasts mortgage rates dipping to 6.26% in Q2 2023, 5.78% in Q3 2023, 5.43% in Q4 2023, and 5.28% in Q1 2024.

Colorado Days on Market

❱ The average time it took to sell a home in the markets contained in this report rose 27 days compared to the same period in 2022.

❱ The length of time it took to sell a home rose across all markets compared to the fourth quarter of 2022 with the exception of Clear Creek County, where market time fell 13 days.

❱ It took an average of 47 days to sell a home in the region, which is an increase of 9 days compared to the fourth quarter of 2022.

❱ Even with limited choice in the market, buyers are being selective and taking their time. It will be interesting to see if the pace of sales picks up as we move further into the spring buying season.

A bar graph showing the average days on market for homes in various counties in Colorado for Q1 2023. Denver County has the lowest DOM at 39, followed by Gilpin at 40, Jefferson and Arapahoe at 41, Larimer, Weld, and Adams at 42, El Paso at 44, Douglas at 46, Clear Creek at 49, Boulder at 52, and Park at 87.

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.

Slowing job growth, the potential for a mild recession this year, and higher financing costs are all impediments to the housing market. However, the market appears to be taking things in stride. Regular readers will be aware that I have been forecasting home prices to soften given all the above factors, which has proved to be accurate. There are signs we may be turning the corner, but we will need to see data from the spring market to confirm if this is the case.

A speedometer graph indicating a balanced market in Colorado in Q1 2023, just a shade toward a buyer's market.

As it stands today, inventory levels, listing prices, pending sales, modestly lower interest rates, and the absorption rate all favor home sellers. However, the number of closed sales, prices, and market time are favoring home buyers. Considering all the data, I do not see the market firmly in favor of either buyers or sellers. However, I see a slight bias in favor of home buyers, so I’ve tipped the needle very slightly in their direction.

About Matthew Gardner

Matthew Gardner - Chief Economist for Windermere Real Estate

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.

Economic • March 1, 2023

Employment & Real Estate

by Brandon Bidwell

As the job market goes, so goes the housing market. This is a fact about any primary housing market.

If employment is growing, the housing market will keep growing.

One of the many positive indicators of the healthy Northern Colorado economy is the fact that the jobs lost during the pandemic have bounced back.

Not only has employment recovered, it now exceeds pre-pandemic levels.

Northern Colorado unemployment is now down to 4.1%.

These facts were reported by our Chief Economist Matthew Gardner during our annual Market Forecast event.

If you would like to see any of the slides from the presentation, please let us know.

Mortgage • February 28, 2023

Mortgage Rate Prediction

by Brandon Bidwell

Our Chief Economist, Matthew Gardner predicts that interest rates will hit 5.4% by the end of 2023.

His prediction is aligned with most expert real estate economists.

While rates will continue to bounce up and down as the year goes on, the general trend will be lower rates.

This prediction is mainly based on the Fed tempering their increases as inflation starts to ease in the second half of the year.

Because of this prediction, we see housing demand increasing as rates decrease throughout the year.

Economic • Market Data • August 23, 2022

2022 Q2 Real Estate Report

by Brandon Bidwell

Regional Economic Overview

Colorado continues to add jobs, but the pace of growth has slowed, albeit modestly. At the time of writing this report, the state’s employment had increased by 124,600 jobs over the past 12 months, which represents an annual growth rate of 4.6%. The state unemployment rate in May was 3.5%. Regionally, unemployment rates ranged from a low of 2.4% in Boulder to a high of 3.4% in the Grand Junction and Greeley metropolitan areas.

Colorado Home Sales

❱ In the second quarter, 12,839 homes sold, a drop of 8% compared to a year ago but 57% higher than in the first quarter of this year.

❱ Year over year, sales rose in only three counties covered by this report and fell in the rest of the region. That said, there was a palpable increase in sales across the board compared to the first quarter of 2022.

❱ The significant jump in sales from the first quarter can likely be attributed to the fact that inventory levels spiked, rising more than 190% from the first quarter.

❱ Pending sales (an indicator of future closings) rose 39% from the first quarter, signifying that the third quarter may show further growth in sales activity.

Colorado Home Prices

❱ The average home sale price ($700,369) was 14.1% higher than the same period in 2021. Prices were also 9.8% higher than in the first quarter of this year.

❱ Price growth remains strong even in the face of significantly higher inventory levels and mortgage rates, which is an impressive achievement.

❱ Year over year, prices rose by double digits across all markets except El Paso and Arapahoe counties. Prices rose in all counties other than Gilpin (-10.3%) and Clear Creek (-1%) from the first quarter.

❱ With the increase in mortgage rates and the number of homes for sale, I have started to watch list prices more closely. Compared to the first quarter, median list prices are lower in 9 of the 12 counties included in this report. Although it’s too early to say whether this is a trend we should be worried about, I will be watching how prices move during the summer, as it may be an indicator that the market is starting to soften.

A bar graph showing the annual change in home sale prices for various counties in Colorado from Q2 2021 to Q2 2022. Clear Creek County tops the list at 23.7%, followed by Denver at 22.3%, Larimer at 18.6%, Douglas at 16.4%, Park at 16.2%, Weld at 15.5%, Adams at 15.2%, Jefferson at 15.1%, Gilpin at 14.2%, Boulder at 11.3%, Arapahoe at 9.9%, and finally El Paso at 7.9%.

Mortgage Rates

Although mortgage rates did drop in June, the quarterly trend was still moving higher. Inflation—the bane of bonds and, therefore, mortgage rates—has yet to slow, which is putting upward pressure on financing costs.

That said, there are some signs that inflation is starting to soften and if this starts to show in upcoming Consumer Price Index numbers then rates will likely find a ceiling. I am hopeful this will be the case at some point in the third quarter, which is reflected in my forecast.

A bar graph showing the mortgage rates from 2020 to the present, as well as Matthew Gardner's forecasted mortgage rates through Q2 2023. He forecasts mortgage rates continuing to climb to 5.9% in Q4 2022, then tapering off to 5.58% in Q1 2023 and 5.53% in Q2 2023.

Colorado Days on Market

❱ The average time it took to sell a home in the markets contained in this report fell eight days compared to the same period in 2021.

❱ The length of time it took to sell a home dropped in six counties, remained static in three, and rose in the other three compared to the same quarter a year ago.

❱ It took an average of only 10 days to sell a home in the region, which is down 15 days compared to the first quarter of the year.

❱ Compared to the first quarter of 2022, average market time fell across the board, with significant drops in Gilpin (-41 days), Park (-25 days), and Clear Creek (-23 days) counties.

A bar graph showing the average days on market for homes in various counties in Colorado for Q2 2022. Arapahoe, Adams, and Jefferson Counties have the lowest DOM at 7, followed by Denver, Douglas, and Clear Creek at 8, El Paso at 9, Larimer at 10, Weld and Boulder at 11, Gilpin at 12, and Park at 17.

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.

The Colorado economy remains robust and continues to grow. As it stands today, I anticipate income growth here will continue to outpace the nation. The 221,000 current job openings in the state are evidence of significant employer demand, which will lead to higher wages. Housing demand is still remarkably strong, even in light of the rapid increase in the number of homes for sale and rising financing costs.

A speedometer graph indicating a medium seller's market in Colorado for Q2 2022.

As mentioned earlier, I will be watching movement in list prices through the summer as they are a leading indicator in respect to the health of the market. Although we saw some softening in the pace of regional list price growth during second quarter and median list prices pulling back in some markets, it is too early to state that this is a pattern. As such, I am leaving the needle in the same position as the first quarter. The growing number of homes for sale and lower list prices in some markets should favor buyers, but this is offset for the time being by solid demand.

About Matthew Gardner

Market Data • May 2, 2022

Expert Opinion

by Brandon Bidwell

This week, take a listen to Matthew Gardner, Windermere’s Chief Economist as he discusses the current state of the housing market.

He takes a deep dive into interest rates, price appreciation and where the market is headed.

You can watch his video HERE

Market Data • April 28, 2021

Q1 Northern Colorado Gardner Report

by Brandon Bidwell

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.

REGIONAL ECONOMIC OVERVIEW

Following the decline in employment last winter, Colorado has started to add jobs back into its economy. The latest data shows that the state has now recovered more than 219,000 of the 376,000+ jobs that were lost due to COVID-19. This is certainly positive, but there is a long way to go to get back to pre-pandemic employment levels. Denver and Fort Collins continue to have the greatest improvement in employment, but all markets show job levels well below pre-pandemic levels. With total employment levels rising, the unemployment rate stands at 6.6%, down from the pandemic peak of 12.1%. Regionally, unemployment levels range from a low of 5.6% in Fort Collins and Boulder to a high of 6.7% in Greeley. COVID-19 infection rates have started to increase again, and this has the potential to negatively impact the job market. I am hopeful that the state will not be forced to pull back reopening, but this is certainly not assured.

COLORADO HOME SALES

❱ 2021 started off on a bit of a sour note, with total sales down 1.2% compared to the same period in 2020. Sales were 29.2% lower than in the final quarter of 2020 as 8,645 homes sold.

❱ Sales were higher in four of the counties contained in this report, were essentially flat in one, and dropped in seven. It was pleasing to see significant sales growth in the large counties of Denver and Adams.

❱ Another positive was that pending sales, which are an indicator of future closings, were 4.8% higher than in the fourth quarter of 2020 and 5% higher than a year ago.

❱ The disappointing number of home sales overall can primarily be attributed to the woeful lack of inventory. Listings in the quarter were down more than 61% year over year and were 40.6% lower than in the fourth quarter of 2020.

COLORADO HOME PRICES

❱ Prices continue to appreciate at a very rapid pace, with the average sale price up 16.5% year over year, to an average of $556,100. Home prices were also 4.4% higher than in the fourth quarter of 2020.

❱ Buyers appear to be out in force, and this demand—in concert with very low levels of inventory—continues to heat the market.

❱ Prices rose over last year across all markets covered by this report, with the exception of the very small Gilpin County. All other counties saw sizeable gains and the trend of double-digit price growth continued unabated.

❱ Affordability levels are becoming a greater concern as prices rise at a far faster pace than wages. Even though mortgage rates have started to rise, they haven’t yet reached the level needed to take some of the heat out of the market.

DAYS ON MARKET

❱ The average time it took to sell a home in the markets contained in this report dropped 20 days compared to the first quarter of 2020.

❱ The amount of time it took to sell a home dropped in every county contained in this report compared to the fourth quarter of 2020.

❱ It took an average of 25 days to sell a home in the region, down one day from the fourth quarter of 2020.

❱ The Colorado housing market remains very tight, as demonstrated by the fact that it took less than a month for homes to sell in all but two counties.

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.

The relatively low level of home sales is not a surprise given how few choices there are for buyers. Sellers are certainly benefitting from strong demand, as demonstrated by the significant price growth. I maintain my belief that there will be an increase in inventory as we move through the year, but it is highly unlikely that we will see a balanced market in 2021.

Given these factors, I am moving the needle a little more in favor of sellers, as demand is likely to continue to exceed supply.

ABOUT MATTHEW GARDNER

Market Data • April 6, 2021

Interest Rate Predicition!?!

by Brandon Bidwell

Windermere’s Chief Economist, Matthew Gardner has made his new mortgage interest rate prediction for 2021.

You can see his breakdown of interest rates and other economic factors by clicking on the image below and watching his newest video.

By the end of the year he predicts rates will rise to 3.63%. By the end of the 3rd quarter, he sees rates at 3.48%.

This would be a 0.5% increase by year-end compared to today.

What this would mean for home buyers is a 5% higher monthly payment compared to today.

Economic • Market Data • October 28, 2020

Housing and Economic Update

by Brandon Bidwell

In this episode Windermere Chief Economist Matthew Gardner dives into three of the latest housing market data releases and gives context to their historical significance.

Economic • Market Data • July 22, 2020

Consumer Confidence in Housing Survey

by Brandon Bidwell

This week Chief Economist, Matthew Gardner, dives into the most recent National Housing Survey results which tell us a lot about consumer confidence both pre- and post-COVID and whether or not they feel this is a good time to buy or sell a home. The results might surprise you.

Economic • Market Data • July 16, 2020

How has the housing market faired through Covid-19?

by Brandon Bidwell

On this week’s episode Chief Economist, Matthew Gardner, analyzes several aspects of the housing market to see how it has fared over the past 16 weeks amid COVID-19.