EconomicMarket Data May 11, 2023

NOCO Gardner Report Q1 2023

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.

Market Data May 2, 2022

Expert Opinion

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 October 6, 2020

Chief Economists Economic Update

Event Invitation

Exclusive Invitation!!!

Tune in on Tuesday, October 6, 2020 at 9:00am to meet with Matthew Gardner, Windermere Real Estate’s Chief Economist LIVE and get your chance to ask him questions. He’ll be discussing the housing market, employment and the effects of COVID-19 on the local and national economy.

As one of the only real estate companies in the US that has a Chief Economist on staff, we have exclusive insights into the housing market, economy and government happenings. This is a one of a kind event for clients and friends of Windermere Real Estate in Colorado.

To sign up, please register at: https://attendee.gotowebinar.com/register/6400354351666419467

(If you can’t attend live, you can register to automatically get the recording.) If you miss it and would like me to send you a copy afterwards feel free to reach out!

Market Data April 18, 2020

Economist Q&A Webinar (Wed 4/22)

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On Wednesday April 22nd you are invited to a special online event with Windermere’s Chief Economist Matthew Gardner.

He will be giving his insights into the U.S. economy and what that means for real estate along the Front Range of Colorado.

You will hear the answers to the biggest questions we are hearing from clients now like “do you think housing prices will crash?”

This event is exclusively for clients and friends of Windermere Real Estate. To receive the registration link simply comment on this blog or reach out to your Windermere real estate broker.

Many of you have heard Matthew speak at our Market Forecast events we hold each year in January. He is famous for making complex economic dynamics very simple to understand.

You will get useful and valuable information which will give you clarity about where the market is headed and when we can expect the economy to improve.

For example Matthew predicts unemployment to hit 15% by the end of June, but then to improve to 8% by year-end and 6% by this time next year.

Again, if you would like the link just comment on this blog or reach out to your Windermere broker.

At Windermere Real Estate we are taking Shelter in Place and Social Distancing very seriously.  Our people are working at home, staying connected to their clients, and providing help wherever needed.

Market DataMortgage January 24, 2020

Interest Rate Forecast

Here is our interest rate Forecast for the next year.

Our Chief Economist, Matthew Gardner, predicts that rates for a 30-year fixed mortgage will stay between 3.8% and 3.9% for 2020.

He doesn’t see rates going above 4.0% until at least the first quarter of 2021.

This is obviously great news for buyers as their payments will stay much lower as compared to having a rate at the long-term average of 7.5%.

If you would like to see the slides from Matthew Gardner’s Forecast presentation, we would be happy to get those in your hands.  Just let us know if we can help!

Uncategorized January 23, 2020

Millennial Home Buyers

Millennials often get a bad rap.  One of the myths about Millennials is that they don’t own homes and will be renters forever.

Not true!  Especially on the Front Range of Colorado.

Based on research by Chief Economist, Matthew Gardner, Millennials make up a significant percentage of all home buyers in Metro Denver and Colorado.

In Metro Denver, 50% of all buyers last year were in the Millennial demographic.

In Northern Colorado, the number is 41%.

It turns out that Millennials, as they move into their mid to late 30’s, see the value of home ownership and are at the point in their lives where it makes sense to own instead of rent.

BuyersMarket Data December 18, 2019

Matthew Gardner’s 2020 Mortgage Rate Forecast

Each year Windermere’s Chief Economist, Matthew Gardner, forecasts into the next. Here’s what he expects for Mortgage Rates in 2020.

 

Market Data December 18, 2019

2020 Economic & Housing Market Forecast

As we head toward the end of the year, it’s time to recap how the U.S. economy and housing markets performed this year and offer my predictions for 2020.

 

U.S. Economy

In general, the economy performed pretty much as I expected this year: job growth slowed but the unemployment rate still hovers around levels not seen since the late 1960s.

Following the significant drop in corporate tax rates in January 2018, economic growth experience a big jump. However, we haven’t been able to continue those gains and I doubt we’ll return to 2%+ growth next year. Due to this slowing, I expect GDP to come in at only +1.4% next year. Non-residential fixed investment has started to wane as companies try to anticipate where economic policy will move next year. Furthermore, many businesses remain concerned over ongoing trade issues with China.

In 2020, I expect payrolls to continue growing, but the rate of growth will slow as the country adds fewer than 1.7 million new jobs. Due to this hiring slow down, the unemployment rate will start to rise, but still end the year at a very respectable 4.1%.

Many economists, including me, spent much of 2019 worried about the specter of a looming recession in 2020. Thankfully, such fears have started to wane (at least for now).

Despite some concerning signs, the likelihood that we will enter a recession in 2020 has dropped to about 26%. If we manage to stave off a recession in 2020, the possibility of a slowdown in 2021 is around 74%. That said, I fully expect that any drop in growth will be mild and will not negatively affect the U.S. housing market.

 

Existing Homes

As I write this article, full-year data has yet to be released. However, I feel confident that 2019 will end with a slight rise in home sales. For 2020, I expect sales to rise around 2.9% to just over 5.5 million units.

Home prices next year will continue to rise as mortgage rates remain very competitive. Look for prices to increase 3.8% in 2020 as demand continues to exceed supply and more first-time buyers enter the market.

In the year ahead, I expect the share of first-time buyers to grow, making them a very significant component of the housing market.

 

New Homes

The new-home market has been pretty disappointing for most of the year due to significant obstacles preventing builders from building. Land prices, labor and material costs, and regulatory fees make it very hard for builders to produce affordable housing. As a result, many are still focused on the luxury market where there are profits to be made, despite high demand from entry-level buyers.

Builders are aware of this and are doing their best to deliver more affordable product. As such, I believe single-family housing starts will rise next year to 942,000 units—an increase of 6.8% over 2019 and the highest number since 2007.

As the market starts to deliver more units, sales will rise just over 5%, but the increase in sales will be due to lower priced housing. Accordingly, new home prices are set to rise just 2.5% next year.

 

Mortgage Rates

Next year will still be very positive from a home-financing perspective, with the average rate for a 30-year conventional, fixed-rate mortgage averaging under 4%. That said, if there are significant improvements in trade issues with China, this forecast may change, but not significantly.

 

Conclusion

In this coming year, affordability issues will persist in many markets around the country, such as San Francisco; Los Angeles; San Jose; Seattle; and Bend, Oregon. The market will also continue to favor home sellers, but we will start to move more toward balance, resulting in another positive year overall for U.S. housing.

 

 

About Matthew Gardner:

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.