Where are interest rates headed?
This question was one of many which were addressed during our annual Market Forecast yesterday.
Our Chief Economist, Matthew Gardner, provided insight on rates, prices, inventory and many other fascinating topics.
Matthew’s prediction is for rates to creep up to 3.07% by the end of 2021. They are currently at 2.79%.
The image below shows how his prediction compares with predictions of his economist colleagues.
Please let me know if you have questions or if you would like a recording of the full presentation.
Here’s a little perspective on the inventory of homes for sale in today’s market…
First we’ll look at Metro Denver:
- The average number of residential listings for sale at this time of year is 15,577
- The highest-ever for this time of year is 29,722 which occurred in 2006
- The number of listings right now is 4,821
- So, inventory in Metro Denver is roughly one-third of the average and 25,000 fewer than the highest-ever.
- DMAR is the source of the stats listed above
Now, Northern Colorado:
- Larimer County has 802 active listings today
- Based on 10 years of data, this is the lowest it has ever been
- The high in Larimer County occurred in 2010 with 2608 listings so today’s inventory is one-third of what it was 10 years ago.
- Inventory today in Weld County is 727 which isn’t the lowest-ever.
- The lowest during the last 10 years was 2017.
The highest was 2010 with 1791 properties so today there are roughly 1,000 fewer properties to choose from.
Americans spend $400 billion per year remodeling their homes.
So, which remodeling investment gives the best return when it comes to resale value?
It should come as no surprise, especially leading up to Thanksgiving, that the best money to spend upgrading your home is in the kitchen.
It’s the place where most homeowners spend most of their waking hours.
According to the research from the National Association of Realtors, it’s where remodelers will see the biggest return on investment.
Here is the ranking of various projects in terms of the value it adds to the home:
- Complete kitchen remodel
- Kitchen upgrade
- HVAC replacement
- Owner’s suite renovation
- Bathroom renovation
- Finishing a basement
- Adding a bathroom
If you have questions about what your property is worth or what the best remodeling value for your home is feel free to reach out. I’m always happy to share what I’ve learned.
As the days shorten, you can mitigate many mid-winter headaches with some preemptive prep. Proper weatherizing can help protect your home from preventable damage, save money on energy costs, and, most importantly, keep you and your loved ones safe and warm throughout the winter season. Here is a useful checklist to manage your weatherization project. Setting aside some time on a couple of weekend days should be more than enough to knock this out:
Cracks & Leaks
Examine your entire house for any cracks and leaks, from your roof to your baseboards, to your basement and foundation. With unpredictable winter weather, these cracks and leaks are how the outside gets in, causing cold drafts and water damage.
Luckily, most cracks don’t require a professional to handle it. Depending on your house type and age, it’s likely you’ll be able to do it yourself with supplies from your local hardware store.
Windows & Doors:
Gaps and breaks in windows and doors is another way to let the winter in your home, and they can let heat escape, raising your heat bill throughout the season.
Make sure seals are tight and no leaks exist. If you have storm windows, make sure you put them on before the cold season begins. Additionally, add weather-strips and or a door sweep to prevent drafts and keep the heat in.
Clean your rain gutters of any debris. In colder climates, the buildup will cause gutters to freeze with ice, crack and then leak.
Once you have removed the residue from the drains, test them by running hose water to make sure cracks and leaks have not already formed. Even in warmer locales, the buildup can put undue stress on your roof and home.
Protecting your pipes from freezing should be your number one priority this winter. A burst pipe can quickly become a disaster in any home.
Remember to turn off your exterior water source and take in your hose. Internally, wrapping your pipes is a recommended precaution to take.
Annual checks are vital in avoiding dangers such as house fires. Replace filters if you use a furnace and clear out any vents and ducts that carry heat through them. If you have baseboard heat, wipe them of dust and remove any debris that might catch fire.
Fireplace & Wood Burning Stoves:
Make sure to have chimneys and air vents cleaned early in the season if you are planning on warming your home with a wood-burning source. When your fireplace is not in use make sure to close the damper, some resources estimate an open damper can increase energy consumption by as much as 30%, increasing your bill about $200.
Bring your patio furniture inside or cover it for the winter. Don’t forget other, smaller items such as your tools, including the hose and planting pots. Clear out any piles around the side of your house, checking for cracks and holes in your home and foundation as you go so to avoid providing shelter for unwelcome guests over the cold season.
If your property has large trees check for loose branches and call someone to trim back any limbs that may fall in your yard, on your roof or even damage a window.
Lastly, make sure your emergency kit is up to date with provisions, batteries, fresh water, food for animals, entertainment for kids – especially if you live in an area prone to power outages.
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 agent.
What a difference a quarter makes! Following the massive job losses Colorado experienced starting in February—the state shed over 342,000 positions between February and April—the turnaround has been palpable. Through August, Colorado has recovered 178,000 of the jobs lost due to COVID-19, adding 107,500 jobs over the past three months, an increase of 4.2%. All regions saw a significant number of jobs returning. The most prominent was in the Denver metropolitan service area (MSA), where 78,800 jobs returned in the quarter.
Although employment in all markets is recovering, there is still a way to go to get back to pre-pandemic employment levels. The recovery in jobs has naturally led the unemployment rate to drop: the state is now at a respectable 6.7%, down from a peak of 12.2%. Regionally, all areas continue to see their unemployment rates contract. I would note that the Fort Collins and Boulder MSA unemployment rates are now below 6%. Cases of COVID-19 continue to rise, which is troubling, but rising rates have only slowed—not stopped—the economic recovery. Moreover, it has had no noticeable impact on the state’s housing market.
- In the third quarter of 2020, 15,065 homes sold. This represents an increase of 20.4% over the third quarter of 2019, and a remarkable 52.7% increase over the second quarter of this year.
- Home sales rose in all markets other than El Paso compared to the second quarter of 2019. I believe sales are only limited by the number of homes on the market.
- Inventory levels remain remarkably low, with the average number of homes for sale down 44.5% from the same period in 2019. Listing activity was 17.8% lower than in the second quarter of 2020.
- Even given the relative lack of inventory, pending sales rose 17.8% from the second quarter, suggesting that closings for the final quarter of the year will be positive.
- After taking a pause in the second quarter, home prices rose significantly in the third quarter, with prices up 11.9% year-over-year to an average of $523,193. Prices were up 7.4% compared to the second quarter of this year.
- Interest rates have been dropping. Although I do not see there being room for them to drop much further, they are unlikely to rise significantly. This is allowing prices to rise at above-average rates.
- Year-over-year, prices rose across all markets covered by this report. El Paso, Clear Creek, and Gilpin counties saw significant price appreciation. All but four counties saw double-digit price gains.
- Affordability in many Colorado markets remains a concern, as prices are rising at a faster pace than mortgage rates have been dropping.
DAYS ON MARKET
- The average number of days it took to sell a home in the markets contained in this report dropped one day compared to the third quarter of 2019.
- The amount of time it took to sell a home dropped in nine counties, remained static in two, and rose in one compared to the third quarter of 2019.
- It took an average of 29 days to sell a home in the region.
- The Colorado housing market continues to demonstrate solid demand, and the short length of time it takes to sell a home suggests buyers are competing fiercely for available inventory.
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.
Demand for housing is significant, and sales activity is only limited by the lack of available homes to buy. Prices are rising on the back of very competitive mortgage rates and a job market in recovery. I suggested in my second-quarter report that the area would experience a “brisk summer housing market” and my forecast was accurate. As such, I have moved the needle a little more in favor of home sellers.
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.
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.
Image Source: Canva
Most of us tend to think of air pollution as something that occurs outdoors where car exhaust and factory fumes proliferate, but there’s such a thing as indoor air pollution, too. Since the 1950s, the number of synthetic chemicals used in home products have increased drastically, while homes have become much tighter and better insulated. As a result, the EPA estimates that Americans, on average, spend approximately 90 percent of their time indoors, where the concentrations of some pollutants are often two to five times higher than typical outdoor concentrations.
Luckily, there are many ways to reduce indoor air pollution. We all know that buying organic and natural home materials and cleaning supplies can improve the air quality in our homes, but there are several other measures you can take as well.
How pollutants get into our homes
Potentially toxic ingredients are found in many materials throughout the home, and they leach out into the air as Volatile Organic Compounds, or VOCs. If you open a can of paint, you can probably smell those VOCs. Mold is a VOC that can build up in the dampest parts of your home like the laundry room or crawl spaces. Another example is the “new car smell” that seems to dissipate after a while, but VOCs can “off-gas” for a long time, even after a noticeable smell is gone.
Many materials used to build a home contain chemicals like formaldehyde, toluene, xylene, ethanol, and acetone, and even lead. VOCs can also be in the form of pet dander or dust. Fortunately, VOCs from building materials dissipate over time. For that reason, the highest levels of VOCs are usually found in new homes or remodels. If you are concerned about VOCs, there are several products you can buy that are either low- or no-VOC. You can also have your home professionally tested.
How to reduce VOCs in your home
Choose your building materials wisely
- – Use tile or solid wood for flooring—hardwood, bamboo, or cork
- – Choose solid wood or outdoor-quality plywood that uses a less toxic form of formaldehyde.
- – Choose low-VOC or VOC-free paints and finishes
Purify the air
- – Make sure your rooms have adequate ventilation, air out newly renovated areas for at least a week
- – Clean ductwork and furnace filters regularly
- – Install air cleaners if needed
- – Use only environmentally responsible cleaning chemicals
- – Plants are a natural solution to help clean the air
- – Air out freshly dry-cleaned clothes or choose a “green” cleaner
Pick the right carpet
- – Choose “Green Label” carpeting or a natural fiber such as wool or sisal
- – Use nails instead of glue to secure carpet
- – Install carpet LAST after completing painting projects or wall coverings
- – Air out newly carpeted areas before using
- – Use a HEPA vacuum or a central vac system that vents outdoors
- – Clean up water leaks fast
- – Keep humidity below 60 percent, using dehumidifiers if necessary
- – Refrain from carpeting rooms that stay damp
- – Insulate pipes, crawl spaces, and windows to eliminate condensation
- – Use one-half cup of bleach per gallon of water to kill mold in its early stages
If you would like to learn more about VOCs and indoor air quality, please visit http://www.epa.gov/iaq/.
We just completed a review of the September numbers in our market.
Here is the one number that is standing out to us – average price.
Prices are way up over last year. Here are the specific average price increases in each of our markets compared to September 2019:
- Metro Denver = 13.2%
- Larimer County = 16.9%
- Weld County = 7.4%
This change in prices has of course generated questions from our clients.
To help our clients answer questions about prices and other real estate topics, we have set up a private online event with our Chief Economist Matthew Gardner.
The event is set for Tuesday from 9:00 to 10:00.
Here is the registration link: https://attendee.gotowebinar.com/register/6400354351666419467
Matthew will be addressing these questions as well as many others:
- What effect will the election have on the economy and on real estate?
- How long can interest rates stay this low?
- Can prices keep appreciating at their current pace?
This online event is for the clients and friends of Windermere. If you would like more information feel free to reach out!
Image Source: Canva
When it comes time to sell your home, first impressions are crucial. Improving your curb appeal helps to make the most of a buyer’s first glance and sets the stage for their interest in purchasing your home. The following projects are simple and inexpensive ways to enhance both your home’s first impression and its value.
- Lawn: A healthy, well-tended lawn goes a long way towards improving your curb appeal. Clean up all weeds, leaves and debris, and consistently water your lawn to give it that fresh green look. If you live in an arid climate, consider grass alternatives like artificial turf for the best lawn aesthetic.
- Plant colorfully: Adding color variety to your front yard will grab buyers’ attention. Align smaller plants, like groundcover and flowers, neatly within your flower beds, aiming for symmetry when possible. Use larger plants and trees to frame in your entryway or walkup. If your front yard doesn’t have flower beds, try adding hanging planters or window boxes.
- Lighting: Landscaping lighting boosts your curb appeal during nighttime, accentuates your shrubbery, and adds a welcoming touch for visitors as potential buyers, lighting the way to your door.
Image Source: Canva
Front porches set the stage for all your home has to offer. Improvements here will play a significant role in how comfortable potential buyers feel about the property and how inspired they are to explore the inside of the house.
- Door: Your front door is an opportunity to make a tasteful statement. Look at bold color choices that are within or slightly stretch your home’s exterior color palette. Take time to prepare the surface for a fresh coat of paint to make the color pop as much as possible. Try stylish doorknob options that accentuate the aesthetic to give your door some added flair.
- House numbers: New and stylish house numbers are an easy, eye-catching touch to the look of your porch. Look for styles that match with your exterior color palette and any exterior lighting fixtures.
- Go for comfort: Incorporating classic front porch elements like a porch swing, sitting bench, and other outdoor furniture gives a welcoming aura to the front of your home and creates a sense of comfort for prospective buyers.
- Shutters: Windows are the gateway to the inside of your home. Shutters of delicate fabric will bring elegance to your front porch, while wooden shutters deliver a solid, cozy vibe.
These miscellaneous projects will add the finishing touches to your home’s curb appeal and get it in prime selling condition.
- Quick maintenance: Small chores and minor fixes like cleaning gutters, repairing chipped paint, and cleaning windows are important for buyers with a detailed eye.
- Staining: Instead of replacing fences or garage doors, look into applying a fresh stain. This brings a refreshed look and is much cheaper than a full renovation or replacement.
- Power wash: Power washing your walkways and driveways makes a significant difference in curb appeal. If buying a power washer is outside your budget, explore rental options from the big-name hardware stores.
If you have particular questions about your property feel free to ask me what you can do to improve your home’s value and curb appeal. I’m always happy to share what I’ve learned.
Image Source: Shutterstock
For some home buyers, a fixer-upper is their idea of a dream home. Preparing for the process comes down to creating a plan, knowing what to look for, and understanding what financing options are available.
Create a plan
Fixer-uppers require a future-oriented mindset. Knowing the magnitude of the project you and your household are willing to take on will help dictate your budget and expectations as time goes on. Understand that in addition to the down payment and closing fees, the costs inherent in a fixer-upper purchase have the potential to go over-budget easily. Familiarize yourself with permitting in your area to understand how to navigate any legal roadblocks in the renovation process.
What to look for
Location: Whether you are purchasing a fixer-upper with plans to sell it, rent it out, or live in it, consider its location before purchasing. If you’re planning on selling or renting, location is one of the most important factors to making a return on your investment. And if you’re planning to live in your fixer-upper, keep in mind that location will be a large part of your experience in the home.
Scope of renovation: If you are looking for a smaller scale renovation, look for fixer-uppers that require cosmetic projects like new interior and exterior paint, fresh carpeting and flooring, appliance upgrades, and basic landscaping maintenance. More expensive and involved projects include reroofing, replacing plumbing and sewer lines, replacing HVAC systems, and full-scale room remodels.
Inspections: Beyond a standard home inspection, which covers components of the home like its plumbing and foundation, consider specialized inspections for pests, roof certifications, and engineering reports. This will help differentiate between the property’s minor flaws and critical problems, further informing your decision when it comes time to prepare an offer.
Renovation loans allow buyers to finance the home and the improvements to the home together. Extra consultations, inspections, and appraisals are often required in the loan process, but they help guide the work—and thereby, added value—of your fixer-upper. Talk with your lender about which option is best for you.
- FHA 203(k): The Federal Housing Administration’s (FHA) 203(k) loans can be used for most projects in the process of fixing up a home. In comparison to conventional mortgages, they accept lower incomes and credit scores.
- VA renovation loan: With this loan, the cost of the improvement projects is combined into the loan amount for the home purchase. Contractors employed in any renovations must be VA-approved, and a construction fee may be charged by the lender.
- HomeStyle Loan – Fannie Mae: The HomeStyle Renovation Loan can be used by home buyers purchasing a fixer-upper, or by homeowners refinancing their homes to cover the improvements. Funds are distributed directly to contractors via a separate escrow account. This loan also allows for luxury projects, such as pools and landscaping.
- CHOICERenovation Loan – Freddie Mac: This renovation mortgage is guaranteed by Freddie Mac, allowing projects that bolster a home’s ability to withstand natural disasters.