Buyers Archives - Page 14 of 16 - Fort Collins Homes

Northern Colorado Employment

One question we get asked is: “What drives our current real estate market, and why is there so much demand”? There are many facets to that answer, but historically, the biggest component has been employment in Northern Colorado. It is no secret that Northern Colorado has enjoyed a robust economy for the last few years, and the forecasts claim we can expect more of the same for the foreseeable future.

As a general rule, employment trending higher leads to increased housing demand 12-18 months later. Colorado has been adding 60,000-70,000 jobs annually, and more locally. Larimer County added about 5,880 jobs in 2015 (a 4.3% increase over 2014), and Weld County added about 6,515 jobs in 2015 (a 6.8% increase over 2014). The energy sector in Weld County has slowed, but some of the energy jobs have gone into construction jobs for the new construction industry. University of Colorado Leeds School of Business predicts total job growth for Colorado of 65,100 in 2016, up 2.5%.

The largest private sector employers to date in Northern Colorado are:

1. University of Colorado Health
2. Hewlett Packard
3. Avago Technologies
4. Banner Health
5. Woodward Governor

The industries that seem to be in the “boom” category are: construction, education and health services, finance, insurance and real estate, and there is good growth in the manufacturing sector. In addition, there is good growth in new business formation according to Rich Wobbekind, executive director of the Business Research Division at the University of Colorado Boulder’s Leeds School of Business. He predicts slightly slower growth than in 2015, but still very robust growth in any historical context.

Contact an agent for more economic information about Northern Colorado, and questions you have about your personal real estate goals!

Colorado Population is… Growing!

You sense it when driving or looking for a home to buy or rent. And, you are right! 100,000 people are estimated to have moved to Colorado between July 2014 and July 2015, according to US Census Bureau data released in December 2015. The Colorado population is now estimated at 5.4 million. Since 2010, Colorado’s population has increased by 408,000, ranking 7th in the US for total population change, and adding more residents than the population of Larimer County. Natural population increase (births and deaths) represented 32,000 of the recent increase, and the remaining 68,000 came from net migration — more people moving into the state than leaving.

Why is Colorado population increasing?

Low unemployment: The Colorado unemployment rate hit 3.6 percent in November 2015, compared with 5 percent nationally, according to the US Bureau of Labor Statistics. Colorado was among the top 5 states in 2014 for job gains. Although job gains have decreased since 2014, the population is expected to see another 100,000 increase in 2016.

Legalized marijuana: Commercial brokers and marijuana enthusiasts in the Denver area point to the marijuana industry as a source of increasing population. Millennials are attracted by the legal access to pot, and out-of-state entrepreneurs see opportunities to benefit from the growing industry.

The same reasons many of us moved to Colorado: the mountains, year round outdoor recreation, job relocation, arts and culture, and a diverse economy (think aerospace to craft breweries).

How Does Increasing Population Affect Real Estate?

Increased housing costs: The cost of housing in post-recession Colorado has increased dramatically. Consumers face strong competition both for rental housing and home purchases, driving rental rates to unaffordable levels for many families, and creating price “bidding wars” for buyers. Increased housing costs also reflect the lack of affordable entry-level housing.

Lack of housing: The amount of available housing has been outpaced by new household formation in recent years. In 2015, household formation was estimated at 45,300 while new housing units were estimated to be 25,000. New construction dropped significantly during the recession and still has not returned to pre-recession levels. As of July 2015, only 2% of new construction was available with pricing affordable to middle-class Coloradans. One impediment to entry-level condo development in Fort Collins and beyond is the state’s construction-defects law that allows condo owners to sue developers over construction defects, and created a shift to luxury priced housing. In 2015, proposed legislation in Colorado was drafted that would encourage condo development by changing current laws. However, the legislation failed, leaving an unresolved and ongoing challenge for entry level housing inventory.

Solutions?

From the state (www.housingcolorado.org) to the local level (http://www.fcgov.com/socialsustainability), affordable housing groups are actively pursuing needed policy changes and legislative action to address challenges facing the real estate industry as our population continues to increase.

Sources: The Prowers Journal; Kathie Barstnar, NAIOP Commercial Real
Estate Development Association; Elizabeth Garner, The Denver Post
Business; Arielle Milkman, New Republic

Want more information?

Colorado Population | census.gov
Colorado Population in the Last 12 Months | DenverPost.com
What Drives Real Estate? | Investopedia.com

Big Expectations for Housing in 2016

Housing

Do signs point to another housing boom? Perhaps — home sales are poised to zoom to the highest levels since 2006 next year, according to a 2016 housing forecast issued by REALTOR.com.

Gains in new-home construction and existing home sales are both expected to push total home sales to the highest levels in years. The new-home construction market is expected to see the most gains in 2016, with REALTOR.com forecasting a 12 percent year-over-year increase in housing starts and a 16 percent year-over-year growth in new home sales. The gains in existing-home sales are expected to be more moderate, with expectations of a 3 percent year-over-year gain.

“Next year’s moderate gains in existing prices and sales, versus the accelerated growth we’ve seen in previous years, indicate that we are entering a normal, but healthy housing market,” says Jonathan Smoke, REALTOR.com’s chief economist. “The improvements we’ve seen over the last few years have enabled a recovery in the existing-home market, but we still need to make up ground in new construction, which we could begin to see in 2016. New home sales and starts will bring overall sales to levels we have not seen since 2006 and will help set the stage for a healthy new home market.”

Total sales for existing and new homes are expected to reach 6 million for the first time since 2006 next year.

2016’s Buying Force

Fueling the increase in total sales, REALTOR.com predicts three distinct segments of home buyers to dominate: older millennials (25 to 34 years old); younger Generation Xers (35 to 44 years old), and retirees (65 to 74 years old), Smoke says.

Millennials:

Millennials are expected to make up the largest advanced notice demographic of buyers in the coming year at 30 percent of the existing home market. “Driven by increasing income, millennials will seek out homes that meet the needs of their growing families – putting the most weight on the safety of the neighborhood and the quality of the home,” according to REALTOR.com’s forecast. “Commute time and a preference for older homes have these buyers looking in city centers and closer-in suburbs.”

Young Generation Xers:

Buyers between the ages of 35 to 44 years old are likely to make up the second largest population of buyers in 2016. “These buyers have rebounded from the financial crisis and are entering their prime family-raising and earning years,” REALTOR.com’s report notes. “More than two-thirds of the buyers in this age group already own a home. They will be moving out of a starter home into a larger home or a more desirable neighborhood.” The markets expected to see the most upticks from these growing families are: 1. Atlanta-Sandy Springs-Roswell, Ga. 2. Denver-Aurora-Lakewood, Colo.

Retirees:

The third largest segment of home buyers in 2016 are expected to be individuals or couples who are looking to relocate or retire between the ages of 65 and 74. New retirees are expected to fuel a trend in downsizing and seeking out ways to lower their cost of living. “They will likely put their home up for sale at the start of the home-buying season in March or April, and aim to make a home purchase following the sale of their home,” REALTOR.com®’s report notes. “This age cohort has a very strong preference for newly constructed homes and put the most weight on their ability to customize their home.”

Source: realtor.com

More Good News For Homebuyers

Home_Buyers

Don’t Worry Homebuyers, Things Are Looking Up!

Homebuyers no longer need to tremble all the way to the lenders’ office or have nightmares over being denied a home loan — all the troubles that have been prominently spotlighted by many news reports in recent years. A new report confirms: It’s getting easier to get a mortgage — and as a bonus, borrowing costs are still low.

Over the past year and a half, the federal government and enterprises have taken several steps to open up the credit box, and the efforts may finally be showing signs of paying off.

Credit scores on closed loans in September dropped to the lowest level since Ellie Mae began collecting the data in August 2011, according to Ellie Mae’s latest Origination Insight Report. The average FICO score for closed loans has fallen throughout the year — from 731 in January to 723 in September.

“Average credit scores declined to the lowest levels we’ve seen since 2011,” said Jonathan Corr, president and CEO of Ellie Mae. We are also seeing rates fall while the time to close is also decreasing.”

Closing rates remained high with more than 66 percent of all loan applications closing for the third consecutive month. The closing rate on purchase loans rose to 71 percent. Also, the time to close on all loans dropped for the fourth consecutive month to 46 days. In northern Colorado, the average time to close has been 30-35 days. However, new federal regulations that took effect on October 1 will likely extend the average to 45 days, and it may be unlikely for purchases that include financing to close in less time.

And more good news for buyers: The 30-year fixed-rate mortgage continues to remain well-below 4 percent. Freddie Mac reported this week that average rates were 3.79 percent nationwide for the week ending Oct. 29, down from 3.98 percent a year ago. Fifteen-year fixed-rate mortgages averaged 2.98 percent, down from 3.13 percent averages a year ago.

Source: “Is the Credit Box Finally Showing Signs of Opening Up?”
HousingWire (Oct. 21, 2015) and Freddie Mac

Looking For More Information?

2016 Housing Market Predictions | Housingwire.com

Freddie Mac 2016 Housing Market Predictions | Housingwire.com

This Isn’t A Housing Bubble:
Here’s Why

Home prices are rising rapidly, but economists are deflating concerns that another “housing bubble” is brewing.

A recent report from CoreLogic shows that twice as many metro markets are considered “overvalued” — prices are inflated relative to incomes — in the second quarter of this year compared to the first three months of the year. But economists say it’s not a housing bubble because bubbles eventually burst and home prices this time around aren’t likely to fall.

“Just because you’re overvalued doesn’t mean that you’re in a bubble or there is an impending crash,” says Sam Khater, CoreLogic’s deputy advanced notice chief economist. “Some markets are overvalued because of strong fundamentals.”

The National Association of REALTORS® reported that the national median sales price is now above its 2006 peak. The median existing-home price for all housing types reached $236,400 in June — 6.5 percent above year ago levels and surpassing the peak median sales price set in July 2006 at $230,400, according to NAR.

Tight supply should prevent a dramatic move down in home prices. Instead, price gains are likely to ease, as supply grows throughout the slower fall and winter months. Prices are also supported by a far larger than normal share of all-cash buyers, which suggests still strong investor demand.

About 10 years ago, a housing bubble was being fueled by free and easy mortgage credit — not the case today, CNBC reports. Today, strong demand and weak supply is driving the rise in prices. “Agents continue to highlight buyers’ growing frustration with rising prices, but see current levels largely supported by tight inventory conditions,” according to a monthly survey of real estate professionals by Credit Suisse.
Source: “Frothy, Yes, But Don’t Call it a Housing Bubble,” CNBC (Sept. 15, 2015)