The following is a snapshot of Colorado’s housing market:
I. Nearly three quarters of 3.6 million or 67.6 percent of Colorado residents are homeowners.
II. CARHOF (Colorado Association of REALTORS® Housing Opportunity Foundation gave $132,308 in 2011 to non-profit housing agencies across Colorado totaling over 7 million since 1990.)
III. Colorado consistently receives top rankings nationally as a place to live and start and succeed in business. Bits of proof of this is supplied below:
a. Best State to Invest (OwnAmerican.com)- 1st
b. Technology Industry Employment Concentration (TechAmerica Cyberstates 2010)- 3rd
c. Research & Development Inputs (Milken Institute)-3rd
d. Best States for Business (Forbes Magazine)- 4th
IV. Colorado’s unemployment rate is currently at 7.9%
a. Service industries make up the largest portion of Colorado’s gross state product. The two largest service industries are real estate (10%) and health care (12%).
b. Tourism is the second largest industry in the State of Colorado.
c. The second-largest aerospace economy in the nation is right here in Colorado. The state’s aerospace economy consists of businesses providing products and services for commercial uses, the military, and space exploration.
d. Colorado is expected to add over 23,000 jobs in 2012, more than any other state.
V. How Does Real Estate Affect the Economy?
a. Real estate contributes 10% of the total U.S. economy’s output.
b. If real estate sales decline
i. Construction jobs decline
ii. Unemployment increases
iii. Real estate prices decrease
iv. The value of homes decrease whether they are being sold or not.
v. The amount of home equity loans the homeowner can get decreases.
c. In 2011, Colorado consumers spent more on goods and services, with retail sales increasing 6.5% for the year. In 2012, retail sales are forecast to remain relatively strong with a gain of 4%.
d. Colorado home builders, for the second year in a row, pulled more permits than they did the year before.
VI. Homes Sold by Colorado REALTORS®- Year End 2011 (based off same time period in 2010)
a. 57,730 Single Family Units were sold in 2011, an increase of 3% compared to 2010. 12,476 Condos/Townhomes in 2011 were sold, a decrease of 1% compared to 2010.
b. The median price for Single Family homes was $196,667 in 2011, a 2% decrease from 2010. The median price for Condos/Townhomes is $126,667 for 2011, a 10% decrease from 2010.
c. About 80 percent of homeowners in Colorado have lived in their house over 1 year and more.
VII. Who were the Buyers?
a. 50% of recent home buyers were first-time buyers
b. The typical first-time home buyer was 30 years old, while the typical repeat buyer was 49 years old.
c. The median income was $59,900 among first-time buyers and $87,000 among repeat buyers.
d. 20% of recent home buyers were single females, and 12% were single males.
e. When considering the purchase of a home, commuting costs were considered very or somewhat important by 76 percent of buyers.
f. New home purchases were at the lowest level in nine years—down to 15% of all recent home purchases.
g. The typical home purchased was 1,780 square feet size, was built in 1990, and had three bedrooms and bathrooms.
h. 11% of buyers over 50 purchased senior related housing or in an active adult community.
a. Colorado is ranked 11th in the nation for its foreclosure rate according to the Denver Post.
b. The state Division of Housing says that foreclosures are down 28 percent at the end of 2011. Many predict the number will continue to slowly decline in 2012.
c. Foreclosure-related properties, which made up roughly one in five home sales in the third quarter of last year, sold for an average 34 percent less than homes that were not “distressed sales,” according to the latest data from RealtyTrac.
Sources: Bureau of Economic Analysis; National Association of REALTORS®; Macroeconomic Advisors; Harvard Joint Center for Housing Studies, Colorado Multiple Listing Services, Realty Trac, U.S. Census Bureau, State Division of Housing; EconPost, Everitt Real Estate Center, Leeds School of Business, Denver Business Journal, Denver Post, Wall Street Journal, Colorado Office of Economic Development
Existing-home sales rose 4.3 percent in January to a seasonally adjusted annual rate of 4.57 million, marking the third gain for home sales in the last four months, the National Association of REALTORS® reports.
“The uptrend in home sales is in line with all of the underlying fundamentals – pent-up household formation, record-low mortgage interest rates, bargain home prices, sustained job creation and rising rents,” NAR’s Chief Economist Lawrence Yun says.
While sales ticked up, inventories of for-sale homes also continued to show improvement, NAR reported. At the end of January, total housing inventory fell 0.4 percent to 2.31 million existing homes for sale, which represents a 6.1-month supply at the current sales pace.
Unsold listed inventory has steadily dropped since reaching a peak of 4.04 million in July 2007. It now is 20.6 percent below where it was a year ago, NAR reports.
Housing Affordability Improves
As home prices have fallen and mortgage rates at all-time record lows, housing affordability is at some of its highest levels on record.
“Word has been spreading about the record high housing affordability conditions and our members are reporting an increase in foot traffic compared with a year ago,” says NAR President Moe Veissi. “With other favorable market factors, these are hopeful indicators leading into the spring home-buying season. We’re cautiously optimistic that an uptrend will continue this year.”
The national median existing-home price for all housing types in January was $154,700, which is down 2 percent year-over-year.
Distressed sales, which tend to sell at steep discounts, continue to hamper home prices nationwide. Foreclosures and short sales accounted for 35 percent of all January home sales, which is up slightly from 32 percent in December.
Still, “home buyers over the past three years have had some of the lowest default rates in history,” Yun said. “Entering the market at a low point and buying at discounted prices have greatly helped in that success.”
Contract Delays, Cancellations Remain High
Twenty-one percent of NAR members in January reported delays in contracts, and 33 percent said contracts fell through, according to NAR. The number of contract cancellations remains mostly unchanged from December.
The increase in the past year of contract cancellations or delays has been blamed on more lenders declining mortgage applications from stricter underwriting standards and low appraisals coming in under the agreed upon contract price.
Source: National Association of REALTORS®