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
Nearly 30 cities have been designated “in the clear” of the housing downtown, according to a report today by Trulia, although real estate experts in some of those markets reacted to the apparently good news with conservative-sounding forecasts for their areas – or with downright skepticism.
Amid hearty, annual asking price gains of 4 percent or more – and with relatively low foreclosure rates – Denver, San Jose, Pittsburgh, Little Rock, Austin and Colorado Springs each hammered out a “solid base for housing recovery,” said Jed Kolko, Trulia’s chief economist.
Those six cities were the only metropolitan areas specifically listed as “in the clear” by the real estate website. “We defined (‘in the clear’) as metros with positive year-on-year asking-price growth and a low or moderate share of homes in foreclosure. In all, that includes 29 metros,” Kolko added, “but we didn’t list them all out because some have only very slightly price growth. Best to focus on those six.”
The big six “in the clear markets avoided the worst of the bubble,” Kolko said. Amid the mortgage crisis, “those metros didn’t have big price declines that we saw in Miami, Phoenix and Detroit – places that still have a lot of homes left in foreclosures.”
Nationally, asking prices for homes flickered just 0.3 percent higher year-over-year in June after a flat May, Trulia reported.
Some “in the clear” cities also are enjoying robust, new-home construction, Kolko added. “But the main driver in those markets is job growth.”
At the top of Trulia’s list: Denver recorded a 7.2 percent asking-price increase year-over-year in June, according to the website’s own pricing metrics. Meanwhile, 11.9 out of every 1,000 Mile High City homes is in foreclosure, reports RealtyTrac – as compared to far steeper foreclosure rates in cities like Phoenix (25.5), Miami (33.7), Orlando (29.3) and Detroit (21.2).
While Miami (up 16.1 percent in asking price during June year-over-year), Phoenix (up 18.9 percent) and Detroit (up 5.2 percent) all won back solid ground on pricing, Trulia dubbed those metros as “at-risk” because they still have a high share of homes in foreclosure.
Kolko expects price gains in those cities to ultimately shrink or even reverse as foreclosed homes in those areas come onto the market. Ironically, seven of the 10 cities with the very highest price increases in June (also including Orlando, West Palm Beach, and Cape Coral-Fort Myers, Fla., as well as Warren-Troy-Farmington Hills, Mich.), all were deemed “at-risk” in the Trulia report.
On the sunnier side of the market, Trulia is sounding “in the clear” alerts for San Jose – with a 6.2 percent annual price spike and a foreclosure rate of 10.0 homes out of every 1,000 properties – and Pittsburgh (a 5.1 percent annual price gain and a foreclosure share of just 4.4 of every 1,000 homes).
Kolko cites the unemployment rates in Denver (8.1 percent in May, according to the federal Bureau of Labor Statistics), San Jose (8.7 percent) and Pittsburgh (6.7 percent) as critical figures in those municipal comeback equations.
The national unemployment average was 8.2 percent in May.
But given the relatively lofty unemployment rates in Denver and San Jose during May, is their job growth really good enough to attract buyers?
According to Kolko at least: yes.
“That means (those markets) are not just dependent on investors,” Kolko said. “People are moving there for jobs. Developers are betting on the future by resuming construction.”
In both Denver and San Jose, real estate brokers contacted at random by msnbc.commomentarily chuckled at the notion that their markets are “in the clear.” They then offered nuanced views of their local housing economies.
“We would be in the clear if the government got the heck out of the (real estate) business,” said Bob Stewart, the broker at Coldwell Banker, The Real Estate People, based in San Jose.
Under federal initiatives like HUD’s Neighborhood Stabilization Program – during which 400 cities and counties have received billions of dollars to slash housing blight in foreclosure-ravaged neighborhoods – “speculators” have shoved local “investors” and Realtors aside, Stewart said, gobbling up distressed San Jose properties and re-selling them on the cheap.
“Speculators went out and got their (real estate) licenses and are targeting underwater properties, getting them listed at a very low price and submitting an offer immediately to the lender. If the lender accepts it, they’ve made $300,000 to $400,000 (per house),” Stewart said. “There are enough of those here getting accepted that it’s keeping our prices” lower than they should be in San Jose.
“The powers that be in the government really don’t understand the difference between investors and speculators,” Stewart added.
In Denver, broker Heather Parness believes “we’re in the clear from the standpoint that I don’t feel we’re going to see any price declines over the next 12 to 24 months.”
Large homebuilders like Richmond and McStain have been buying up swaths of land “for the last couple of years within metro Denver,” said Parness, president and managing broker at RE/MAX of Cherry Creek. “And now that we’re seeing a shortage in existing inventory in Denver, the construction side is booming.”
“The message that we’re very careful about is: We’re not predicting any huge price increases over the next several years,” Parness added. “If we see any gains in the next 36 months, it might be a 1 to 3 percent appreciation, at most.”