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How Much?
So how much real estate is sold in Northern Colorado?
As it turns out, a lot!
Last month alone there were 1,099 single family homes that sold in Larimer and Weld Counties
The average price was $429,144 which means the total sales volume for one month was $471,629,129 (almost a half a billion)!
Over the last 12 months, just over $4.5 billion worth of single-family homes have sold.
That’s a lot of real estate!
What We Notice
Here are some observations we have about the market right now:
- Inventory is up, price reductions are up, the length of time to sell a home is up
- Seller concessions are more prevalent
- Sellers are more willing to accept contingent offers (especially in higher price ranges)
- If a home doesn’t sell within a week, it often becomes stigmatized by the market and potential buyers assume there must be something wrong with it
- Homes that likely would have sold within hours a year ago, are now sitting on the market
- Condition is super-important as buyers become even more picky
- Pricing a property correctly on day one is paramount
- Sellers who over-price their property are finding themselves chasing the market
On Sale
With interest rates so low, one could argue that money is essentially on sale.
It’s actually half off.
30-year mortgage rates hit 3.75% which is exactly half of their long term average.
Rates have averaged 7.5% over the last 40 years so today buyers are getting half of that rate.
The “sale” on mortgage rates creates a significant savings in monthly payment because of the 1%/10% rule.
For every 1% change in interest rate, the monthly payment will change roughly 10%.
So when rates go up to 4.75%, a buyer’s payment will be 10% higher.
For example, the principal and interest payment on a $400,000 home with a 20% down payment at today’s rates is $1,482.
If rates were 1% higher, the payments jump up to $1,669.
Home-Ownership Rate
An interesting stat which can give some insight to the national market is the Home-ownership Rate.
It simply looks at the percentage of Americans who own their home instead of rent.
The most recent report from the Census Bureau shows the rate at 64.2%.
Most importantly, this number is showing stability after many years of change.
After many years of hovering around 64%, the Home-ownership Rate started increasing in 1996 and reached as high as 69.5% in 2005.
2008 started several years of declining back to the pre-1996 levels of 64%.
So today it’s back to what seems to be “normal” based the long-term average.
Sign Surprise
Given how active our market is today and has been over the last few years, many people assume that virtually every home with a “For Sale” sign in the front yard is already under contract.
They are surprised to learn that, in most cases, the “For Sale” sign does indeed represent a home that is actively for sale.
For example, today in Fort Collins there are 655 single-family homes on the market. 290 of these are under contract and will be closing soon. 365 of these are still active. So, 56% of the signs in Fort Collins are in front of homes that are still available.
Here are the specific numbers for each of our Northern Colorado markets:
• Fort Collins = 56%
• Loveland = 57%
• Windsor = 58%
• Greeley = 41%
What to Consider Before You Build
If you’re short on space but don’t want to move, a home addition is an attractive way to solve your woes and turn your current home into your dream home.
Whether you’re adding a whole new room or a more modest addition, it can turn into a major construction project; with architects and contractors to manage, construction workers traipsing through your home, hammers pounding, and sawdust everywhere. Although new additions can be a great investment, the cost per-square-foot is typically more than building a new home, and much more than buying a larger existing home.
Before you make the leap, consider the following:
Define your needs
To determine if an addition makes sense for your situation, start by defining exactly what it is you want and need. By focusing on core needs, you won’t get carried away with a wish list that can push the project out of reach financially.
If it’s a matter of needing more space, be specific. For example, instead of just jotting down “more kitchen space,” figure out just how much more space is going to make the difference, e.g., “150 square feet of floor space and six additional feet of counter space.”
If the addition will be for aging parents, consult with their doctors or an age-in-place expert to define exactly what they’ll require for living conditions, both now and over the next five to ten years.
Types of Additions
Bump-out Addition
“Bumping out” one or more walls to make a first-floor room slightly larger is something most homeowners think about at one time or another. However, when you consider the work required, and the limited amount of space created, it often ends up to be one of your more expensive approaches.
First Floor Addition
Adding a whole new room (or rooms) to the first floor of your home is one of the most common ways to add space to a home. You can easily create a new family room, apartment or sunroom. But this approach can also take away yard space.
Dormer Addition
For homes with steep rooflines, adding an upper floor dormer may be all that’s needed to transform an awkward space with limited headroom. The cost is affordable and, when done well, a dormer can also improve the curb-appeal of your house.
Second-Story Addition
For homes without an upper floor, adding a second story can double the size of the house without reducing surrounding yard space. But be cautious not to ruin the value of homes next to you when you do this, the second story might not be worth the drama on your block.
Garage Addition
Building above the garage is ideal for a space that requires more privacy, such as a rentable apartment, a teen’s bedroom, guest bedroom, guest quarters, or a family bonus room.
Permits required
You’ll need a building permit to construct an addition—which will require professional blueprints. Your local building department will not only want to make sure that the addition adheres to the latest building codes, but also ensure it isn’t too tall for the neighborhood or positioned too close to the property line. Some building departments will also want to ask your neighbors for their input before giving you the go-ahead.
Requirements for a legal apartment
While the idea of having a renter that provides an additional stream of revenue may be enticing, the realities of building and renting a legal add-on apartment can be sobering. Among the things you’ll need to consider:
- Special permitting—Some communities don’t like the idea of “mother-in-law” units and therefore have regulations against it, or zone-approval requirements.
- Separate utilities—In many cities, you can’t charge a tenant for heat, electricity, and water unless utilities are separated from the rest of the house (and separately controlled by the tenant).
- ADU Requirements—When building an “accessory dwelling unit” (the formal name for a second dwelling located on a property where a primary residence already exists), building codes often contain special requirements regarding emergency exists, windows, ceiling height, off-street parking spaces, the location of main entrances, the number of bedrooms, and more.
In addition, renters have special rights while landlords have added responsibilities. You’ll need to learn those rights and responsibilities and be prepared to adhere to them. Be sure to talk to your Windermere Real Estate Agent or a local Property Manager about municipal, state, and federal laws.
Average costs
The cost to construct an addition depends on a wide variety of factors, such as the quality of materials used, the laborers doing the work, the type of addition and its size, the age of your house and its current condition. For ballpark purposes, however, you can figure on spending about $200 per square foot if your home is in a more expensive real estate area, or about $100 per food in a lower-priced market.
You might be wondering how much of that money might the project return if you were to sell the home a couple years later? The answer to that question depends on the above details; but the average “recoup” rate for a family-room addition is typically more than 80 percent.
The Bottom Line
While you should certainly research the existing-home marketplace before hiring an architect to map out the plans, building an addition onto your current home can be a great way to expand your living quarters, customize your home, and remain in the same neighborhood.
Colorado Real Estate Market Update
The following analysis of the Metro Denver & Northern Colorado real estate market (which now includes Clear Creek, Gilpin, and Park counties) 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.
ECONOMIC OVERVIEW
Colorado’s economy continues to grow with the addition of 45,900 new non-agricultural jobs over the past 12 months, which represents a growth rate of 1.7%. As I have stated in the last two Gardner Reports, we continue to see a modest slowdown in employment gains, but that is to be expected at this stage of the business cycle.
In May, the state unemployment rate was 3.2%, up from 3.1% a year ago. The increase in the rate is essentially due to labor force growth, which rose by over 55,700 people over the past year. On a seasonally adjusted basis, unemployment rates in all the markets contained in this report were lower than a year ago and are at full employment.
HOME SALES
- In the second quarter of 2019, 17,853 homes sold. This is a drop of 1% compared to the second quarter of 2018 but a substantial 59.9% higher than the first quarter of this year. Pending sales — a sign of future closings — rose 5.8%, suggesting that closings in the third quarter are likely to show further improvement.
- Half of the counties contained in this report saw sales growth, while the other half had fewer closings. Sales in the small Clear Creek County fell precipitously. However, it was only a drop of 20 sales.
- The marginal drop in the number of sales compared to a year ago can be attributed to the ongoing increase in listing activity (+34.8%), which continues to give would-be home buyers more choice and less urgency.
- Inventory levels continue to rise, but demand for housing appears to be ongoing. I am not concerned by the marginal year-over-year slowdown and anticipate that sales will rise again in the third quarter.
HOME PRICES
- Home prices continue to trend higher, but the rate of growth has taken a pause, with the average home price in the region rising by just 2.3% year-over-year to $490,575.
- The drop in interest rates this year has nudged more buyers off the fence and this can allow further price growth as we move through the year.
- Appreciation was again strongest in Park County, where prices rose 6.1%. We also saw strong growth in Weld County, which rose by 6.1%. Home prices dropped in Clear Creek, Boulder, and Gilpin counties, but I do not see this as being indicative of a trend in these markets.
- Affordability continues to be an issue in many Colorado markets and this may act as a modest headwind to ongoing price growth. However, some of the slowing may be offset by very favorable mortgage rates.
DAYS ON MARKET
- The average number of days it took to sell a home in the markets contained in this report rose four days over the second quarter of 2018.
- The amount of time it took to sell a home rose in all counties except Gilpin when compared to the second quarter of 2018.
- It took an average of 29 days to sell a home in the region — a drop of 13 days compared to the first quarter of this year.
- It is likely that the drop in time-on-market was a function of the emerging spring selling season as well as falling mortgage rates.
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.
For the second quarter of 2019, I continue the trend I started last summer and have moved the needle a little more in favor of buyers. I continue to closely monitor listing activity to see if we get any major bumps above the traditional increase because that may further slow home price growth. However, the trend for 2019 will continue to be a move toward a more balanced market.
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.
Compound Effect
If you have driven on I-25 lately you may have noticed that the Front Range is a popular place.
The projections show that it will only get more popular in the future.
Today, 4.8 million people live along the Front Range from Fort Collins down to Pueblo.
In 2030, just 11 short years from now, 5.7 million people will live here. Yes, that’s almost 1 million more than today.
This is all according to the Colorado State Demographers Office.
While this seems like a big increase, keep in mind that this assumes that population growth occurs at a fairly modest 1.7% per year.
It seems that our state will continue to grow and there will continue to be a demand for housing.
Extend the Life of your Roof
Your roof is one of the most important and expensive assets of your home, but no other element is quite as valuable. While the average lifespan of a roof is about 15 years, careful homeowners can extend the life of their homes without enduring too many hardships. Take a look at these three quick maintenance tips to help your roof last.
Keep Your Gutters Clear
Debris that accumulates and clogs your gutters adds extra weight and pulls at your roof’s fascia, which can be a costly fix. Look down the length of your roof for any signs of sagging or bending – that’s a sure sign your gutters are carrying too much weight and pulling at your roof.
Don’t forget the downspouts either, and don’t be fooled by easy-flowing water. Moss and algae buildup on and around your roof can slowly eat away at your roofing material and severely compromise its integrity.
Focus On The Attic
The exterior of your roof isn’t the only area you should focus on as your attic is your roof’s first line of defense against damage with a two-pronged approach: insulation and ventilation.
Insulating your attic has the double benefit of keeping your home’s internal temperature consistent while also preventing vapor and moisture buildup on the underside of your roof. When combined with proper ventilation your attic can stay dry and keep your roof’s rafters safe from moisture damage.
A great way to keep properly ventilate is to add a fan or dehumidifier to the attic.
Catch Problems Early
Check on your roof regularly, an easy time to remember to check is with every change of the season, or after a significant storm. Catching small issues early on will save you money in the long run, so utilizing the services of a reliable, professional roofer is an invaluable asset. As with any working professional, it’s a good idea to establish a working relationship with a roofer and even consider scheduling a yearly checkup for your roof just to make sure there aren’t any problems sneaking up on you. After all, spending a little each year to maintain your roof is a lot better than dropping $15,000-$50,000 on a new one, right?
Protect Your Home With Homeowners Insurance
In addition to providing shelter and comfort, our home is often our single greatest asset, and it’s important that we protect that precious investment. Most homeowners realize the importance of homeowner’s insurance in safeguarding the value of a home. However, what they may not know is that about two-thirds of all homeowners are under-insured. According to a national survey, the average homeowner has enough insurance to rebuild only about 80% of his or her house.
What a standard homeowners policy covers
A standard homeowner’s insurance policy typically covers your home, your belongings, injury or property damage to others, and living expenses if you are unable to live in your home temporarily because of an insured disaster.
The policy likely pays to repair or rebuild your home if it is damaged or destroyed by disasters, such as fire or lightning. Your belongings, such as furniture and clothing, are also insured against these types of disasters, as well as theft. Some risks, such as flooding or acts of war, are routinely excluded from homeowner policies.
Other coverage in a standard homeowner’s policy typically includes the legal costs for injury or property damage that you or family members, including your pets, cause to other people. For example, if someone is injured on your property and decides to sue, the insurance would cover the cost of defending you in court and any damages you may have to pay. Policies also provide medical coverage in the event someone other than your family is injured in your home.
If your home is seriously damaged and needs to be rebuilt, a standard policy will usually cover hotel bills, restaurant meals and other living expenses incurred while you are temporarily relocated.
How much insurance do you need?
Homeowners should review their policy each year to make sure they have sufficient coverage for their home. The three questions to ask yourself are:
· Do I have enough insurance to protect my assets?
· Do I have enough insurance to rebuild my home?
· Do I have enough insurance to replace all my possessions?
Here’s some more information that will help you determine how much insurance is enough to meet your needs and ensure that your home will be sufficiently protected.
Protect your assets
Make sure you have enough liability insurance to protect your assets in case of a lawsuit due to injury or property damage. Most homeowner’s insurance policies provide a minimum of $100,000 worth of liability coverage. With the increasingly higher costs of litigation and monetary compensation, many homeowners now purchase $300,000 or more in liability protection. If that sounds like a lot, consider that the average dog bite claim is about $20,000. Talk with your insurance agent about the best coverage for your situation.
Rebuild your home
You need enough insurance to finance the cost of rebuilding your home at current construction costs, which vary by area. Don’t confuse the amount of coverage you need with the market value of your home. You’re not insuring the land your home is built on, which makes up a significant portion of the overall value of your property. In pricey markets such as San Francisco, land costs account for over 75 percent of a home’s value.
The average policy is designed to cover the cost of rebuilding your home using today’s standard building materials and techniques. If you have an unusual, historical or custom-built home, you may want to contact a specialty insurer to ensure that you have sufficient coverage to replicate any special architectural elements. Those with older homes should consider additions to the policy that pay the cost of rebuilding their home to meet new building codes.
Finally, if you’ve done any recent remodeling, make sure your insurance reflects the increased value of your home.
Remember that a standard policy does not pay for damage caused by a flood or earthquake. Special coverage is needed to protect against these incidents. Your insurance company can let you know if your area is flood or earthquake-prone. The cost of coverage depends on your home’s location and corresponding risk.
Replacing your valuables
If something happens to your home, chances are the things inside will be damaged or destroyed as well. Your coverage depends on the type of policy you have. A cost value policy pays the cost to replace your belongings minus depreciation. A replacement cost policy reimburses you for the cost to replace the item.
There are limits on the losses that can be claimed for expensive items, such as artwork, jewelry, and collectibles. You can get additional coverage for these types of items by purchasing supplemental premiums.
To determine if you have enough insurance, you need to have a good handle on the value of your personal items. Create a detailed home inventory file that keeps track of the items in your home and the cost to replace them.
Create a home inventory file
It takes time to inventory your possessions, but it’s time well spent. The little bit of extra preparation can also keep your mind at ease. The best method for creating a home inventory list is to go through each room of your home and individually record the items of significant value. Simple inventory lists are available online. You can also sweep through each room with a video or digital camera and document each of your belongings. Your home inventory file should include the following items:
· Item description and quantity
· Manufacturer or brand name
· Serial number or model number
· Where the item was purchased
· Receipt or other proof of purchase / Photocopies of any appraisals, along with the name and address of the appraiser
· Date of purchase (or age)
· Current value
· Replacement cost
Pay special attention to highly valuable items such as electronics, artwork, jewelry, and collectibles.
Storing your home inventory list
Make sure your inventory list and images will be safe in case your home is damaged or destroyed. Store them in a safe deposit box, at the home of a friend or relative, or on an online Web storage site. Some insurance companies provide online storage for digital files. (Storing them on your home computer does you no good if your computer is stolen or damaged). Once you have an inventory file set up, be sure to update it as you make new purchases.
We invest a lot in our homes, so it’s important we take the necessary measures to safeguard it against financial and emotional loss in the wake of a disaster. Homeowners insurance is that safeguard, be sure you’re properly covered.
