Economic Snapshots and Stats

Broomfield/Westminster Economic Snapshot - June '13

The Broomfield/Westminster real estate market continues to show improvement over 2012 as we begin our annual trek through the dog days of summer. Single family home sales are up 25.33% through May/2013 compared to through May/2012. Attached unit sales are up 24.06% and the combined market is up 25.14% for the same time periods.

Mortgage interest rates, those little devils that often play havoc with our economic lives, continue to reside near historic lows. That old bastion, the thirty-year fixed rate loan, which many home buyers have relied on through the years, is hovering around 3.75% to 4.0% for a conventional loan, and slightly less for a government insured loan (FHA/VA).  Rates have trickled up recently as the economic climate has experienced times of continued improvement.

Available inventory of single family homes in Broomfield/Westminster showed a modest gain in May/2013 compared to April/2013 increasing by 5.62% (611 vs. 579). Improving home values have provided sellers, who have been sitting on the sidelines to do something these past few years, an opportunity to make the move to a larger home or downsize as their needs change. 

With lower mortgage interest rates and reduced inventory, rental properties have become less available. Scarcity creates demand and rental rates have increased over the course of the past year. Once again real estate is a wise investment, providing investors with tax benefits and appreciation.    

Real estate is characteristically a bottom-up phenomenon. Homes on the less expensive end of the scale have a tendency to start selling first in an improving real estate market. If the market sustains itself, then pricier homes begin to sell. The Front Range real estate market is following suit with more expensive homes showing marked improvement in sales activity this spring. Expect this pattern to persist through the balance of the summer.        

Late spring and early summer are the times when the Broomfield/Westminster real estate market bell curve has a tendency to peak. Available inventory reaches its highest point and buyer activity rises. With low mortgage interest rates and a shortage of inventory (compared to previous years), expect the Broomfield/Westminster real estate market to be quite active through late summer.

As we shift from spring into summer there doesn’t appear to be anything perched on the economic horizon waiting to create chaos with the Broomfield/Westminster real estate market. Bank foreclosures and short sales still rear their ugly heads on occasion, but not at the levels that existed between 2007 and 2011. New home construction has become a greater part of the economic landscape with starter homes flourishing across the Front Range and even custom homes beginning to sprout in subdivisions that were stagnant for the past few years. Seller motivation has increased and buyer confidence has improved; two elements that are vital to a healthy real estate market.

Real estate markets are normally slow moving entities when they are going through a period of recovery. This current shift was accomplished quite quickly, which bodes well for both buyers (low mortgage interest rates) and sellers (appreciation and lack of competition).

 

Broomfield/Westminster Economic Snapshot - May '13

And the Beat Goes on. That’s a 1980 song from an American group called The Whispers. The song is about moving on from a lost love. In a different sense, the Boulder Valley, Metro Denver, and Northern Colorado real estate markets have moved on from a period of time when real estate values plummeted, bank foreclosures and short sales multiplied, and banks were draping Out-of-Business signs on their front windows courtesy of the Federal Reserve.

In the span of less than two years the Front Range real estate market has shifted from a buyer’s market to a balanced market to a seller’s market. Driven by pent-up demand and affordable mortgage interest rates the Front Range real estate market regained its mojo. Sometimes the wheels of change move quickly.

The Broomfield/Westminster real estate market peaked in 2005 and plateaued in 2009. The years 2010 and 2011 mirrored 2009. 2012 saw the market begin to shift upward as the economy improved and mortgage interest rates reached historic lows. Four months into 2013 the Broomfield/Westminster market is up 22.73% for single family home sales (1371 vs. 1117) compared to the same time period for 2012. Attached unit sales are up 14.48% (245 vs. 214) for the same time periods. The overall market is up 21.41%.

The Absorption Rate for the Broomfield/Westminster real estate market for single family homes stands at 51 days at the end of April/2013. This is the length of time it would take for the market to fully sell assuming no new listings came into the marketplace and the rate of sales activity remained the same. It’s a good gauge for determining what is happening in the market over the course of the past few months. Absorption Rates normally drift lower as sales activity in the spring and summer markets increase.

The question becomes can the Broomfield/Westminster real estate market sustain itself? The available inventory of single family homes in Broomfield/Westminster continues to creep-up, but at a snail’s pace. When comparing the end of April/2013 to the end of April/2012, available single family homes in Broomfield/Westminster are down 10.24% (579 vs. 645). 

Across the Front Range the real estate market is beginning to experience the trickle-up effect where more expensive homes are selling. The average single family home through April/2013 in Broomfield/Westminster has sold for $219,902. This compares to $194,329 through April/2012, an increase of 13.15%. Entry level homes continue to sell well and now the market is undergoing an upper movement in buyer confidence. That’s a positive sign for the market as a whole.

As we enter the peak real estate selling season here are some things buyers and sellers will need to focus on. For buyers, available inventory will continue to remain at a low level with well-priced homes selling quickly. Get your financing in place before you make an offer. This bodes well in the mind of sellers to know they have a qualified buyer. It also makes sense in terms of timing. The early bird catches the worm or in this case makes the home purchase.

For sellers, be aware of changing market conditions. Home values are trending up in most areas and price segments. Take advantage of that shift by pricing your home competitively, but also knowing this is not a discount housing market. There will still be “bottom-feeders” out there looking for “deals”. Don’t feel like you need to buy into that scenario.

Broomfield/Westminster Econimic Snapshot - March '13

Two months plus into this New Year and the Broomfield/Westminster real estate market continues to show strong activity. Through February single family home sales are up 14.34% for Broomfield/Westminster over last year for the same time period; attached unit sales are up 12.22%. The inventory level of available single family homes in February/2013 mirrored January/2013 (618 vs. 623), but were down 15.69% when compared to February/2012 (618 vs. 733).

The US Department of Labor (Bureau of Labor Statistics) recently released their unemployment rates for the country and by state. Nationally, the unemployment rate stands at 7.7% at the end of February. Last year at this time the rate was 8.3%. Colorado is currently at 7.5%. The state with the highest unemployment rate is Rhode Island at 9.9%. Not far behind are Nevada and California at 9.8%. The state with the lowest unemployment rate is North Dakota at 3.2%. For a point of reference, the unemployment rate for the Great Depression peaked at around 25% in 1933. In 1929 the unemployment rate was 3.2%.

On the home mortgage scene, interest rates have trended up slightly since the first of the year. The traditional thirty-year fixed-rate loan has moved from 3.35% to around 3.75% depending on the lender and closing/loan costs. Sometimes an advertised lower interest rate can mean higher closing/loan costs. Buyers need to make sure when they are looking at getting a loan they are comparing apples to apples.

From a financial perspective, there are still those ankle biters out there in the real estate market, bank foreclosures and short sales. There aren’t as many as there were a year or two ago, but like weeds, they keep popping-up.  

Spring is that eternal time of year when everything looks brighter. Days are getting longer; nights are getting shorter. Flowers and trees are beginning to bloom and bud. The gray days of winter are fast becoming a distant memory. It’s also the time of year when a plethora (large number) of home sellers and buyers begin the process of becoming actively involved in the real estate market. 

The next few months are the time when the Broomfield/Westminster real estate market begins to accelerate. Active listings will increase, but so will sales activity. Home values, especially in the lower price ranges, have been improving. Appraisers are aware of this and are making pricing adjustments accordingly. There has been a slight up-tick in sales activity in the higher end homes across most market areas. That’s a good sign for the overall market, since real estate markets strengthen from the bottom up.

New construction continues to play an important part of this renewed housing market. It started with production builders building starter homes, mid-range homes, and attached units. The market has slowly evolved to where custom builders are dusting off the cobwebs and seeing some activity. Spec inventory on expensive homes? Don’t see that coming anytime soon. Banks and builders are too wary.

As late winter and spring days vacillate between snowstorms and record highs, look for the Broomfield/Westminster, Denver Metro, and Northern Colorado real estate markets to remain on the current pace. Available inventory will be the key to sustaining the rate of growth across all market areas.

Broomfield/Westminster Economic Snapshot - February '13

The Broomfield/Westminster real estate market continued its active pace in January/2013 as single family homes and attached unit sales outpaced January/2012 sales. Single family home sales were UP 16.59% (281 vs. 241). Attached unit sales were UP 22.72% (54 vs. 44). The collective market was UP 17.54%. Sales figures for January/2013 approached January/2007 sales numbers.

The inventory of available properties will increase as winter melds into spring and the real estate market gains momentum. Available inventory will be the key to how active the Broomfield/Westminster real estate market is in 2013. January/2013 ended the month with nearly 17% FEWER active single family homes on the market compared to the end of January/2012 (623 vs. 755). When you take January/2011 into consideration, there were 58% FEWER single family homes available at the end of January/2013 (623 vs. 1476). The past two years have seen buyer activity increase swallowing-up available inventory. Expect this pattern to continue throughout 2013.

On the financing side, the Federal Reserve has indicated they are going to keep lending rates at historic lows through the balance of 2013 and into 2014. The Fed’s goal is to get the national economy stabilized and then growing at a reasonable rate. National unemployment rates have dipped to slightly under 8%. Colorado’s unemployment rate has pretty much mirrored the national rate for the past five years.

When the Metro Denver and Northern Colorado real estate market was HOT back in 2004 through 2007, the Colorado unemployment rate had dipped below 4%. The national rate dropped to around 4.5% at that time. In its August/2012 economic forecast, the Congressional Budget Office (CBO) estimated the unemployment rate would be 5.9% by 2017. Getting from there to below 4% again would require a Herculean effort on the part of the local, national and global economy.

But that’s the future. We have to deal with the realities of today. Here are some thoughts to chew-on in looking at the Broomfield/Westminster real estate market.

  • It’s a seller’s market, especially at the entry-level. The Absorption Rate for Broomfield/Westminster at the end of January/2013 for single family homes was 68 days. That number at the end of January/2012 was 97 days. (The Absorption Rate is the length of time it would take the market to fully sell, assuming the same rate of sales activity and no new inventory entering the market.)
  • If a property is priced competitively and in reasonable condition, multiple offers are now the norm. Short sale properties, especially, invite multiple offers.
  • The upper end of the market is showing some resiliency. Driven by low mortgage interest rates and limited inventory. 
  • As buyer demand increases, home values follow suit. We’re seeing the trickle-up effect as mid-range and upper end homes are experiencing a positive movement in values.
  • New home construction will continue to be a viable part of the housing market as the resale inventory dwindles and buyer motivation increases. 

In Broomfield/Westminster, the spring and early summer are characteristically the busiest time of the year with home closings peaking in the March through August period.

Broomfield/Westminster Economic Snapshot - January '13

Single family home sales were UP 14.10% in 2012 when compared to 2011 (4,029 vs. 3,531). Attached unit sales were down 1.04% for the same time periods (669 vs. 676). The collective market was UP 11.67% (4,698 vs. 4,207). 

The Absorption Rate (the length of time it would take for the market to fully turn) for single family homes ended the year at 61 days for Broomfield/Westminster. 2011 ended the year at 84 days. This was spurred my low mortgage interest rates and diminishing inventory. 

For Broomfield/Westminster, the year ended with 678 single family home active listings. This was down 17.02% when compared to the end of 2011 (678 vs. 817). 

Below is an overview of sales activity for the past two years for single family homes and attached units in Broomfield/Westminster, courtesy of MetroList – the Denver Metro/Suburban Mountain MLS. 

2013 promises to be a year of continued change. Here are some thoughts relative to what the Broomfield/Westminster market may experience.

  • Lack of available inventory will further foster a seller’s market, with both the resale market and new construction benefitting. 
  • Land sales, once a dormant part of the real estate landscape, will experience a rebirth as production and custom builders seek out new opportunities. 
  • Home mortgage interest rates should continue to hover below 4.0% for the traditional thirty-year fixed rate mortgage as the economic impacts of the decisions surrounding the fiscal cliff become more apparent. 
  • Rental rates will continue to increase as the availability of rental units shrinks.

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