Today’s Real Estate Market – I know. I wonder. I’m boggled!
There are things I know, things I wonder about and things that boggle my mind. Here are a few… I knew demand was about to explode before 2020 even began. Demographics relentlessly told us that. 8.8 to 9.2 million first-time home buyers were coming and they wanted a piece of the American Dream. With the largest age cohort numbering over 23 million, Americans aged 25 to 29 are looking to start families and buy homes. And reports show once someone has a child, they are twice as likely to purchase a home.
I knew that a recession was coming, or at least I was relatively certain. America was on a recession watch at the end of 2019 and beginning of 2020, tracking slowing manufacturing, shipping, business spending and job creation as well as declining consumer confidence, talks of trade wars and political unrest. The two and ten-year yields had also inverted, pointing to a longer-term financial instability.
Housing inventory was low coming into 2020, down 10 percent year-over-year with active listings a paltry 5,025 homes for sale. Yet, buyers were not budging. Forty-five percent of sellers at the start of 2020 had to reduce their price to get their home sold even though we only had 1.13 months of inventory. Consumer spending similarly was the very thing that was keeping our economy afloat. Since spending is 70 percent of the GDP, consumers were determined to not allow the U.S. to go into a recession.
Then, spending stopped because jobs stopped. COVID-19 shut the economy down, and to no one’s surprise, the recession began, but then it ended just a few months later. There was political and social unrest, and lives changed forever. The mortgage market was a mess and public enemy #1 Mark Calabria, the head of the Federal Housing Finance Agency, became a target. But here’s what boggles my mind, consumers wanted to spend. But they couldn’t, not on hotels and airfare, nor concerts and restaurants, but they could on homes, cars, and oh yeah, on stocks.
Housing remained resilient as we quickly defined “essential” and adapted to a work from home economy. Houses became bigger, more suburban, with two offices and a place to work, play, workout, educate and relax. They became everything and everywhere to all of us. Coloradans. who had jobs saw weekly wages increase 8.7 percent. Counties like Denver saw the juxtaposition of 11 percent unemployment and 11 percent weekly wage increase in the same period.
Meanwhile, the Federal Reserve continued to support the markets, dropping the fed rate to zero and injecting trillions through the purchase of mortgage-backed securities and treasuries. As long as they continue, we will continue to see mortgage rates low and equities high.
So I wonder, will the economy sustain while we distribute enough vaccines to realize herd immunity? Will the stimulus package keep small businesses afloat or add to the equity market gains? The Fed predicts unemployment at 5 percent, spending to increase 3.7 percent and GDP rising to 4.2 percent in 2021. This is good! So, will they be able to justify a zero fed rate and quantitative easing until 2023? And if they can’t, will rates start to go up? By how much? I also wonder, once people go back to work, ball games, concerts and travel; will they find things to buy other than houses, which would then ease demand slightly and put us back towards seasonal normals?
January’s DMAR Market Trends report is anything but normal. With 0.4 months of inventory, the visual of our trending closed homes to active inventory tells the story we are all feeling… there are not enough sellers to satisfy the spending hunger of the demographic swell. Year-to-date, we’ve sold 6.95 percent more homes than last year for a total volume of 15.44 percent more, yet 1.79 percent fewer homes came on the market. Active listings hit an all-time low of 2,541 homes for sale which is down 49.55 percent from last year. Consider that there are 1.2 million households in DMAR’s 11 county area (per the census bureau). 0.2 percent of available homes are for sale. At the last census, Colorado’s 2020 population growth was 2.63 percent year over year. Where are they all living?
What boggles my mind is how our average and median prices did not move this month. We are all hearing of 5, 10, 42 offers per home with appraisal gaps and inspection waivers. REALTOR® friends are stumped at how even to price a listing in today’s market. Per the report, single-family homes sold at 100.11 percent close to list. Yet, our prices stalled at 7.14 percent for our median close price growth and 7.94 percent for our average. Our market feels on fire, yet this is only 1 percent higher than the historical average.
There is no doubt in my mind that 2021 will be another incredibly strong year for housing. Low rates, favorable demographics, rising wages, and the wealth effect created by a staggeringly out of control stock market will be the story of 2021. With interest rates hitting record lows 16 times in 2020, buyers and investors alike are taking advantage of increased purchasing power and are willing to pay what a seller asks to get their piece of real estate!
Nicole Rueth with The Rueth Team of Fairway Mortgage
Keeping you updated.
Producing Branch Manager with The Rueth Team of Fairway Mortgage
The Rueth Team is dedicated to our clients success. It is this driving mission that keeps our team constantly learning and pushing beyond our boundaries. We find the solutions other lenders simply can’t (or won’t). We make a commitment to each borrower, fulfilling it with hard work, constant communication and creative problem solving. When a referral partner gives our name, they are confident knowing they are giving their clients the best chance of a smooth, successful experience.Learn More
NO OBLIGATION TRAINING: Market Mastery & “Done for You” Marketing tools delivered every 3rd Thursday (occasionally Tues) of the Month so you MAKE MORE MONEY! Nicole Rueth with Fairway Independent Mortgage Corporation, together w/ guest speakers from a range of professional disciplines, will be presenting monthly updates on industry statistics and market news you can use to help educate and motivate your buyers and sellers. Walk away with talking points, slides & information to set yourself up as an industry expert.
Alison P. from Wheat Ridge, CO
Nicole was wonderful to work with! The experience was so much better and more personal than working with a large company where you might not have contact with the same person throughout the process. Nicole was extremely communicative, easy to reach and talk to, and went out of her way to make this the most positive experience for my family. She worked so hard to meet our tight deadlines and made the entire experience smooth and stress free. I would 100% recommend working with Nicole and the Rueth Team!
stacieandtomwedding from Denver, CO
Nicole and her team were responsive, professional, and supportive as they walked us through every step of the loan process. We highly recommend the Rueth Team and will reach out to them with any future needs!
Natalie W. from Idaho Springs, CO
We’ve used The Rueth team twice now and have had a seamless experience both times. She and her team are knowledgeable, friendly and helpful. When I contact them they are very quick to respond. I would continue to work with The Rueth team in the future!
Shelby from Denver, CO
I used Fairway and Rueth’s team when purchasing a home recently and they were outstanding throughout the entire process. One of the staff on the team was even out on leave for most of the process and you wouldn’t have even noticed. Everyone I worked with provided very friendly, personable and knowledgeable service. I knew what my options were and everything was done in a very timely fashion. They even were able to find me some closing clost assistance so that I was able to have some money in my pocket left at close to do some work on the house. This was the third home I’ve bought and Rueth’s team was by far the best mortgage company I’ve worked with and I would recommend them with my full confidence.
Andrew C. from Wheat Ridge, CO
Nicole was fantastic to work with. She's responsive, knowledgeable, and able to make last minute changes when necessary. Working with her was a nice change from big-box mortgage companies. When last minute things needed to be fixed she did them promptly, and made sure we made it to closing without a hitch!
Mr. and Mrs. Walls from Idaho Springs, CO
We were impressed with the professional, personable service we received from Nicole and would recommend her to other home buyers. She helped us get pre-qualified quickly, making our search more productive.
Kathleen Cain from Palmer Lake, CO
Excellent team! Would highly recommend! If I ever have to do this again I would call Nicole Rueth! Her response to any of my questions was answered immediately and with great accuracy! Couldn't have been any better!
Paige M from Morrison, CO
Nicole and her team did an amazing job not only in keeping me informed of all the processes that go into selling and buying a home, but they were professional and knowledgeable! They answered all my questions, and made it easy to understand! I will never use anyone else!
april3lynz from Colorado Springs, CO
Absolutely AMAZING group! I had a really rocky start with my home buying experience. I had a horrible realtor and I was going to go through a different lender. I dropped my horrible agent and found an amazing realtor who was just phenomenal, and she referred me to The Rueth Team. My experience with them was quick, painless and simply amazing. I had very little stress and their team was so helpful. I had a moment of panic and I called, they were able to explain everything to me without confusing me more and went over every detail of my process moving forward with me. They had no hidden fees and were straight up and up front with me the whole way. I'm extremely grateful to them. In less than a month I am moving into my new home!!
Jeff D. from Denver, CO
I've closed two mortgages prior to this one with The Rueth Team, and this was by far the smoothest lending process I've had. Nicole, Peter, Emily, and Robbin were terrific communicators, provided me with honest feedback, and were simply easy to work with. They're true professionals and I'd happily work with then again on my next loan.