Following a change of administration, it is hard not to focus on how politics might affect the real estate market, but something to remember is that one of the top determining factors that will ultimately decide if Colorado will experience a ‘make or break year’ in real estate, is job growth. According to recent population estimates from the U.S. Census Bureau, Colorado added 100,986 people to its population between 2014 and 2015, making it the second-fastest growing state in the United States. As we head into the second quarter of 2017 with strong employment, rising salaries, still very low interest rates, and a shortage of inventory (nationally and locally), job growth is the best indicator to determine the strength of the overall housing market.
Employment Gains in 2017 – Colorado’s economy is positioned for continued growth in 2017, with the state expected to rank among the top 10 states for job growth for the sixth year in a row, according to the 2017 Colorado Business Economic Outlook from the University of Colorado Boulder. The report expects Colorado to have the second fastest rate of population growth in the country this year, adding another 95,000 people to bring the total population of the state to 5.5 million. With Colorado continuing to draw workers into the state in search of employment, also comes the opportunity to capture the job seeker housing market – a benefit in the current housing market.
Competing with Other Buyers – One challenge for home buyers in higher demand cities (including Denver) is how can they best compete with other buyers. It can be challenging to locate the right home in markets where there is a shortage of available inventory. A great strategy for positioning yourself to compete against other buyers is becoming “buyer ready”, meaning to become preapproved by a respected mortgage lender, or defining your ability to be a cash buyer.
Interest Rates – Interest rates will gradually increase, and the job growth of any local economy will usually dictate the health of that area (Denver looks well positioned). Appreciation will also continue to increase, albeit at a more reasonable pace for 2017. Rates will be a little higher, but mortgage money will be plentiful and with less government regulation involved. The current administration may also remove obstacles with tax breaks and more incentives, while limiting regulations, helping both builder and consumer costs (an estimated 25% of the cost to build a home is regulation and fees).
Market Drivers – The housing market thanks Baby Boomers and Millennials for the increased real estate momentum. Baby Boomers or ‘empty nesters’, have been and will be making lifestyle changes as they get closer to retirement. Millennials, typically born between 1976and 1990, do not see interest rates as a driving factor in purchasing a home. They view ownership as the best path to building personal wealth and stability for the future, and are tired of paying increased rents.
Colorado for Business – Colorado is consistently recognized as a top-ranked state in in Forbes Best Places for Business and Careers. The states relatively central location makes it a natural location as a distribution hub for the American west, while also supporting a number of growing industries in technology and telecommunications. Its location just east of the mineral-rich Rocky Mountain range encouraged mining and energy companies to spring up in the area, making the energy industry another staple of the state’s economy. Colorado is nationally recognized has gained a reputation as being a very active, outdoor oriented city because of its proximity to the mountains and generally sunny weather.
A Positive Outlook – With average home prices rising throughout the state of Colorado, and job growth on the rise, the Colorado real estate market is primed for a breakout year in 2017. LIV Sotheby’s International Realty has experienced agents who can assist homebuyers with determining a competitive offer in the Colorado or resort-area markets.