There is no hotter real estate right now in the county than the Colorado housing market. At the beginning of the year Colorado home prices rose 9.8% between February 2014 and February 2015. And the market keeps moving up. In June the state reported record sales with the average residential property being sold for $377,550. But summer is the prime time for real estate sales and as such the market has cooled since then.
Buyers are now beginning to go under contract without competing offers, and price reductions have begun to come around. It is still a competitive market for sellers, however. And homes in the $200-400,000 range are seeing the most competition. One condo in the popular Capital Hill market that was 837 square feet and priced at $229,000 was shown more than 2 dozen times after being listed for less than 24 hours. “I think more people are able to buy with cash and don’t have to wait for appraisals, so I think that really drives the market,” says realtor Susan Chong. Another fact that Chong points out is that demand is higher than supply due to nearly all of the new construction in the state is being designated for rental units.
So the Colorado housing market has home prices rising at a meteoric rate and an extremely low inventory. One major factor influencing this: legalized marijuana. When speaking of the economy or the housing market in the state the legalization of marijuana must be brought into the discussion. Since its legalization in 2012 the marijuana industry has had a significant impact on home prices. “There has been a huge bump in real estate prices due to the legalization of marijuana,” says managing partner of West Realty Advisors James Paine. “It’s massively pushed up raw land and industry prices.” And while there are other factors driving the 2015 housing market the pot industry has injected the state with job growth and has drawn people to area. “The pot industry is creating jobs that we didn’t have before,” says realtor Kelly Moye. “It adds a whole new factor to the area. You have real estate needs, housing needs, and job needs.” And to the naysayers, these new jobs are more than just growers and distributers. Electricians, HVAC, plumbers, and general contractors have seen the demand for their services increase exponentially. And because the market is bringing in such a vast number of transplants the state has seen an increase in other markets as well. Denver and its surrounding counties have become a tech industry hot spot. “It’s fairly affordable,” says Moye. “The quality of life is great and employers are bringing their employees here.” But how long can the Colorado housing market stay hot?
Moye thinks that barring any major economic disasters his housing market predictions have the Colorado real estate continuing to grow for years to come. “We are going to continue to see an increase in population growth based on marijuana until other states start picking up recreational laws,” says Berkshire Hathaway realtor J.P. Speers. But with the population increase Colorado must amp up efforts to provide sufficient housing. In a July report by Zillow Denver CO had 16% fewer homes for sale in the second quarter of this year compared to the second quarter of last year. High demand and low inventory keeps home prices high and that’s something that we could continue to see in 2016.
Influencing Factors for the 2015 Colorado Housing Market
- Colorado home values have increased 12.8% over the past year and forecasts have this number rising another 4% in the upcoming year.
- Because availability is so low rental prices across the state are high. The median rental price is $1,695 in Colorado.
- Homes do not spend a lot of time on the market. Homes listed on Zillow spend an average of 59 days on the market.
- The Colorado Market Health Index is 9.2 out of 10. This is due to the quickness that homes are sold, the price that they are selling for, low negative equity, and low delinquent on mortgage rates.
- As one of only four states where it is legal to partake in recreational marijuana Colorado enjoys a niche market that is undoubtedly drawing people to its borders. As more states legalize and expand upon the marijuana industry keep an eye on how this effects the state’s housing market and economy.
- New home construction will help to ease the housing demand. As more units become available in the upcoming year look for home values to begin to cool down.
Best Places to Live in Colorado
Perhaps the biggest drivers behind the Colorado housing market gains are the Denver and Aurora markets. Denver real estate started the year off hot with home prices rising 1.8% between January and February, and by March the average price of a home sold in the metro area was $354,580. One reason for the rise is a low supply of affordable homes. This is pushing up home appreciation rates at the low end of the market. As can be seen on various rental websites like Rent.com and Craigslist Colorado has a major shortage of rental units, and Denver in particular. The Denver metro area typically has around 24,000 listings. Right now there are only around 4,000. Although the market has cooled off since the summer sales are still very healthy. “Record home prices are discouraging and eliminating some buyers from the market, but with recent price reductions and the end of the frenzy, sales remain strong,” says chairman of Denver Metro Association of Realtors Anthony Rael. If you are looking to buy a home in Denver now is probably the time. In August, Realtor.com published its “hottest” real estate markets in the U.S. and Denver ranked #2. The feature ranks local housing markets based on the level of buyer demand and the speed at which homes sell. Currently on Trulia Denver County has an average listing price of $513,513 (As of October 14.)
Those who can’t find available housing in Denver need only look to the Aurora CO real estate to the east. A recent annual report conducted by Coldwell Banker reported Aurora as having the most affordable four bedroom, two-bath houses in the surrounding Denver area. “Aurora offers a tremendous amount of affordability, even in newer neighborhoods,” said Ed Hardy, board chair of the Aurora Association of Realtors. Couple this with Aurora’s great school system, family friendly neighborhoods, and low property taxes and Aurora is a great bang for the buck.
Colorado Springs CO real estate continues the trend of fast moving homes. The median price of sales in the area hit $250,000 in June and sales totaled 1,401, both record highs. The first half of 2015 also saw total sales of 6,284, also a record. Colorado Springs forecasts that sales could break records for year end totals by December. And like the rest of the state a low supply coupled with high demand will keep the home costs up. Even rental units are hard to come by in the Springs area as vacancy rates were 5.32% in the second quarter of this year. While rental prices are reasonable (they average around $849) finding an apartment has proven to be difficult. But there is hope on the horizon. The tight supply of available homes is having a positive effect on homebuilding. Some buyers who can’t find existing homes to purchase are turning to new home construction as an alternative. In July 279 single-family home building permits were issued in the county, and 1,637 were issued since the beginning of the year. This is a 9% increase from a year ago. Colorado Springs is also beginning to see an increase in Denver area workers moving into the market. Homes are selling for tens of thousands of dollars cheaper, making it worthwhile for Denver employees to make the commute. “Denver is crazy right now in their prices. People are evaluating. They realize they can come down here and save a substantial amount of money and just have a short commute,” says board president of the Housing and Building Association of Colorado Springs Mike Ruebenson.
Boulder CO real estate is some of the most expensive in the state. So high that more than 60% of Boulder County residents 25 years old or older earn too little to purchase median priced homes according to an analysis by Daily Camera. And the same can be said for surrounding areas such as the Fort Collins CO real estate market to the north. Throughout Boulder county median home prices have risen 32% in the past 5 years to $469,000. But median income in Boulder is only $67,959, well under the $100,000 income needed to purchase a home here. This has caused a large exodus of residents migrating elsewhere to find affordable housing. And the metro area of Boulder is the most expensive. Median prices for a single-family home sold for an incredible $790,000 in the first half of 2015. So what makes this a desired and expensive market? Boulder has a thriving economy to go along with a lack of developable land. This means that in terms of available housing, what you see is what you get. Because expansion is not a viable option for the city Boulder is able to maintain the charm and feel that residents have come to love about it.
Rounding out the most expensive places in the state to purchase a home is the Aspen CO real estate market. Prices in Aspen have increased year-over-year for the sixth straight quarter. As of April the median sales price in Aspen jumped 46% from April of last year to a staggering $3,200,000. Those looking to purchase homes in Aspen are looking to buy more space as well. The average size of sold homes increased 18.5% from the same time a year ago to 3,015 square feet, and the average price per square foot now exceeds the price per square foot in Manhattan, New York. This is a great investment for millionaires, but for all others look to nearby Snowmass for a more reasonable price per square foot.