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REAL ESTATE INSIDER Vol. 46, No. 8 | SEPTEMBER 2022

HISTORY LESSON: WHY HOUSING SKEPTICS KEEP MISSING THE MARK

For the past decade, we’ve read and heard from many economic observers who have declared – for a variety of reasons – that residential real estate in the U.S. was about to slam on the brakes. And while there have been occasional twists and turns (remember the onset of COVID-19?), the housing market has kept chugging down the highway.

Are the current conditions different? Are housing prices going to fall? Should we be worried about a rerun of a 2008-style crash?

There’s no paving over the fact we are dealing with a pothole in today’s market. Inflation is spiking. Mortgage rates have ticked up since the start of the year, forcing some would-be buyers to the sidelines. Overall housing demand has slowed, and the pace of home price appreciation has slowed along with it.

But these factors are not reason enough for appreciation to go in reverse.

In his recent report for HousingWire, market analyst Logan Mohtashami reviewed the litany of doom-and-gloom forecasts since 2012, and why they didn’t come true. Consistently, the skeptics missed the fact that housing supply was trending down. Consequently, even in years when demand slipped, prices didn’t. On top of that, the job market—an indicator of housing demand in the future—is still robust, especially in Colorado.

Unlike 2008, market fundamentals are strong. And looking ahead, Mohtashami sees more of the same.

“Even with some of the recent weakness in demand, we haven’t seen a significant dynamic shift yet to bring prices down because total inventory is still too low,” he writes. Nationally, the supply of existing homes for sale is only enough to last 2.2 months. Mohtashami thinks it will take an extended period of at least a four-month supply before housing prices could decline.

Call me if you have questions about the housing market in your community.

SOME CREDIT ADVICE FOR HOMEBUYERS OF ALL AGES

If home ownership is the foundation to building wealth in America, credit worthiness is the bedrock underneath. Depending on your stage in life – i.e., just out of college, starting a family, or contemplating retirement – consider how your credit rating will influence your capacity to buy a home.

Writing in the Washington Post, here’s how Francis Creighton, president and CEO of the Consumer Data Industry Association, boils down credit considerations for would-be homebuyers from each generation.

Gen Z (1997-2012)

Gen Zers will think about buying a car or paying for college before giving thought to a home. Paying off a car or college loan builds credit worthiness for a future mortgage. But what if cars or college aren’t in the cards? Another option for building credit is to make regular payments on one or more credit cards.

Creighton calls the ability to manage balances and credit lines “an important consideration by mortgage lenders.”

Millennials (1981-1996)

Millennials who felt the sting of the Great Recession (2008-2009) may have put off homeownership as they work to pay off student loans or solve other lingering debts. How can you impress a mortgage lender? Creighton says, “Increasingly, housing providers and credit reporting agencies are working together to see ‘expanded data’ such as rental, utility and monthly streaming payments land on credit reports.” He recommends contacting your landlord or utility provider to help report your payments to national credit bureaus.

Gen X (1965-1980)

Many Gen Xers were also pinched by the Great Recession, and may still be catching up on retirement savings. For some, you can add the financial squeeze of caring for both their college-aged kids and their aging parents.

If you’re thinking of moving for retirement, be thoughtful about borrowing for your kids’ education. Creighton says, “Taking out a tuition loan can strengthen – or hurt – your future mortgage application loan, depending on whether you pay it back correctly.”

Baby boomers (1946 to 1964)

Like Gen Xers, some ‘boomers’ might be balancing elderly parents with the needs of children or grandchildren. Or, if you’re not charging as much on your credit cards these days, paradoxically, it can lower your credit score just when you are thinking of making the move to downsize.

“If needing credit in the future, it’s vital to create a financial plan now to maintain a high score,” Creighton writes.

The bottom line for all generations: keep tabs on your credit score. If a home purchase is in your future, take steps to improve your score.

TIPS FOR LIMITING YOUR EXPOSURE TO WILDFIRE RISK

When the Marshall Fire raged through a suburban section of Boulder County last December, it was a stark reminder for all Front Range residents that wildfire is not just a hazard of living in the high country or the foothills.

  • Keep potentially flammable debris out of your gutters.
  • Make your house numbers very visible, so emergency responders can easily identify your property.
  • If you live in a wooded area, clear all vegetation from within 30 feet of your home.
  • Keep firewood or combustible materials at least 30 feet away from your home.
  • Seal exterior wall gaps with fire resistant caulk.
  • Install a nonflammable roof.
  • A more costly option is to spray your home with fire retardant sealer.

The Group has a page on its website which provides resources to help you safeguard your home and belongings. Click HERE to find that resource.

Beyond physically protecting your home from fire, you should also take steps to deal with the aftermath – including the possibility of replacing your property. It’s important to prepare an inventory of valuable items in your home – pictures stored on your phone will do – and document any recent improvements to your property. Keep phone numbers for your insurance agent in your phone, and make sure your policy information is available for reference. Know if your coverage will provide you with temporary housing.

Call me to schedule your annual review and to discuss if you have enough coverage to replace the current value of your home at today’s building costs.

THE GROUP DIFFERENCE

What will happen with your home’s value?

A real estate market that was running in overdrive earlier this year has downshifted, a change brought on by rising interest rates and Inflation. However, Northern Colorado’s physical beauty and reputation as a recreation hub continue to make it an attractive place to live. Working with a trusted REALTOR® who has their finger on the pulse of the local market is critical.

Want to know how much your house is worth? Contact me today for a real estate review.

REAL ESTATE BY NUMBERS

  • $37.55 million. Sale price for the 152,000-square-foot Center Place of Greeley shopping center, located at the intersection of 47th Street and U.S. Highway 34. The retail center is anchored by a Safeway grocery store.
  • $18 million. Estimated development costs for a new three-building, 38,000-square-foot academic complex at Aims Community College’s Windsor campus. Completion is scheduled for spring of 2024.
  • 2,469. Number of new real estate agents who took up the profession in Colorado during 2020 and 2021, according to the National Association of Realtors.
  • $244.6 million. Estimated investment needed to build the Rocky Mountain Grand Resort and Conference Center, a project proposed for east Loveland. Plans include a 390-room hotel, a water park, and conference facility.
  • 17.5. Average percentage increase for home insurance premiums in Colorado over the 12 months ending in May 2022, according to a report by Policygenius. Nationally, the average increase was 12.1 percent.
  • 277. Number of parking spaces planned for a parking garage that would be part of the Draper Heartland redevelopment in downtown Loveland, located near the intersection of Fourth Street and Lincoln Avenue.
  • $1.5 million. Estimated renovation cost for the 98-year-old Scott Apartments, a 13-unit building near the intersection of South College Avenue and Locust Streets in Fort Collins.
  • 97. Number of new home sites planned by home builder Toll Brothers at Timnath Lakes. The Overlook Collection will have 40 home sites and The Summit Collection will have 57 home sites.
  • $39.9 million. Purchase price for the 4,860-acre Big Creek Ranch located near Steamboat Springs. The ranch includes a 10,000-square-foot home and a six-mile section of trout stream on the property.
  • 28. Percentage of home purchases made by investors during the first quarter of 2022, up from 19 percent in the first quarter of 2021, according to a recent report by the Joint Center for Housing Studies at Harvard University.

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