2021: THE YEAR IN REAL ESTATE
As much as 2020 seemed to make the real estate world shake, rattle, and roll, 2021 was nearly every bit as dynamic. In fact, 2021 was a record-breaking year for days on market, median sales price, and mortgage rates.
The familiar ingredients of high demand and low interest rates caused the market to continue to surge from January to December. Let’s look back at key factors that unfolded in 2021.
HOME SALES
After a record number of home sales in Northern Colorado in 2020, would there be a similar demand for housing in 2021? Yes. Home sales reached a 15-year high with about 6 million homes sold nationwide.
INVENTORY
Inventory moved fast in 2021 — creating an extremely competitive market — and leaving standing inventory in short supply. Traditionally, a balanced housing market is characterized by six months of supply, meaning enough houses are available that it would take six months to sell them all, based on historical buying trends. Except for homes priced over $1 million, supply was at less than two months across the region.
MORTGAGE RATES
Low mortgage rates are key to housing affordability and thus a driving force behind housing demand. While average rates on 30-year-fixed loans inched up from the start of 2021, the 3.11 percent rate as of December 30 remained below the 3.74 percent average at the end of 2019.
Now that 2021 is officially behind us, here’s a look back at the market statistics and trends that embodied this memorable year.
Group Partners’ Design Trend Predictions
- Clean lines, flexible multipurpose spaces.
- Black accents, natural light, nature coming indoors, and home bars.
- Modern sleek, blacks, grays, natural woods.
- Eclectic and global. Move over modern farmhouse – more woods and less white kitchens.
- More quartz, less granite.
- Quartz, brushed brass, real hardwood.
- White countertops.
- Colored kitchen cabinets.
- Away from all gray.
- Gray will finally lose favor or be used less; more warm colors coming in with the gray.
- Still lots of grays, but taupe getting mixed back in.
- More color.
- Bold wallpaper.
- Patterns and funky wallpaper.
- Southwest.
- Minimal and modern industrial looks.
- Mountain modern.
- Modern, modern, modern, and yet, farmhouse.
- Warm neutral tones, getting away from grays and farmhouse style.
- Gold fixtures.
- Outdoor spaces and privacy will become very important.
2022 OUTLOOK
We asked our Group Partners to weigh in on what they see on the horizon for 2022, including what might catch some of us by surprise, how growth will unfold in Northern Colorado this year, customer preferences for their new homes, and economic trends in the making.
Here is a summary of what they had to say:
POTENTIAL SURPRISES IN STORE.
Maybe it won’t be a shock if interest rates go up or down, but the direction is up for debate – and our Partners agree that it will be an eye opener whichever way it goes. Meanwhile, look out for the rising cost of water and the impact it will have on housing prices. Brace yourself for more “inbound” moves to Northern Colorado, and for home prices to keep surging at double-digit rates.
WHERE GROWTH WILL GO.
You’ve heard of “Drive until you qualify,” which applies as much as ever. Thanks to lower development costs, look for growth to shift away from bigger towns like Fort Collins, Loveland, and Greeley to smaller towns – particularly east of I-25 (i.e., Ault, Eaton, Johnstown, etc.). But here’s another saying for 2022: “Follow the water.” Towns with a handle on water supplies will attract more growth.
WHAT OUR CUSTOMERS WANT.
What makes homebuyers happy? That’s a wide-open discussion. Our Partners pointed out preferences that range from simply “bigger homes” to the need for more private spaces and high-tech features to support work-at-home and school-at-home lifestyles. Baby Boomers entering retirement years want ranch homes, while many younger families look for versatile properties with space for boats and RVs.
ECONOMIC TRENDS TO WATCH FOR.
Social, political, and financial forces will influence economic trends this year, but how? For starters, many Partners are wary of rising inflation, and particularly its impact on lower- and middle-income residents. While some believe we will feel the lingering effects of a sluggish supply chain and labor shortages in the service sector, others are confident that Northern Colorado will fight off the headwinds, continue to grow, and be attractive for relocating homebuyers.
2022 GROUP PARTNER ADVICE
FOR SELLERS.
Be realistic about price vs. condition. In this market, it’s possible to overprice. Small updates can go a long way. Be prepared for multiple offers and know ahead of time what is most important to you (i.e., price, possession date, terms, etc.) Get the contract that you want. How you live in your home and how you sell your home are very different. Pre-inspection increases your chances of multiple offers. Get your home ready for sale through the buyers’ eyes. Control what you CAN control: Condition. Do the proper prep, price it right and you will reap the benefits. You only get one first impression. Listen to your experienced Realtor. The prep done before pictures is your most important job!
FOR BUYERS.
Get financing in order first and listen to your Realtor. Get pre-approved first, get a lender letter, be ready for multiple offers, and try not to have a home sale contingency. Know the market you’re getting into – how aggressive do you need to be when making an offer. Be ready to make your “highest and best offer” and then live with the result. Be patient. Be ready to jump – properties go fast – and be financially and mentally ready to go. Know what is selling in the neighborhood you’re offering in and bid accordingly. Just because you may need to offer higher than asking price doesn’t mean you’re overpaying.
FOR INVESTORS.
Just because prices have gone up, that doesn’t mean you can’t find a great investment. Find a Realtor who knows what they’re doing in the investing world. Buy now! Rates are amazing and rents are solid. Buy what you know and understand. Real estate is the best investment in the world. Get as much income-producing real estate debt as you can; inflation is here. Escalation clause is your friend; see the potential, be flexible, be ready to move fast. You may need to count on more appreciation than cash flow. Cash flow may be a little tougher in 2022, but over the long haul, property prices are rising. There is opportunity for some incredible investment property in Northern Colorado!
FOR BUILDERS.
Kitchens still sell homes. We are cooking less, but we LIVE in our kitchens. Don’t forget storage when you’re leaving out the basement. Build something that is timeless. Floor plan needs are changing; listen to your Realtors and buyers on what is important today. Main-level primary bedrooms and basements please! Find a niche. Don’t skimp on finishes. Offer good warranties and honor them. Ensure garages are large enough to fit SUVs, pickups, and accommodate newer trash and recycling bins as required by HOAs. Make it clear what’s included versus what’s an upgrade. Don’t take this current sellers’ market for granted and maintain relationships.
2022 FORECAST
2022 will be another banner year for Northern Colorado Residential Real Estate. While, the dynamics of a rising interest rate environment may raise some questions about the potential growth opportunity of the housing market. The overall homeownership equity growth since the Great Recession will continue to fuel movement. While Northern Colorado will continue to see new construction growth, the limitations imposed by lack of skilled labor, as well as supply chain issues for materials, and the overall cost of both will drive prices higher in 2022. The impacts of events like the Marshall fire have added additional variables that certainly will further reduce the availability of resources (labor and materials) making it more difficult to match the demand and interest of prospective buyers fighting to get into or move around in this market.
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