We’ve had a robust real estate market in Northern Colorado in the last decade. At the beginning of the decade we were dealing with the effects of a recession and the housing crisis which included many foreclosures and rock bottom prices in real estate. However, by this time things were on the upswing. By the middle of the decade we were seeing significant price appreciation in home values year over year with multiple offer scenarios and offers coming in well above list price. As we approached the end of the decade we are still seeing growth in the housing market but now at a slower rate. The intensity of the real estate market that we saw a couple of years ago is settling down, those multiple offer scenarios are becoming more rare and the overall real estate market is cooling down.
So what will things look like for 2020? Let’s take a look at data put out by the Federal National Mortgage Association, or Fannie Mae as it is more commonly known, as well as the 2020 Business Economic Outlook put out by Leeds School of Business out of CU Boulder.
Let’s start with Interest Rates. According to research from Fannie Mae, it is expected that we will see record low average interest rates for 2020 of around 3.6%. By comparison, in 2018 we saw an average of 4.5% and in 2019 we saw an average of 3.9%.
Looking at the local economy, Colorado is in the top 10 states for employment growth. It’s predicted that employment growth is expected in 10 of the 11 industries state-wide, including construction. Unemployment in Colorado is at 2.7%, ranking Colorado in the top 5 lowest states. Employee wages in Colorado are higher than the national average.
With a strong employment force and opportunities, Colorado is attracting more people to move to the state for work. It’s forecasted that 2020 will see just under 50,000 people moving into Colorado.
Colorado is already seeing low inventory for housing. New construction is expecting a boom this year as more buyers will be in the market for a home and builders aren’t able to keep up with the need for more inventory.
How will this impact real estate for 2020? We should continue to see modest price appreciation in home values. While our real estate market is steadily normalizing, due to low inventory and increasing demand from steady population growth, we are still in a seller’s market, albeit mildly so. If the economic trends mentioned continue, we should see about 3-5% increase in average price appreciation. While the December numbers aren’t in yet, this last year saw about a 3% increase in average sales price in Northern Colorado. In this market, both sellers and buyers will benefit. Sellers will be able to capitalize on equity earned since they purchased their home and buyers will see moderate price appreciation after buying a home. With Colorado’s strong economy, we should see this trend continue.
December Housing Forecast. Federal National Mortgage Association (Fannie Mae): https://www.fanniemae.com/portal/research-insights/forecast.html?
2020 Colorado Business Economic Outlook. Leeds School of Business, University of Colorado, Boulder.