Boulder Economic Summit 2018: Skilled Workers Essential to Boulder’s Future, Housing a Key Issue

Boulder County excels at attracting talented and skilled workers. But change is in the air, says futurist Josh Davies, CEO at The Center for Work Ethic Development and keynote speaker at the recent Boulder Economic Summit 2018: The Workforce of the Future.

Statistics presented by futurist Davies suggest that if the last decade rocked with rapid change on the job-front, hang on to your Smartphone – the future promises to be a rocket-ride.

And, the future starts now.

Today, Boulder County employers are going head-to-head with the rest of the world. Local businesses compete globally for highly skilled workers integral to business success, yet these workers are too few in number to fill the demand. If corrective steps aren’t taken, the worker shortage will continue and potentially worsen, predict speakers at the Summit.  Success is critical, since Boulder County’s thriving economy, vitality and quality of life depends on local businesses continuing to engage world-class, highly skilled people.

Hosted by the Boulder Economic Council (BEC) and the Boulder Chamber at CU-Boulder, the Boulder Economic Summit brought experts and hundreds of community leaders together to evaluate Boulder’s competitiveness in the global demand for talent. In breakout sessions and roundtable discussions, the group explored how education and workforce development must evolve to keep up with the impacts of automation, immigration, globalization and other forces affecting future jobs.

There Will Be Robots. Lots of Robots.

People, get ready. Futurist Davies says the robots are coming and in more ways than ever expected.

The growth will be explosive: 1.7 new industrial robots will be in use by 2020, with robots performing tasks in homes and offices – not just in manufacturing, says Davies.

In his talk, 2030: The Workplace Revolution, Davies highlighted how technology will change our jobs in the coming decade and the pressing need for skill development and preparation.

With advances in technology and creative disruption in industries, employment has shifted, explains Davies, adding that 85 percent of jobs in 2030 haven’t been created yet. By then, computers will function at the speed of the human brain. He warns that increased automation and artificial intelligence will significantly alter employment needs and businesses should be prepared.

Low-skilled and entry-level and other jobs that perform repetitive tasks will no longer be available to human workers – computers and robots will fill that need. While companies do not like to replace people with robots, if robots cost 15-20 percent less, humans will lose out.

Davies predicts retail jobs will be replaced by robots at a very high rate, even though it is the leading profession in most states. Sixteen million retail workers will need to be retrained for new jobs.

His strategies for the future are to recognize that whether tasks are cognitive or non-cognitive, repetitive tasks can be automated. To succeed, workers need to develop non-cognitive skills: problem-solving, critical thinking and empathy.

Acquiring New Skills Critical to Success

Andi Rugg, executive director of Skillful Colorado, says one-third of the American workforce will need new skills to find work by 2030.

In her talk, Understanding the Skills Gap, Rugg emphasizes that training and retraining are the path to success, not only for the coming decade, but for today. There are 6.3 million unfilled jobs in the U.S. today because there’s currently not enough talent to bridge the gap between employer requirements and the workforce.

Rugg stresses that hiring needs to become skills-based, since we are in a skills-based economy. Her statistics are hard hitting:

  • Jobs requiring college degrees exceed the number of workers who have them.
  • Seventy percent of job ads for administrative assistants ask for a college degree, but only 20 percent of administrative assistants have a college degree.
  • Only 3 in 10 adults in the U.S. have a bachelor’s degree – demand for bachelor’s degree is outstripping supply of workers who have them.
  • Only 35 percent of Boulder County’s skilled workers have a degree and Colorado ranks No. 48in the nation for the number of people of color with a degree.
  • Employers need to be more agile in hiring and realize that skills can bridge the gap.
  • Employers need to focus on skills to address inequities in the labor market.
  • Employers should also offer upskilling and lifelong learning for employees.
  • Skills-matching improves employee retention and engagement as well as reduces the time to hire and ultimately reduces turnover costs for the employer.

Housing and Transportation Keys to the Solution

In a roundtable discussion led by RE/MAX of Boulder Broker/Owner Jay Kalinski, the team tackled one of Boulder County’s looming challenges in attracting workers to Boulder County – affordable housing and transportation options that enable commuting. The group developed possible solutions to ease transportation and affordable housing issues.

Photo caption for photo above: Jay Kalinski, RE/MAX of Boulder Broker/Owner (left} leads a roundtable discussion to develop transportation and affordable housing solutions.

Learn more about the discussion in Jay Kalinski’s article in BizWest, “Where will Boulder’s workforce of the future live?” at: https://bizwest.com/2018/06/01/where-will-boulders-workforce-of-the-future-live/?member=guest

Community Collaboration

In breakout sessions and the closing plenary, discussions revolved around ways the community can address workforce and economic development by bringing together private sector businesses and industry with educational institutions and organizations, government, and nonprofits in collaboration.

Through this joint effort, our community can prepare students with the workforce skills needed in the future that cannot be automated; develop business-relevant class content; roll out real-life technical projects in classrooms; re-train workers; and offer apprenticeships, internships, and work-based learning alongside education or as standalone, all of which can help workers gain skills.

Learn more by reading the Boulder Economic Council and Boulder Chamber’s recently published “Boulder Innovation Venture Report” at: https://bouldereconomiccouncil.org/whats_new_with_the_bec/boulder-innovation-venture-report/

Posted by Tom Kalinski Founder RE/MAX of Boulder on Wednesday, June 20th, 2018 at 11:25am.
Posted on June 21, 2018 at 5:38 pm
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Spring Home Sales Continue to Surge

Spring selling season in Boulder County continues to soar with April’s residential sales keeping pace with last month’s rocketing sales as well as outperforming April last year.

“Demand remains strong and inventory tight, keeping upward pressure on pricing,” says Ken Hotard, senior vice president of public affairs for Boulder Area Realtor® Association.

The 345 single-family homes that sold in April 2018 topped March’s rising sales by one unit or .3 percent; and the 126 condominiums and townhomes sold in April represented an additional 4 sold or 3.3 percent over last month.

Year-over-year Boulder-area single-family home sales climbed 5.4 percent through April 2018 – 1,198 homes sold vs. 1,137 – and condo/townhomes sales increased 5.9 percent with 447 units sold compared to 422.

Inventory also grew, which has proven to be a key factor in maintaining sales.

“While inventory showed solid increases in both single-family and condo/townhomes, we could use three-to-four times that amount to meet demand,” says Hotard.

Countywide single-family inventory increased 18.2 percent in April over March with 770 homes for sale vs. 651. Condo/townhome inventory improved 16.4 percent over the same period – 163 units vs. 140.

Hotard says evidence shows prices may have not yet reached a peak. “This is the first time I recall median prices over $1 million. It’s clear that with the city of Boulder built out on single-family housing stock, it’s putting pressure on prices.”

He notes that many dynamics shape the market. “Clearly affordability is a big issue – it influences who can live here, whether purchasing or renting. As more people can’t afford to live here, it’s a big loss because we are losing high quality people and the marketplace is becoming more exclusionary.”

Noting that buyers are coming from many places including California, Chicago, Texas and Nebraska, Hotard says people look to Colorado because of the entrepreneurial spirit and low unemployment.

Hotard summarizes, “As Boulder is to Colorado, Colorado is to the rest of the country.”

 

Posted by Tom Kalinski Founder RE/MAX of Boulder on Tuesday, May 29th, 2018 at 11:56am.

Posted on May 30, 2018 at 9:48 pm
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High-Skilled Workers Move to Denver More than Any U.S. City

More highly skilled workers are moving to Denver than any other U.S. city, according to a new study by JLL Research.

The number of 25-year-olds and older with a bachelor’s degree or higher increased in Denver by 22.5 percent from 2012-2016, leading the nation’s growth rate for that demographic, reports JLL based on analysis of U.S. Census Bureau estimates.

Among cities ranked, Denver took No. 1 followed by Washington, D.C. at 19.9 percent; Philadelphia, 19.7 percent; Boston, 19.1 percent; Portland, 18.4 percent; and Fort Worth, 17.9 percent.

Here’s a look at the top 10 cities for worker growth rate in that demographic:

Cities emerged as the residential location of choice, JLL Research says but “not all cities were created equal in their ability to attract talent.”

Denver led the pack bolstered by high wages and low unemployment. Even with the influx of workers, Colorado’s unemployment rate is at a historic low, clocking in at 3 percent, according to Colorado Department of Labor and Statistics March 2018 data.

In 2017, our state boasted the lowest unemployment in the nation at 2.3 percent, which is the lowest the state has seen since data were recorded in 1976, reports the CU Leeds Business Research Division at CU-Boulder.

CU Leeds School reports cities across the state with the lowest unemployment rates:

–          Fort Collins-Loveland, 2.1 percent

–          Boulder, 2.3 percent

–          Greeley, 2.5 percent

–          Denver-Aurora-Broomfield, 2.5 percent

Unemployment in the U.S. is 4.1 percent, with unemployment for those holding a bachelor’s degree or higher is roughly 2.1 percent nationwide.

“In a full employment economy, talent becomes increasingly difficult to attract as competition for available workers increases. As a function of demand for talent outstripping supply, wages naturally rise as employers offer higher compensation to compete,” reports JLL Research.

See the full list of cities at http://www.jll.com/philadelphia/en-us/research/snapshots/839/philadelphia-4-9-18-war-for-talent

Read more on the CU Leeds Economic Report at http://www.boulderco.com/blog/colorado-outperforms-us-economy-state-outlook-strong.html

Posted by Tom Kalinski Founder RE/MAX of Boulder on Tuesday, May 29th, 2018 at 11:07am.

Posted on May 29, 2018 at 9:48 pm
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Four Colorado Metros Where Home Sellers Gain Most

As home values continue to rise in Colorado, it’s clear that home sellers are benefitting, with four state metro’s making the top 15 of 24/7 Wall St.’s list of cities where people made the most money on home sales.

Boulder ranked No. 8 on the list with Denver, Fort Collins, and Greeley coming in seventh, eleventh and fifteenth, respectively.

According to 24/7 Wall St., Boulder’s average home price gain since last purchase is 56.4 percent or $176,750, compared with Denver’s slightly higher 56.6 percent which translates to $133,700; Fort Collins’ gain of 54.6 percent or $121,850 and Greeley’s 52.6 percent or $107,748.

Top-ranked California metro San Jose-Sunnyvale-Santa Clara had an average home price gain of 77 percent or$415,500.

Metro areas like Denver, Nashville, and Austin are “historically steady-Eddie appreciation markets in middle America that have transformed into boomtowns during this particular up economic cycle,” Senior Vice President of Attom Data Solutions Daren Blomquist tells 24/7 Wall St.

The top five and half of the top 20 metro areas with largest home sales gain are West Coast markets, which Blomquist notes were “the last to get hit by the housing crisis and the first to recover.”

Here’s a look at the full data on Colorado cities, as reported by 24/7 Wall St.:

No. 7 – Denver-Aurora-Lakewood
Average home price gain since last purchase: +56.6% (+$133,700)
Average home sale (2017): $453,012
Best historical time to sell: 2017 (+56.6% price chg. since last purchase)
Worst historical time to sell: 2011 (-3.6% price chg. since last purchase)
Average outstanding home loan: $316,904
Median household income: $71,926

No. 8 – Boulder
Average home price gain since last purchase: +56.4% (+$176,750)
Average home sale (2017): $645,424
Best historical time to sell: 2000 (+72.6% price chg. since last purchase)
Worst historical time to sell: 2003 (-0.4% price chg. since last purchase)
Average outstanding home loan: $377,262
Median household income: $74,615

No. 11 – Fort Collins
Average home price gain since last purchase: +54.6% (+$121,850)
Average home sale (2017): $530,051
Best historical time to sell: 2017 (+54.6% price chg. since last purchase)
Worst historical time to sell: 2010 (4.9% price chg. since last purchase)
Average outstanding home loan: $281,579
Median household income: $66,469

No. 15 – Greeley
Average home price gain since last purchase: +52.6% (+$107,748)
Average home sale (2017): $327,100
Best historical time to sell: 2000 (+239.7% price chg. since last purchase)
Worst historical time to sell: 2011 (-6.0% price chg. since last purchase)
Average outstanding home loan: $334,061
Median household income: $63,400

Methodology

To identify the cities where people make the most on home sales, 24/7 Wall St. reviewed home price gains in metropolitan statistical areas of 200,000 people or more provided by Attom Data Solutions. The real estate data clearing house considered the 150 large MSAs with at least 18 years of home sales and price data. Attom determined for each year the median sales price of all single family homes and condos that sold that year and subtracted it from the median sales price of those same properties the last time they sold. To calculate the percentage gain, the median dollar gain was calculated as a percent of the previous median purchase price.

For the full report visit https://247wallst.com/special-report/2018/03/02/cities-where-people-make-the-most-on-home-sales

Posted by Tom Kalinski Founder RE/MAX of Boulder on Tuesday, May 22nd, 2018 at 2:31pm.

Posted on May 28, 2018 at 4:05 pm
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6 Strategies for Maximizing Your Home’s Selling Price

Pricing and prepping your home to sell at the highest price requires strategy, even in a red hot market like Boulder County.

The best strategy is the one that suits your personal needs and local market conditions. For those reasons, your Realtor is the most reliable advisor for pricing your home. Your Realtor also can offer insights on improvements that will boost your home’s appeal and value.

If you’re just beginning to consider selling, take a look at these pricing and prepping strategies reported by Realty Times. Depending on your local market, your Realtor may recommend these approaches to selling your home.

Price Just Under a Price Break

For a home valued at $600,000, list at $599,000 to increase the number of searches your home appears in and the potential buyers that see your home. Even better, prices that aren’t typical, such as $597,400, increase the perception of value.

Price to Drive Demand

The same $600,000 home could be priced at $575,000, which is slightly undervalued. This might seem risky, since all offers could come in right at $575,000. As the seller, you can counteroffer or decline any offer you don’t want to accept. The advantage is that an under-value listing creates a sense of urgency, potentially motivating more buyers to make an offer. If enough people do this at once, this creates a buyer frenzy and increases the likelihood of multiple offers and escalated prices.

Review Comparable Listings

Review a comparative market analysis of recently sold homes and those currently active, expired and off-market. Remember, it’s important to look at what isn’t selling, as well as what is. Your Realtor will prepare this report for you and recommend how you should price your home relative to the comparable listings nearby. Generally, it’s recommended to price you home within 10 percent of the average home price in your area.

Make Select Home Improvements

When choosing which home improvements to make, go with those that will make a positive first impression and sell your home quickly for the lowest investment.

Two proven updates to make are:

Replace carpet that is more than five years old or looks worn or stained. Consider replacing the carpet with hard floors such as wood, bamboo or cork. Here’s an extra tip: Using the same material throughout each floor of your home makes it look bigger and creates the impression your home is worth more.

Apply a fresh coat of neutral paint to brighten your home and cover up scuff marks and dirt. Neutral grays and earth tones will appeal to a cross section of buyers. You can even freshen your kitchen with chalk paint, instead of going to the expense and inconvenience of fully remodeling. Chalk paint looks great and is hard to distinguish from the original finish.

Decisions on how to price and prepare your home for sale are important and influenced by local factors. So once you get past the considering stage, consult your Realtor for the best professional advice for your neighborhood.

Read more at https://realtytimes.com/consumeradvice/sellersadvice/item/50605-20170216-maximize-your-listing-price-while-minimizing-your-expense

Posted by Tom Kalinski Founder RE/MAX of Boulder on Tuesday, May 22nd, 2018 at 2:16pm.

Posted on May 24, 2018 at 4:04 pm
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Denver International Named Top Airport in America

Denver International Airport ranked No. 1 in the U.S, reports international air transport researchers at Skytrax in the 2018 annual airport awards.

In a separate Skytrax ranking of regional airports by continent, Denver is the No. 1 airport in North America and No. 5 regional airport in the world.

More than 13 million international air travelers around the world surveyed for the awards voted Singapore Changi the top airport in the world for the third year in a row. Denver – ranking 29th in the world – claimed the top ranking spot for U.S. airports. Denver is followed by No. 34 Cincinnati, No. 48 Houston International, and Nos. 50 and 51 Atlanta and San Francisco, respectively.

Travelers were surveyed from August 2017 to February 2018, covering 550 airports worldwide and evaluating traveler experiences including check-in, arrivals, transfers, shopping, security, and immigration through to departure at the gate.

But that’s not all. In a separate airport satisfaction survey conducted by J.D. Power Ratings in 2017, DIA pulled a score of 763 out of 1,000, ranking fourth. Orlando International Airport ranks highest in satisfaction among mega airports, with a score of 778. Detroit Metropolitan Wayne County Airport (767) ranks second, and McCarran International Airport and Phoenix Sky Harbor International Airport (765) tied for third.

The survey found overall passenger satisfaction with North American airports has reached an all-time high.

“Capacity has become a huge challenge for North American airports, with many reporting 100% of available parking spots being filled and large airports, such as Orlando International, setting passenger volume records each month for more than three years straight,” said Michael Taylor, Travel Practice Lead at J.D. Power. “Despite these difficulties, airports are responding with new technology and old-fashioned personal skills to win over harried travelers. These range from smartphone apps that tell travelers where to find a parking spot to therapy dogs—and in one case, a therapy pig—mingling with travelers to relieve stress and improve the overall airport experience.”

Nearly every U.S. airport – faced with high passenger capacity and ongoing construction projects to address increased demand – is using technology to help address these issues. Sacramento International Airport developed a smartphone app that tells travelers where to find a parking spot, and airports nationwide have invested heavily in improving phone-charging stations and internet access in their terminals.

The J.D. Powers study, now in its 12th year, measures overall traveler satisfaction by examining six factors: terminal facilities; airport accessibility; security check; baggage claim; check-in/baggage check; food, beverage and retail. It is based on responses from 34,695 North American travelers who traveled through at least one domestic airport with both departure and arrival experiences during the past three months.

For more on the Skytrax Awards see: http://www.worldairportawards.com/Awards/world_airport_rating.html and http://www.worldairportawards.com/Awards/worlds_best_regional_airports.html

For the full J.D. Power ratings see: http://www.jdpower.com/press-releases/jd-power-2017-north-america-airport-satisfaction-study

Posted by Tom Kalinski Founder RE/MAX of Boulder on Monday, May 14th, 2018 at 2:49pm.

Posted on May 22, 2018 at 5:47 pm
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Boulder County Home Sales Spring Ahead

March home sales signaled a robust and active home buying season ahead for Boulder County.

“The Boulder-area market rocketed forward in March with strong sales that improved significantly,” says Ken Hotard, senior vice president of public affairs for the Boulder Area Realtor® Association.

Following modest positive movement in February, housing surged forward in March, according to March sales statistics. Boulder Valley buyers showed up strong, undeterred by a market pattern of low inventory and rising prices. This pattern has characterized the countywide housing market for several years running.

Single-family home sales in the Boulder-area jumped 43.3 percent in March compared to February 2018 – 344 units sold vs. 240. Condominium and townhome sales also rose, marking 28.4 percent growth month-over-month with 122 units sold vs. 95.

Year-to-date, single-family home sales increased 8.7 percent through March 2018, with 829 Boulder-area homes sold vs. 763. Sales of condominiums and townhomes increased 1.6 percent year-to-date with 312 units sold compared to 307 for the same period in 2017.

Inventory also improved, though modestly. The number of single-family homes for sale grew by 10 percent – 651 units compared to 592 – while townhome and condo inventory grew 5.3 percent – 140 units vs. 133 – month-over-month.

“The inventory level is about a two-month supply of single-family homes and a one-month supply of condominiums and townhomes. A healthy market is thought of as a five- to six-month inventory supply,” says Hotard.

Nationally 40 percent of housing sales occur during March, April, May and June.

Hotard says the consistent buying activity we see in our housing market speaks volumes for the desirability of the area and health of the market.

“It’s a strong, positive market for sellers. We need a significant amount of new product in the market to meet the demand, particularly the demand for housing suited for young people and a broad demographic of ages and incomes.”

Posted by Tom Kalinski Founder RE/MAX of Boulder on Tuesday, April 24th, 2018 at 11:31am.

Posted on April 26, 2018 at 6:52 pm
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Boulder One of Most Fitness-Friendly Cities for 2018

With Boulder’s walking, biking and hiking trails, it’s no surprise the city made the SmartAsset top 10 list of places for physical fitness.

But here’s what is surprising: as fitness and healthy-eating oriented as Boulder’s culture is, the city ranked only No. 10 on SmartAsset’s fourth annual study of the most fitness-friendly places in America.

According to the study, nine other cities are more fitness-friendly than this biking-hiking-running-skiing-walking-climbing loving town.

SmartAsset describes fitness-friendly cities as those that tend to be walkable, offer few fast food eateries and plenty of healthier eating restaurants, and present plenty of places to workout in. Having ample workout facilities overcomes crowded or far away gyms that can deter people from exercising regularly.

Boulder scores in the top 15 for the percent of residents who walk or bike to work and the number of fitness professionals per 10,000 residents. In fact, Boulder has a top 25 score in the number of fitness businesses. However, the cost of getting fitness help from a professional lowered Boulder’s overall score. The city ranks 337 out of 340 for the affordability of professional fitness help.

In No.1-ranked Missoula, Montana, residents walk or bike to work at a rate of around one in 11. The city’s transportation design makes walking or biking not only possible, but enjoyable.

With two Iowa cities in the top 10 – No. 3 Iowa City and No. 9 Ames – it’s clear that Iowans are doing a lot right when it comes to fitness. Around 11 percent of Iowa City residents walk or bike to work – the fifth-highest rate in the study, according to SmartAsset.

The top 10 cities are:

  1.       Missoula, Montana
  2.       La Crosse-Onalaska, Wisconsin-Minnesota
  3.       Iowa City, Iowa
  4.       Ocean City, New Jersey
  5.       Bend-Redmond, Oregon
  6.       Napa, California
  7.       State College, Pennsylvania
  8.       Harrisonburg, Virginia
  9.       Ames, Iowa
  10.      Boulder, Colorado

Data for 340 metros was analyzed by SmartAsset to determine America’s most fitness-friendly cities. Metrics include the percent of those who walk or bike to work, number of fitness jobs, cost of hiring a personal fitness instructor, number of fitness establishments and prevalence of fast food restaurants. The final factor – fast food eateries – is calculated as a negative.

Get all the details on each city at https://smartasset.com/mortgage/fitness-friendly-places-2018

Posted by Tom Kalinski Founder RE/MAX of Boulder on Friday, April 20th, 2018 at 10:40am.

Posted on April 20, 2018 at 5:43 pm
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What Not to Do Once Your Mortgage Is Approved

The real estate market in Boulder County is red hot, which makes maintaining your mortgage approval a must if you’re shopping for a home.

“It can be a lot of work to get your mortgage approved. Once it is approved, it is important not to make any major financial changes until you sign your final disclosure and the loan is closed,” says Jessica Shanahan, loan officer with Premier Lending.

To keep your mortgage approval, you need to know the financial moves not to make.

Your mortgage approval is primarily based on documenting your income and assets, your equity stake or down payment, your credit history and the cash you’ll have left over after the deal is done, according to Tuttle’s Real Estate Update.

After your mortgage is approved, don’t change any one of those qualifiers without first consulting your loan officer or you could lose your mortgage.

Here’s Real Estate Update’s list of what not to do:

Avoid Big Purchases

Don’t buy a new car or another large possession, or change the lease on your current car. It could show up on your credit report or bank statement. The new loan or purchase amount could tilt the debt-to-income ratio the lender used to approve your home loan, and your mortgage could vaporize.

Don’t Get New Credit

Don’t sign up for any new credit cards or other lines of credit, even for a zero interest rate. Resist all of those credit card offers that flow in after you get your mortgage approval.

Don’t Miss a Bill Payment or Pay Late

Pay your bills on time without fail, even if you dispute the charge. If you stop paying a bill, it can end up on your credit report and cause a problem with your mortgage.

Don’t Change Jobs

Now isn’t the time to start a new job or lose the job you have. It is okay to take a second job, as long as you keep the job you have. However, if you should be so fortunate as to get a promotion and raise, your mortgage shouldn’t be jeopardized.

Don’t Spend Your Cash

Don’t use your cash reserves, transfer large sums between bank accounts, or make undocumented transactions in your back account – either deposits or withdrawals. This activity can cause your mortgage approval to be reversed.

Just remember to control items that affect your financial picture, and barring any uncontrollable life events, your mortgage should be fine.

For more information see: https://bit.ly/2JzU2lx

Posted by Tom Kalinski Founder RE/MAX of Boulder on Friday, April 13th, 2018 at 12:09pm.

Posted on April 17, 2018 at 5:29 pm
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The one statistic every renter needs to see

By Jay Kalinski — 

That’s right, based on the latest available data from the Federal Reserve Survey of Consumer Finances, the average net worth of a homeowner is $231,000, a whopping 44 times greater than the average renter’s $5,200 net worth.  What makes the situation more dire is the fact that the gap is widening.  From 2013 to 2016, the average net worth of homeowners increased 15 percent while the average net worth of renters decreased by 5 percent. The situation for renters is bad and getting worse.

More than any other factor I could identify, homeownership best explains the gap between the haves and have nots. People seem to understand this fact, as a Gallup poll showed that Americans chose real estate as the best long-term investment for the fourth year in a row. So, why aren’t more renters buying homes?

Desire?

It could be that renters do not want to own homes. Anecdotally, we hear stories about how Millennials prefer to rent to give them a more flexible lifestyle, but the research tells a different story. In fact, Millennials represent the largest share of homebuyers today and only 7 percent of respondents to an NAR survey said that they did not want the responsibility of owning. More generally, 82 percent of renters expressed a desire in the fourth quarter of 2017 to be homeowners and about the same percentage said that homeownership is part of the American Dream.

What is driving this desire for renters to become owners? According to a recent survey, the main reasons renters would want to buy a home are: a change in lifestyle such as getting married, starting a family or retiring; an improved financial situation; and a desire to settle down in one location.

Renters seem to know that owning a home is a great investment, and they overwhelmingly express a desire to do so, and yet something is preventing many of them:

Ability

Based on a recent NAR survey, it appears that ability (perceived or actual) is the biggest obstacle to homeownership. In fact, 66 percent of renters reported that it would be somewhat or very difficult to save for a downpayment on a home. Only 16 percent said that it would not be difficult at all. Of those who said saving for a downpayment was difficult, 49 percent identified student loans, 42 percent cited credit card debt, and 37 percent cited car loans.

The above, however, only focuses on one aspect of home affordability. Another side is home price appreciation.  That is, if homes were more affordable, it would be easier to save for a downpayment.  Unfortunately for local renters, Boulder County has appreciated more since 1991 than any other area in the country — more than 380 percent! The average single family Boulder County home topped $708,000 in February 2018, which is almost 20 percent higher than two years ago.

In addition, interest rates are on the rise in 2018, and we’ve already covered how a 1 percent increase in interest rates can reduce your purchasing power by 10 percent.

Takeaways

There are two takeaways from this. First, for renters, you may be familiar with the adage “The best time to buy a home was 30 years ago. The second best time is now.” That is true now more than ever. If you have been considering making the jump to homeownership, now is the time. At this point, each day delayed likely equals less home for the money.

Second, for local government officials, if you truly support the idea of affordable (market rate) workforce housing, you have the power to encourage it. Without you, the affordability situation will only continue to deteriorate.

Jay Kalinski is broker/owner of Re/Max of Boulder.

Posted on April 10, 2018 at 7:51 pm
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