At the start of the year, I read an article about the 10 biggest threats to the global economy in 2020, written by a prestigious international organization. “Global pandemic” did not make the list, which goes to show how generally lousy we humans are at accurately predicting the future. As such, any predictions that I (or anyone else) could give you about how this pandemic will unfold, in terms of its impact on the local real estate market, would likely fare no better than random chance. Similarly, with the situation evolving so rapidly, any advice or best practices I could offer today may become obsolete in short order.
So, rather than peddle advice and predictions, let’s pause and take stock.
Back in 2008, the financial crisis was sparked in the real estate sector and led to a crisis that nearly collapsed the banking system. We see from history that recessions that begin in the housing sector tend to be worse and last longer than recessions ignited by other factors. Today, the recession we are likely heading into has a very different background — our economy and housing market were far stronger and more resilient, thanks in part to the measures put in place after that recession (tighter lending restrictions, more stringent liquidity requirements for banks, etc.). In fact, we were enjoying the longest economic expansion since WWII.
According to National Association of Realtors chief economist Dr. Lawrence Yun, “Conditions today are very different than the last boom/bust cycle. In 2004, we had a huge oversupply of new homes. In 2019, we still had a huge undersupply of new homes. In fact, we haven’t been building enough new homes to keep up with demand in over a decade. During the last downturn, there was the subprime factor and the variable interest rate. Now there are fewer variable rate mortgages and virtually no sub-prime mortgages.”
Colorado is well-positioned as a top economy nationally. Real GDP growth in Colorado ranked seventh in the nation year-over-year, and the state’s five-year average ranks fifth, according to economist Rich Wobbekind with CU-Boulder’s Leeds School of Business. Wobbekind says that Boulder County’s economy has been outgrowing the state economy, and is uniquely able to weather a recession. Boulder County’s economic vitality is fueled by a highly educated workforce and diverse ecosystem of industries including government research facilities, aerospace, biotechnology, cleantech, and information technology — industries that endure in the long term.
Boulder ranks number one in the nation for home value stability and growth for the fifth consecutive year, according to SmartAsset. As discussed in our recently published real estate report, based on our extensive data and market analysis, we have had a healthy housing market through 2019. Even through the grim days of the Great Recession, home prices in Boulder County declined only by 5 percent and recovered quickly post-recession. If you held onto your home for at least six years, there is no period when you would have lost money on your investment here.
While past performance is no guarantee of future results, the real estate market in our area has a history of weathering recent recessions better than other places and recovering more quickly after the storm has passed. Given everything that is going on, I still believe that owning property in Boulder Valley is and will continue to be an excellent investment.
Be well and do what you can to flatten the curve. Stay home.
Why Louisville and why now?
Those are the questions RE/MAX Elevate, the sister franchise of RE/MAX of Boulder, had to answer when deciding whether to put roots down there with its first office. And the answers came easy. Louisville is to many the unofficial “Capital” of East Boulder County. Business booms there, school are great, families love it, and it’s been recognized numerous times in the national media as one of the safest and best places to live in the nation (Money Magazine’s “Best Places to Live” in 2009, 2011, 2013, 2015, and 2017, one of the “20 Safest Places to Live in Colorado” by Elite Personal Finance, and among the “10 Best Towns for Families in the U.S.” by Family Circle Magazine). Louisville is a great little city. In fact, 78 percent of respondents to a citizen survey rated Louisville as an “excellent” place to live.
So it was with much excitement that RE/MAX Elevate planted its flag at 724 Main Street and had its grand opening on May 1. The public was invited to enjoy a ribbon cutting ceremony with Shelley Angell, executive director of the Louisville Chamber of Commerce, live music by Louisville musician Johnny O., wine and sangria tasting with local Decadent Saint winery thanks to Premier Lending LLC, small bites by local Wildcraft Kitchen, desserts from Bittersweet Café & Confections, and flower arrangements donated by Red Door Flowers. RE/MAX Elevate thanks the sponsors and vendors who made it such a special day in Louisville.
It is with much excitement that RE/MAX Elevate planted its flag at 724 Main Street in Louisville and had its grand opening on May 1. (Photo: Jonathan Castner)
RE/MAX Elevate Broker/Owner Jay Kalinski. “It’s an ideal place to live and do business with a great quality of life. We Heart Louisville. That’s the sentiment you’ll see on t-shirts and stickers for RE/MAX Elevate.”
Jay says that for those who want a little more space to live in, along with the beauty and amenities of Boulder County, Louisville is a remarkably attractive choice.
Lest our readers think this is a case of a national “chain” without ties to the community setting up shop in a hot market, a brief history lesson is helpful.
RE/MAX of Boulder was founded 42 years ago in Boulder by Tom Kalinski. At the time it opened for business, it was only the third RE/MAX franchise in the United States. RE/MAX of Boulder has been the No. 1 company in Boulder Valley home sales for more than 30 of its 42 years and the No. 1 single RE/MAX office in the U.S. 8 times. The company has more than 100 award-winning Realtors who are among the best in the nation, averaging more than 15 years of experience. They are seasoned experts with the utmost dedication to clients, going far beyond the extra mile to help them navigate an often challenging market. Jay became Co-Owner of RE/MAX of Boulder in 2012 and helped further expand the company to where it is today, serving as Broker/Owner for several years.
While Jay remains co-owner of RE/MAX of Boulder, he has turned Broker duties back over to Tom, so he can focus on expanding RE/MAX Elevate. Jay is a Boulder native, CU-Boulder alumnus, and Tom’s son. Jay, a lawyer and military veteran, says, “We’re thrilled to introduce RE/MAX Elevate to Louisville, where many of our founding real estate agents – and their families – live, work, and go to school, and where our clients are selling or searching for homes. We are rooted in the community.”
Jay has been a licensed broker for 10 years and a licensed attorney for 14 years having worked at several prominent law firms and serving 4 ½ years on active duty as an Air Force JAG officer. “We are committed to the city of Louisville, East Boulder County, Broomfield, and beyond,” Jay says. “And as a small local veteran-owned business, we are excited to be actively involved in the local entrepreneurial community and with nonprofits and community organizations and to support the vitality and wellbeing of the community.”
Manager Tammy Milano with Broker/Owner Jay Kalinski
Realtors in both offices have donated gift baskets from Louisville businesses for a free drawing, which kicked off during the grand opening party. Drop by any day during business hours in May to enter. Tickets will be drawn and winners announced during the Taste of Louisville on June 1. And to celebrate the opening of the new office, RE/MAX Elevate is sponsoring the Louisville Public Library’s Summer Reading Program. RE/MAX Elevate along with RE/MAX of Boulder are giving back to the community by co-sponsoring the Louisville Downtown Street Faire on Friday nights thoughout the summer.
Jenni Hlawatsch, owner of The Singing Cook, the business next door to RE/MAX Elevate where she continues to be a neighbor, is looking ahead as she welcomes the new office. She says, “While I’ll miss my Book Cellar neighbors, I look forward to the new business relationship with Jay and the RE/MAX Elevate team who are eager to support and get involved in all the goings on in downtown Louisville.”
“We’re delighted to welcome RE/MAX Elevate to downtown Louisville,” says Louisville Mayor Bob Muckle. “Their contributions to the local economy and strong tradition of community involvement will be a win for us all.”
RE/MAX Elevate is a member of the Louisville Chamber of Commerce and the Louisville Downtown Business Association.
RE/MAX Elevate, 724 Main St., Louisville; 303.974.5005; elevatedrealestate.com. Hours are: M-F 10:00 AM – 5:00 PM; Sa/Sun 11:00 AM-4:00 PM
By Darren Thornberry, At Home
Photos by Jonathan Castner and Flatirons Pro Media
Originally Posted by RE/MAX of Boulder
Colorado ranked as the No. 5 most innovative state in the U.S. and the achievement comes with perks.
For example, innovation is a principal driver of U.S. economic growth, reports WalletHub, which points toward good news for Colorado’s economic outlook.
“In 2019, the U.S. will spend an estimated $581 billion on research and development — more than any other country in the world and about 25 percent of the world’s total — helping the nation rank No. 6 on the Global Innovation Index,” writes WalletHub in its recently released study of Least & Most Innovative States.
The study compared 50 states and the District of Columbia across 24 indicators of innovation-friendliness, ranging from share of STEM professionals to tech-company density.
The top five states and their corresponding scores out of 100 are:
No. 1 Massachusetts, 72.31
No. 2 Washington, 68.03
No. 3 District of Columbia, 67.47
No. 4 Maryland, 64.06
No. 5 Colorado, 63.35
“Certain states deserve more credit than others for America’s dominance in the tech era. These states continue to grow innovation through investments in education, research and business creation, especially in highly specialized industries,” notes WalletHub.
Colorado also ranked in the top 10 for six metrics, including tied for No. 1 in eighth-grade math and science performance, No. 5 for share of STEM professionals and share of technology companies, No. 6 for projected STEM-job demand, and No. 7 for venture capital funding per capita.
What makes Colorado so innovative?
WalletHub compared two dimensions across 24 metrics, “Human Capital” and “Innovation Environment.”
Human Capital includes:
- Share of STEM Professionals
- Share of Science & Engineering Graduates
- Projected STEM-Job Demand by 2020
- Scientific-Knowledge Output
- Eighth-Grade Math & Science Performance
- AP Exam Participation
Innovation Environment includes:
- Share of Technology Companies
- R&D Spending per Capita
- R&D Intensity
- Invention Patents per Capita
- IP Services Exports as a Share of All Services Exports
- Business Churn
- Jobs in New Companies
- Net Migration
- Entrepreneurial Activity
- Number of Startups “Accelerated” per Total Number of Start-ups
- Venture-Capital Funding per Capita
- Average Annual Federal Small-Business Funding per GDP
- Industry-Cluster Strength
- Open Roads & Skies Friendly Laws
- Average Internet Speed
- Share of Households with Internet Access
- Adoption of K–12 Computer Science Standards, Note that this metric was chosen because WalletHub considers most future innovation will be tech enabled.
For more information visit https://wallethub.com/edu/most-innovative-states/31890
Originally Posted by Tom Kalinski Founder RE/MAX of Boulder on Tuesday, April 16th, 2019
More than 40 percent of homeowners in Boulder County are equity rich – that is the amount of loans secured by the property is 50 percent or less of the property’s estimated market value, according to ATTOM Data Solutions Q3 2018 U.S. Home Equity & Underwater Report.
Cities in Boulder County notch the upper end of the equity rich measure. Here are the statistics for Boulder County. Percentages within cities vary slightly by zip code:
Boulder – 55% equity rich
Louisville – 46% equity rich
Lafayette – 42% equity rich
Longmont – 41% equity rich
Statewide, Colorado homeowners aren’t far behind with more than 32 percent of Colorado properties equity rich.
Across the U.S., nearly 14.5 million properties are equity rich. That’s 25.7 percent of all mortgaged properties, up from 24.9 percent the previous quarter. Conversely, the share of seriously underwater properties dropped to 8.8 percent. ATTOM says properties categorized as seriously underwater have a combined estimated balance of loans at least 25 percent higher than the property’s estimated market value.
States with the highest share of equity rich properties are California, 42.5 percent; Hawaii, 39.4 percent; Washington, 35.3 percent; New York, 34.9 percent and Oregon, 33.6 percent. Colorado is close on Oregon’s heels with 32.3 percent equity rich properties.
“As homeowners stay put longer, they continue to build more equity in their homes despite the recent slowing in rates of home price appreciation,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “West coast markets along with New York have the highest share of equity rich homeowners while markets in the Mississippi Valley and Rust Belt continue to have stubbornly high rates of seriously underwater homeowners when it comes to home equity.”
The ATTOM Data Solutions U.S. Home Equity & Underwater report provides counts of properties based on several categories of equity at the state, metro, county and zip code level, along with the percentage of total properties with a mortgage that each equity category represents.
For the full report and to view statistics by zip code, visit: https://www.attomdata.com/news/market-trends/home-sales-prices/home-equity-underwater-report-q3-2018/
Posted by Tom Kalinski Founder RE/MAX of Boulder on Wednesday, February 20th, 2019 at 2:54pm.
Boulder’s economic horizon will keep its rosy glow, though economists anticipate the pace will slow in the face of growing local and national challenges.
Nationally recognized experts presented a mixed economic message to a record-setting crowd of civic, political and business leaders gathered for the 12th annual Boulder Economic Forecast. Organized by the Boulder Chamber and Boulder Economic Council, the event was held January 17 at the Embassy Suites Hotel. RE/MAX of Boulder is among the event’s sponsors.
The goal is to arm community leaders with up-to-date statistics and trends that inform decisions and support local economic vitality, according to John Tayer, CEO and President of the Boulder Chamber.
And community leaders will want to take heed.
Keynote speaker Dr. Richard Wobbekind, Executive Director CU-Boulder Leeds Business Research Division, shared a vision of continued economic growth but more moderate than previous years.
“Overall the picture is pretty positive in the sense that consumption is growing, investment is growing, government spending has been growing, so you have those pieces pushing the economy forward. That continues to fuel growth and employment,” says Wobbekind.
But uphill pressures are mounting.
With national GDP growth slowing to a projected 2.4-2.5 percent for 2019, the national economy is moving to a moderate trend. Wobbekind says the thing on everyone’s mind – “the elephant in the room”—is whether recent stock market volatility and other factors will lead to a significant downturn in the economy.
“Will the Recovery Ever End?” is his presentation title. But Wobbekind says it’s hard to say whether or not the economy will turn towards recession.
National outlook a mixed bag
Nationally, Wobbekind’s data showed a story of good news, bad news.
On the good news side, Wobbekind says nationally incomes are rising due to strong employment accompanied by strong wages. With rising incomes, consumption rates are growing and debt burden as a percentage of income is relatively low. National FHFA home price growth is showing strong price appreciation.
Then there are the tempered aspects of the national economy. He says consumer confidence is still quite high, historically speaking, but it has come down slightly. Businesses are in good shape, but there is uncertainty about interest rates, trade agreements, sales and profit growth and hiring. Nationally, business confidence is falling, but still above neutral.
Wobbekind also presents some straight-up challenges. Corporate and private tax cuts are effectively ending, with the tax cut stimulus leaving a national deficit of over $1 trillion, accumulated during a prolonged period of economic expansion. Workers are in short supply with low unemployment rates and 6.7 million jobs unfilled nationwide. Student loan debt is high and interest rates may see modest increases.
Colorado’s economy sustaining strength, but pressure is rising
Colorado’s economic record has been strong, outperforming the nation in recent years. For example, the state ranked third in the country for pace of GDP growth in 2017. Wobbekind suggests the trend may keep going, though more slowly.
For one, strong employment growth is expected to continue – Colorado has been in the top five states for job creation since 2008. But in 2018, the employment growth was down slightly to two percent. Even so, Colorado has the third highest labor participation in the country.
But worker’s wage growth is not as strong as would be expected given the tight labor market. Wobbekind notes lackluster increase in wages is troubling in the face of the high cost of housing and inflation.
While Colorado’s population keeps growing, the rate is slowing. Net migration will continue to decline as it did last year.
Home price appreciation—notably among the fastest growing in the U.S for the past 10 years—fell from the top three slots but remains in the top 10. Residential building permit activity is still strong.
While businesses are still confident in state and local economies, confidence is dropping when it comes to the national economy.
Boulder County carries on
Boulder County is expected to mostly hold steady. Though the area’s strong rate of growth is expected to decrease next year, the decline will be slight. Key statistics Wobbekind listed are:
Boulder’s GDP growth is 4 percent
Much needed multifamily housing stock is increasing
City of Boulder’s median single family home prices have stabilized somewhat
City of Boulder has a significant jump in office vacancies and more office space is coming online
Boulder County wage growth is 4.7 percent
Broomfield and Denver have higher wages than Boulder
City of Boulder’s sales and use tax dipped last year but is climbing back up
Wobbekind points to headwinds facing Colorado, saying the state should watch out for:
Drought and weather
Real wage increases
PERA funded only at 46 percent
Labor shortage one of state’s biggest challenges
Skillful Colorado’s Executive Director, Shannon Block, dove into to strategies for overcoming the shortage of skilled workers. Employers are struggling to find workers and the cause of the talent shortage is a skills gap. Fueling the problem, says Block, are traditional employment practices narrowly focused on candidates with 4-year college degrees. That focus is making job-landing difficult for the 70 percent of Americans who don’t have a 4-year degree.
Skillful Colorado’s focus is to shift that trend toward hiring practices that value skills-based talent. The goal is to help Coloradans get jobs in a rapidly changing economy, particularly the 60 percent In Colorado with no college degree.
For more information, see Boulder Economic Forecast slide presentations at:
Dr. Rich Wobbekind’s 2019 Boulder Economic Forecast: https://ecs.page.link/YoZU
Shannon Block, Skillful Colorado, Addressing the Skills Gap: https://ecs.page.link/kLGs
Originally posted by Tom Kalinski Founder RE/MAX of Boulder on Thursday, February 7th, 2019 at 1:40pm.
2018 was another strong year for residential real estate in Colorado in general and Boulder Valley in particular, but what’s in store for 2019?
First, a look back at 2018. Nationally, Colorado jumped from 10th to fifth among all states for one-year appreciation, with a 9.16 percent increase in home values. Boulder County improved from 57th in 2017 to 41st in 2018, with over 9.5 percent price appreciation. Below are the 10 “Vital Statistics” for Boulder Valley we track to gauge the health of the real estate market from year to year.
As you can see, most of the indicators point toward an appreciating market, though increasing interest rates and a drop in the percentage of homes under contract indicate potential signs of weakness emerging.
In the city of Boulder, the average price of a single-family home topped $1,215,000, which was up 11 percent from 2017. However, Boulder also saw almost 50 fewer home sales than last year, which highlights our continued shortage of inventory. The most affordable city in Boulder County continues to be Longmont, but even there, the average price of a single-family home is now over $460,000 and may reach $500,000 if its appreciation trend continues.
One statistic that gets very little attention is that we often see home prices dip slightly in the second half of the year as compared to the first. As the chart below shows, we generally see appreciation through June or July, and then values trail off slightly. What this chart means is that, if you’re a seller your best bet is to sell in the spring, and if you’re a buyer, try to buy in the fall when home prices are stagnant or dropping.
2018 was quite strong — will 2019 be similar?
Locally, conditions in our area generally support continued appreciation in residential real estate. The total number of active listings available is still less than half of what it was before the Great Recession, which is likely to keep home prices growing, especially as our economy remains strong (very low unemployment) and we continue to see net migration into our area.
There are, however, several trends that could derail continued growth in our market. First, interest rates are almost a full point higher than they were in 2017, and I’ve discussed before how a one point increase in interest rates can reduce purchasing power by 10 percent. The Fed had indicated its intent to continue to raise rates in 2019, however, the news from the Fed’s most recent meeting in January suggested that they may hold off until at least June.
Second, the potential for a recession in the next year or two could begin dragging on home sales. One indicator is that the yield curve (which compares rates for short-term vs. long-term Treasury notes) has been getting flatter. When the yield curve inverts (that’s when rates for 10-year notes dip below rates for 2-year notes), it is very often followed by a recession.
Finally, local no-growth and anti-growth policies, regulations, and mindsets are making it increasingly difficult to add inventory to our region. The dearth of homes to sell could negatively impact our market — and it is the only factor here that we as citizens have a measure of control over.
2019 has the potential to be another great year for residential real estate in Boulder Valley, but we need to be mindful of the potential derailers mentioned above.
Originally posted on BizWest. Jay Kalinski is broker/owner of Re/Max of Boulder.