It’s not just Denver that is competitive. Two other interesting charts below that.
Sellers: degree of competitiveness not going to let up in the next 8-12 weeks. High end sellers really should take advantage of the market ASAP before the fairytale market for selling big homes ends. Which will happen, eventually.
Buyers: wow, it’s just not going to get better this spring. If you have first time buyers that can extend leases a few months and look in the summer vs. now, that might be a good idea. as much as I hate to say wait, I just don’t see the buyer demand falling off.
The first is the most interesting, the number of homes sold in the US was down a little in Feb ’21 from Jan ’21. Usually sales volume goes up. Lack of inventory likely caused this.
Another way to look at it:
This one shows it (inventory level) in an even more dramatic way:
At the moment Denver is seeing big pricing increases – so is the entire US
A good way to fix this inventory problem is build more houses. We have a shortage of skilled labor to do that. Good news, there are LOTS of job openings for apprentices in the trades
Finally, Colorado ranks #2 for remote work jobs. I’m not sure what the implication is for that. Perhaps high tech jobs in CA and NY will live in CO while “employed” in CA?
The record-low number of homes on the market is limiting purchases heading into the spring selling season.
Home sales typically slow in the winter before climbing in the spring, as families try to buy homes and move before the start of a new school year. For-sale listings of previously owned homes usually rise in February.
But in the past year, homeowners have been reluctant to sell due to concern about the coronavirus and fierce competition for homes. There were 1.03 million homes for sale in the U.S. at the end of February, unchanged from the revised January level, which was the lowest in data going back to 1982, the National Association of Realtors said Monday. The level was down 29.5% from February 2020, a record annual decline, according to NAR.
The inventory shortage was the key reason why existing-home sales dropped 6.6% in February from January to a seasonally adjusted annual rate of 6.22 million, said Lawrence Yun, NAR's chief economist. "It is not that demand is disappearing from the marketplace. It is really the lack of supply," he said.
The February sales marked a 9.1% increase from a year earlier.
The housing market has boomed in the past year, as buyers took advantage of low interest rates and the pandemic prompted new demand for homes with space to work remotely. Houses are typically selling in less than three weeks, according to NAR. The median existing-home price rose 15.8% in February from a year earlier to $313,000, NAR said.
First-time home buyers Jill Hardy and Michael Zana struggled to find homes in their price range in Santa Cruz, Calif. Ms. Hardy had $200,000 saved to spend on a down payment but kept losing last fall to cash buyers who were willing to forego home inspections.
They found a house flipper who agreed to sell a house he was renovating before it went on the market. The sale closed last month. “There was no competition for this one, which I think is probably why I got it,” Ms. Hardy said.
At the current sales pace, there was a two-month supply of homes on the market at the end of February.
Nationally, there were more real-estate agents in February than there were houses to sell, according to NAR.
Homes typically go under contract a month or two before the contract closes, so the February figures largely reflect purchase decisions made in January or December.
That means sales could slow further in March, reflecting the severe winter weather that affected much of the country in February, according to Capital Economics.
Mortgage rates also ticked higher in February and March. For the week ended Thursday, the average rate on a 30-year fixed rate mortgage was 3.09%, the highest level since June, said Freddie Mac. The monthly payment for a $300,000 loan is $70 higher than at the start of the year, said Danielle Hale, chief economist for Realtor.com.
News Corp, owner of The Wall Street Journal, also operates Realtor.com under license from the National Association of Realtors.
In Boise, Idaho, home prices are rising quickly but homeowners are reluctant to sell, said Sheila Smith, team leader at Re/Max Capital City.
“They realized they can’t afford to buy anything, so they’re staying put and remodeling,” she said.
Existing-home sales fell the most month-over-month in the Midwest, down 14.4%, and in the Northeast, down 11.5%. Sales rose 4.6% in the West.
Home sales typically slow in the winter before climbing in the spring, as families try to buy homes and move before the start of a new school year.
Sales were especially strong at the high end of the market, with the number of homes selling that were priced over $1 million rising 81% in February compared with a year earlier, according to NAR.
Homes typically go under contract a month or two before the contract closes, so the February figures largely reflect purchase decisions made in January or December.
New-home construction has risen in the past year alongside demand, but shortages of land, labor and materials have raised builders’ costs and limited how quickly they can start new homes.
A measure of U.S. home-builder confidence declined in March, the National Association of Home Builders said last week. Housing starts, a measure of U.S. home-building, fell 10.3% in February from January, the Commerce Department said last week. Residential permits, which can be a bellwether for future home construction, fell 10.8%.
“There’s just not enough physical people,” especially in skilled trades, to meet home-building demand, said Ivy Zelman, chief executive of real-estate research and advisory firm Zelman & Associates.
The red-hot housing market has achieved a number of milestones this past year. Perhaps the most telling is this: There are more real-estate agents than homes for sale in the U.S.
This phenomenon reflects both the extremely tight supply of homes on the market and how surging prices are persuading tens of thousands more Americans to try their hands at selling real estate.
Michael Mitchell in Boston is one of them. He signed up for a real-estate course in June after being furloughed from a managerial position at a regional restaurant chain. He greeted the new profession enthusiastically, thinking his skills and focus on customer experience developed during 30 years in the restaurant business would be transferable to real estate.
He got his license in October, but has yet to land any deals, as Covid-19-related restrictions are limiting in-person interactions with clients.
“I’ve learned some aspects of the business, but it’s hard to connect with people…that you’ve never met,” Mr. Mitchell said.
The National Association of Realtors’ membership count has exceeded the number of homes on the market only once before, in December 2019, when the number of agents dipped slightly but the inventory of homes for sale declined by more. It happened again last October and has held ever since.
At the end of January, there were 1.04 million homes for sale. That is down 26% from a year earlier and the lowest on record going back to 1982, according to the National Association of Realtors. Also in January, the NAR had 1.45 million members, up 4.8% from a year earlier.
It is easy to understand why so many people would sign up for the real-estate profession: The pandemic eliminated millions of jobs, especially in service industries such as restaurants and hospitality. The booming housing market suggests there is a lot of money to be made selling homes. And in most states, it doesn’t take much more than taking a course and passing an exam to get a residential real-estate license.
“There are very low barriers to entry, in terms of the ease of getting a real-estate license. But the barriers to success are very high.”
State licensing exams can include questions on property laws and market analysis. Pass rates vary by state. In Texas, nearly two-thirds of test takers pass on the first try, according to the Texas Real Estate Commission.
“There are very low barriers to entry, in terms of the ease of getting a real-estate license,” said Nick Bailey, chief customer officer at Re/Max Holdings Inc., a real-estate brokerage franchiser. “But the barriers to success are very high.”
Home sellers generally favor agents with years of experience and proven sales records. That means newer agents tend to represent home buyers, many of whom are struggling to get an offer accepted with so few properties for sale.
Consequently, most agents make little or even no money in the beginning, since they typically rely on commissions and don’t get paid unless a sale is completed. Realtors with two years of experience or less earned a median gross income of $8,900 from their real-estate work in 2019.
But that figure rises with more years on the job: The median gross income for all NAR agents in 2019 was $49,700, up from $41,800 in 2018, the association said.
The business is pretty fluid. NAR, which represents the majority of active U.S. residential real-estate agents and brokers, said about 15% of its membership turns over every year. Agents usually work as independent contractors, and many work part time.
The number of agents also tends to roughly correlate with the performance of the housing market. The ranks of NAR rose to 1.37 million in October 2006—shortly after the market's peak—then bottomed out around 960,000 in March 2012, following the housing crash. NAR membership has risen every year since.
Real-estate brokerage Redfin Corp. , which hires agents as employees, said it underestimated demand after the pandemic struck. Redfin furloughed 41% of its agents in April as home sales slumped. The firm said it is now hiring 162 people a week in its brokerage business, up from 92 a week at the same time last year.
“It is by far the most hiring we’ve ever done,” Redfin Chief Executive Glenn Kelman said.
Some new agents have enjoyed early success. Lauren Hurwitz of New Rochelle, N.Y., got her real-estate license in August after being laid off from a media-relations job. She closed her first sale in February and has three more in contract. Her first client was a close friend whom she helped buy a home. She has gained others through social media and word-of-mouth.
“I am seeing insane demand and very little inventory,” she said. “I know there’s a lot of competition out there.”
Diana Dorel Gutierrez took her real-estate exam last March, just before the testing center closed because of the pandemic. When she joined a brokerage in the Phoenix area, co-workers warned it wouldn’t be easy.
“They said, ‘You don’t have any idea what you’re in for. This is the worst time to be an agent [for buyers] and the best time if you’re the listing agent,’” Ms. Dorel Gutierrez said.
But Ms. Dorel Gutierrez, who also works as a spiritual and relationship coach, has closed five deals so far. She has found clients through social media, referrals and leads from Zillow Group Inc. Her colleagues call her and the other agents that joined the brokerage last spring the “pandemic babies.”
“If you can do it in this industry at this time,” she said, “you can do anything.”
Realtor.com says despite double-digit increases in home prices and a record low number of homes for sale, buying is becoming more affordable in a growing number of the nation's largest cities compared to renting. The monthly buying cost of buying is the same or was cheaper in 15 of the nation's 50 largest metros, up from 13 a year ago. Nine other markets were within 5% of flipping in favor of buying from renting. Low interest rates have made the monthly cost to purchase the median price home in the US rise 0.2% year-over-year to $1,988, despite the double-digit growth in home prices. The cost to rent was up 2.4% to $1,727. In the top 10 metros that favored buying over renting, the median listing price of a home averaged 7.7% lower than January's national median listing price of $346,000, while rents were 0.7% greater than the top-50 average.
Population growth in the U.S. has slowed to its lowest level in at least 120 years, but Colorado and the West have continued to draw migrants from other parts of the country, according to new numbers from the U.S. Census Bureau.
The country as a whole grew about .35%, or about 1.1 million people, between 2019 and 2020. Among individual states, though, Colorado saw the twelfth-highest growth at .85%, which translates to just under 50,000 people. The state has been growing for years and has added about 760,000 people since 2010, the eighth-highest in the country. These new population figures include changes due to births, deaths and migration. A Brookings Institution report attributes part of the decrease to the pandemic, which brought more deaths and more travel restrictions to most of 2020.
Any increases in population indicate where people are heading to weather the Covid-19 pandemic, since the Census Bureau numbers are based on estimates collected this year. These estimates are independent from the 2020 census, which hasn't been released yet. The data show that areas thatare typically more populated – the Northeast, California and parts of the Midwest – lost population, but areas like the West and South grew.
The data release comes as the Bureau of Economic Analysis reported that the Denver metro saw one of the highest jumps in personal income between 2018 and 2019 among large cities. Experts predict a 5.4% increase in personal income this year.
In terms of just net migration, Denver County alone gained 7,200 residents between 2014 and 2018 according to the most recent migration figures from the Census Bureau. The city has gained 1,200 net residents from California and about 1,100 from the state of New York, followed by Florida and Illinois.
New York saw a drop of .65% in total population this year, the country's largest and a loss of 126,000 people. New York was followed by by Illinois, which lost .63% of its total population due to migration or deaths.
Other states in the West — in particular Idaho, Arizona, Nevada and Utah — saw the greatest yearly growth in terms of overall population, with each state growing more than 1% from 2019.
“These statistics paint a portrait of a nation that is experiencing unprecedented growth stagnation, even before the Covid-19 pandemic hit,” said Brookings Institute senior fellow William Frey in an analysis published last week. “The exceptionally low growth rate from 2019 to 2020 reflects the pandemic’s impact over part of that year.”
Colorado, as well as other western states like Arizona, Oregon and Montana, stand to gain one congressional seat, according to the Brookings analysis.
The Zestimate is now an initial cash offer for eligible homes in more than 20 cities nationwide, including in the Jacksonville MSA.
Zillow Offers is the company’s home-buying service through which customers can sell their home directly to Zillow. When Zillow introduced the Zestimate in 2006, it was the first time people had instant access to an estimated value of millions of homes across America for free. The announcement highlights the growth in the reliability of the Zestimate valuations to provide an initial cash offer on qualifying homes through its Zillow Offers service, the company said in a statement.
Pairing the Zestimate with Zillow Offers is the latest way the company is using technology to simplify and streamline real estate transactions from beginning to end. Zillow Offers customers can already use Zillow-affiliated mortgage, title and escrow services through Zillow Home Loans and Zillow Closing Services, the company said.
"For 15 years, homeowners and home shoppers have come to rely on the Zestimate as an essential first step. This exciting advancement demonstrates the confidence we have in the Zestimate and the lengths we are willing to go to make selling your home truly seamless and easy," said Zillow Chief Operating Officer Jeremy Wacksman. "Zillow is transforming the way people sell and buy homes. Presenting the Zestimate as a cash offer to qualifying homes upfront will save time, reduce friction and provide greater transparency — getting us closer to our vision of helping customers transact with the click of a button."
Zillow is marketing the service as a "more hassle-free experience by eliminating the time and resources required to prepare and list a home, including open houses and showings."
The Zestimate is published for nearly 100 million homes with a nationwide median error rate for on-market homes of 1.9%. To determine the Zestimate, Zillow uses data from public records, feeds from multiple listing services and brokerages as well as artificial intelligence, including advanced technologies such as computer vision and a deep-learning neural network to incorporate data from photographs.
Over the last decade and a half, Zillow has released more than half a dozen updates to the Zestimate to improve its accuracy, speed, transparency and availability. The most recent version of the Zestimate was released in mid-2019, and incorporated winning ideas developed out of a two-year, $1 million data science competition that included more than 3,800 teams from 91 countries.
The initial offer equal to the Zestimate valuation is currently available on a limited subset of homes in markets where Zillow Offers operates. Homeowners with qualifying homes will see the initial cash offer prominently displayed at the top of their property information on Zillow. The company will continue expanding the number of eligible homes as Zillow Offers grows. This initial offer is before taxes and fees are factored in and is also subject to eligibility and accuracy of property information, the company said.
Markets with homes eligible for this program include: Phoenix, Tucson, Ariz., Charlotte, N.C., Raleigh, N.C., Miami, Jacksonville, Orlando, Tampa, Portland, Ore., Denver, Colorado Springs, Colo., Fort Collins, Colo., Nashville, Tenn., San Diego, Los Angeles, Riverside, Calif., Sacramento, Calif, Dallas, Houston, San Antonio, Las Vegas, Atlanta, Minneapolis.
Lumber prices have shot to fresh records, defying the normal winter slowdown in wood-product sales in a sign that the pandemic building boom is bowling into 2021.
Records have been set across species, products and grades, according to pricing service Random Lengths. It has never cost more to buy oriented strand board, known as OSB and used for walls, Southern yellow pine, which is favored for fences and decks, or ponderosa pine, which is popular in cabinetry and interior trim.
Many engineered wood products used in new construction, such as I-joists, are in short supply, and mills are backlogged with orders well into March, the pricing service said. Last week, its Random Lengths Framing Lumber Composite price rose to $966 per thousand board feet, exceeding the $955 high set in September.
Lumber futures have climbed 47% over the past three weeks, to within a few dollars of records set in September. Lumber for March delivery ended trading Friday at $982.10 per thousand board feet, more than twice the price a year earlier.
Many buyers have jostled into contracts for May delivery, which ended Friday at $830.90. The cheapest and most distant futures, for lumber in March 2022, start at $695, which is more than the pre-pandemic record of $639.
“We don’t expect these prices forever, but what we are seeing is a bit of acceptance that maybe going forward the price level may be different than it has been in the past,” said Chris Virostek, finance chief at West Fraser Timber Co. , North America’s largest lumber producer.
Shares of West Fraser, which acquired leading OSB-maker Norbord Inc. earlier this month, have more than quadrupled since stocks bottomed last March when the economy was shut down to slow the spread of Covid-19. The S&P 500 has gained 75% in the same span.
Mills shut down and choked back output at the pandemic’s onset, reasoning that widespread job losses would wipe out what was looking like a promising spring for home-building. They were wrong.
Stuck-at-home Americans undertook home-improvement projects. Builders faced a stampede to the suburbs, brought on by record-low mortgage rates and people looking for more living space. New York City’s bars and restaurants built outdoor seating so that they could stay in business. Lumber prices shot to new heights.
West Fraser and rivals such as Weyerhaeuser Co. and Interfor Corp. haven’t caught up, despite ramping mills back up to capacity.
In autumn, prices dropped on another erroneous assumption: that building season was winding down. Prices rose anew in November as home builders hammered through mild weather.
Housing starts as well as building permits for private-owned residential units rose in December to their highest levels since 2006, when the bottom was falling out of a yearslong housing boom.
Now, a severe cold snap that settled over much of the continent is disrupting lumber deliveries from Canada while dealers and retailers are stocking up for spring. Strong wood prices in Europe have prevented a flood of imports from dousing the domestic price rally.
Housing affordability is the primary threat to the lumber rally, Weyerhaeuser Chief Executive Devin Stockfish told investors recently.
Home prices are on their fastest climb since the run-up to the housing crash 15 years ago. The frenzy has helped builders protect their profit margins by raising prices on everything from mobile homes to McMansions.
“This is a disruptive and difficult process for the plants, dealers and ultimate home buyers,” said William Boor, chief executive of Cavco Industries Inc., a Phoenix firm that builds modular homes. “So far we’ve been able to keep up.”
The average price of the 7,056 houses that PulteGroup Inc. sold in the fourth quarter was $462,000, up 7% over the same period in 2019, and the builder’s executives say prices are headed higher because of lumber costs.
AvalonBay Communities Inc. said that it has $750 million worth of new apartments on the drawing board. Whether the suburban developer starts all of them depends on lumber costs.
“If lumber pricing doesn’t adjust back to where we would expect it to, some of those starts may be in question,” said Matthew Birenbaum, AvalonBay’s investment chief.
On another front—the shelves of Lowe’s and Home Depot—soaring home prices are supporting lumber’s lofty prices. Rising property values tend to encourage homeowners to undertake renovations. The added home equity can be borrowed against to pay for patios and new kitchens.
U.S. homeowners with mortgages collectively gained about $1 trillion in home equity in the 12 months that ended Sept. 30, according to real-estate data firm CoreLogic Inc.
“Household balance sheets are pretty spectacular right now, and there’s some disposable income that isn’t going into cruises and holidays,” said Bart Bender, Interfor’s senior vice president of sales and marketing. “Yeah, lumber costs a little bit more, but there certainly seems to be a number of people that are pretty focused on improving their homes.”