By Louis S. Barnes, Capital Markets, Premier Mortgage Group
Given our national anxiety over too many issues to count, it feels odd to share worry-free good news from the real estate sector. Seems fake, but it’s not.
The Front Range housing market is still appreciating. True, the rate of appreciation is slower than last year, but that’s normal and expected after the hottest six-year run on record. Inventory is increasing in some sub-markets, but rather than creating a problem, it’s creating relief in markets lacking homes to buy. Entire categories like condos are still not able to meet demand, but inventory trends overall appear to be headed slowly in the right direction.
As to the threats we saw last fall: mortgage rates above 5 percent, government shutdown, possible recession… all gone. Just gone, nationally and locally.
The good news locally is refreshing: Colorado has the seventh highest growth in state GDP. Of all fifty states, we have the lowest rate of mortgage delinquency and foreclosure. (For the record, all urban areas are having a good century so far.)
Still, Colorado has an issue that’s causing challenges for some citizens: affordability.
The term requires context. In strict economic terms, which is how appraisers approach housing, “affordability” has little meaning. If homes anywhere were not affordable, their prices would fall until buyers could afford them. Simply put: if homes are being purchased, homes are affordable. External forces can change the equation—for example, a spike in mortgage rates or a jump in joblessness. But affordability is often a circular debate and the question tends to be not “what is affordable” but “who can afford them.”
In this regard, Colorado has some work to do. Here’s a thought: address affordability as a transportation problem. Lower priced homes tend to be farther from jobs, so reliable and fast transportation options become more important.
We’re succeeding in spots: FasTracks is working so well that its stations are magnets for high-density neighborhoods and inexpensive homes. By solving our transportation problem, we address affordability and inventory—not to mention quality of life—along the Front Range.