When was it more affordable to buy a house: 1977, '81, '90, '06 or 2021?

 

Check out this Time Magazine cover from 1977 (that looks like it could very well be from today!):

Keith Weinhold had a great article on affordability throughout the years. Housing inventory and affordability is not a new problem in the United States. Just ask your parents and grandparents how much they stretched (not paid) to buy their new home. 

In 1977:
The median housing price was $48,800. 
BUT, 1977's median income was less than $14,000. 
AND mortgage interest rates were 8.9%, only to go up to 18% in the 80's!😱

Today, many people think that the price of housing has become high again.

But we need to understand housing affordability in the context of "consumer house-buying power."

First American's Real House Price Index helps. It shows that today's real house prices are now 42% below the 2006 housing boom peak. Wow!

It considers 3 big factors of:
-today's nominal house price,
-today's household income
-today's mortgage interest rates.

Basically it is more affordable to buy a house today than from 2000 to 2008:

 

Today's "nominal" house prices are well above the housing boom peak, but real, house-buying power-adjusted house prices remain 42% below the 2006 housing boom peak! 

House-buying power has benefited from a long-run decline in mortgage rates and the slow, but steady growth of household income. Since the housing boom peak in unadjusted prices in 2006, the average 30-year, fixed mortgage rate has fallen by approximately 3.3 percentage points, from 6.32% to 2.98%. Over the same period, nominal household income has increased 55%. The dramatically lower mortgage rates and higher income levels mean home buyers in June had 129% more house-buying power than in 2006. House-buying power matters because people buy homes based on how much it costs each month to make a mortgage payment, not the price of the home. (credit Keith Weinhold and First American)

This Chart Will Blow Your Mind!

This amazing chart is a historical index comparing monthly mortgage payments dollar for dollar by year since 1969! Which means that dollar for dollar today the monthly principal and interest mortgage payment is only 48% of what it was in January 1990! And only 26% of what it was in 1981!😱🤯

Denver Adjusted Home Price Index, showing prices when getting mortgages are really only $300k in apples to apples comparison with what interest rates and prices were in 1990! 

Adjusted for Inflation, Denver prices are actually only $290k:


Bottom Line: Yes house prices have gone up, but so has affordability and buying power because of record-low interest rates and higher incomes. 

Lending Programs RETURN

As the economy settles, the forbearance curve flattens and the financial markets become more stable, we are seeing loan programs return.  Such GOOD NEWS for our clients. 

• Jumbo loans are back for buyers and refinance clients up to an 80% loan to value and a 720 credit score
• CHFA and our other state DPA programs return with NO restrictions!  This is the program I am most excited about as we help more people move into home ownership and building wealth.
• Renovations loans are back in full hammer swing!
• Broker loans and Non-QM are slowly returning as well.

All of those first time home buyers did NOT go away!  In fact, loan applications for FTHB had a 50% less decline than move-up buyers in April, and are DOUBLE the amount of repeat homebuyers in May. Inventory is low, and demand is high. The housing market is as strong as ever. 

Denver Ranked #2 BEST City to Live

For the 2nd year in a row Denver was named either #1 or #2 BEST city to live in the country. This year it was #2 - perhaps it would have been a bit embarrassing should it have gotten #1 both years in a row!

The key factors were demanding for any city:
1) Value of homes.
2) Quality of life.
3) Job market health.
4) Desire to live here.
5) Number of people moving here.

Check out what US News & World Report had to say: 

"Founded in the mid-1800s as a mining hub during the gold rush, Denver has come a long way since its Wild West days. Over time, its residents have evolved from gun-slinging gamblers into an easygoing crowd of ambitious, progressive-minded fitness fanatics and nature lovers who are eager to push the envelope on everything from civil rights to drug laws. Nicknamed the Mile High City for its 5,280-foot elevation (although officially reported as 5,279 feet), Denver's location at the base of the Rocky Mountains provides a gateway to a slew of outdoor pursuits, although it is probably best known for its devout ski and snowboard enthusiasts.
To clarify a common misconception, Denver is not a mountain town. It actually takes at least an hour to drive to the Rockies. But there are some great places for recreating within a 30-minute drive of downtown, such as Red Rocks Park and Cherry Creek State Park.  
Some might say that Denver is experiencing a gold rush of a different color: green. After Colorado residents voted to legalize recreational marijuana in 2012, Denver has seen a surge in cannabis-related commerce, from dispensaries to magazines to high-tech paraphernalia like vaporizers, rolling papers, lotions and storage containers – and the industry is just gaining speed."

Denvernomics: 10 Fascinating Fast Facts That Show Denver is Not in a Bubble

1. In 2006 Metro Denver had 7 months of supply inventory, which means it would take 7 months for the amount of buyers then to buy all the homes that were for sale. Today there is 1.2 months of inventory. A balanced market is 6 months of inventory. 1.2 months means tons of demand, and scarce supply. Before the recession we had tons of supply, little demand. 
2. From 2000-2006 homebuilders built 47,000 too many homes based on population growth, but since 2007 because many builders stopped building during the recession, builders are behind by 67,000. Building and development take twice as long today as it did 10 years ago, so builders are not keeping up. The average household in Denver is 2.5 people. The population increase of 120,000 people in the last 2 years means 48,000 new units were needed to be built. Builders only built 30,000 new units in the last 2 years. Demand for new housing is 60% greater than the supply of new homes. 
3. The foreclosure filing rate today is 95% lower than it was a few years ago. There are very few distressed sales. 
4. Just last year 103,000 people moved to Metro Denver. There has been an average of 45,000 population increase in Denver since 1994. The Colorado state demography office has determined growth by at least 50,000 people per year for decades to come. 
5. The unemployment rate is under 3.5%. It is very easy and attractive to become an entrepreneur in Colorado, and many people are taking advantage of that and being successful. 
6. There has been an average income growth of 5% in last 2 years.
7. Rental rates have dramatically increased in the last 5 years, and have doubled in the last 10. An average of 1200-1500 people are moving to Denver each WEEK. 
8. Mortgage rates are at record lows, at 3.45% right now, at the lowest rates since banks started lending in 1900.
9. Lenders since 2010 have been extremely strict on qualification per new government and industry regulations caused by bad lending before the recession. The buyers who have bought since 2010 are very well qualified. 
10. There are 800,000 millennials and counting in metro Denver. And 350,000 of them are living with their parents! This is a whole wave of buyers and renters who are going to flood the market soon in the next few years, so even if 50,000-100,000 people stop moving here (which will not happen) millennials will be more than enough to absorb supply. 

Our Denver real estate market as like a teeter totter: imagine on the demand side is a huge hungry japanese sumo wrestler, and on the supply side a very skinny model. The sumo wrestler's diet is population growth and people moving to Denver, and economic growth. The skinny model's diet is essentially more housing supply and more vacancies. With Denver's economy right now the model is starving, and the sumo wrestler is gorging. For the teeter totter to balance or go the other way, the sumo wrestler has to stop eating his diet and the model has to start eating her diet. Until either or both events happen our real estate market will not change.

Welcome to Denvernomics with The Denver House Guy :)

(Some of this material is taken from notes in economic trends classes I took from Lon Welsh and Lonnie Glessner)

10,000 New Homes Expected 

in Denver this Year as 

Builders Kick Into Overdrive

Metro Denver home construction revved up in the first quarter, reaching a pace not seen since before the last recession, according to a report Wednesday from Metrostudy.

Builders in metro Denver started 2,413 new homes in the first quarter, up 3 percent from the fourth quarter and 47 percent higher than the first quarter of 2015. New housing starts are running at a pace about 26 percent faster than a year ago, on track to end the year with about 9,869 homes built.

Housing starts in metro Denver, as measured by Metrostudy, are now at their highest level since 2007, and Covert expects the pace to quicken and that builders will complete 10,000 new homes this year.

He called 10,000 homes an important milestone, but it is only half the number metro builders achieved during the peak of the housing boom last decade. It also remains far short of what is needed to keep pace with the region’s population growth.

“While the large run up in new homes in metro Denver is a very encouraging sign, demand still out paces supply. The influx of new residents to the state coupled with historical low interest rates has created a very strong demand for homes in the metro area,” said Brook Rarden, a managing director with U.S. Bank’s Private Client Reserve in Denver.

And there simply isn’t enough supply for first-time and low-income buyers, he adds.

Builders remain primarily focused on higher-priced properties. Homes priced above $400,000 accounting for about 60 percent of the market, the highest share on record, according to Metrostudy.

The cost of a new home in metro Denver now averages $503,768, which contrasts with an average price of $398,663 for existing homessold in April, according to the Denver Metro Association of Realtors.

Demand, however, is much stronger in the under $400,000 market, based on what the typical household can afford. Covert expects builders will respond by producing more condos, townhouses and paired homes in suburban and in-fill locations.

The accelerated pace of new home construction has put pressure on the supply of vacant lots. In the first quarter, there were 11,494 vacant developed lots available through the entire metro area.

Source: The Denver Post

East Colfax, Denver, CO Neighborhood Trends

East Colfax, Colorado

Housing Market Trends

Market trends help you understand the movement of key price indicators. Trends in East Colfax show a 4% year-over-year rise in median sales price and a 0% rise in median rent per month.

Median Sales Price

Price Per Square Ft.

Median Rent Per Month

Crime

East Colfax has low crime relative to the rest of Denver County.

Knowing more about crime activity in East Colfax can help keep you aware of crime in the area. Crime activity is most helpful when comparing two locations to understand the relative safety of each location.

Most frequent crimes in the past year

785

COUNTS OF ARREST

403

COUNTS OF THEFT

277

COUNTS OF ASSAULT

Demographics

Get to know your neighbors in East Colfax by reviewing our census driven map. Get insights into median age, how many people are married, and percentage of people with a college degree.

50%

SINGLE RESIDENTS

36%

HOME OWNERS

30

MEDIAN AGE

$38,130

MEDIAN HOUSEHOLD INCOME

31%

COLLEGE EDUCATED

Commute

Most people in East Colfax commute by car. Learn how neighbors in this area get to work so you can consider how you might commute if you lived here, too.

Yellow: 83% commute by car

Pink: 15% commute by public transportation

Torquoise: 1% commute by bike

Source: Trulia