What a Year It’s Been in Colorado Real Estate

RE/MAX Alliance of Boulder County brokers provide insight on what to expect in real estate in 2022

With buyers carrying more affordability strength yet confronting limited inventory, Colorado’s real estate market at the end of 2021 is for the brave of heart. Yet for those seeking to buy or sell in 2022, market challenges can be efficiently navigated with careful preparation, information grounded in experience and reasonable expectations.

At Home sat down with some of the top broker associates at RE/MAX Alliance Boulder County to discuss the current market, 2022 predictions and how to prepare for a real estate sale in the coming year.

Current market overview
The current market is a unique concoction of limited inventory, more people than ever moving to Colorado and a scarcity of new construction due to kinks in the supply chain. RE/MAX Alliance broker associate Jackie Jones, who specializes in Peak to Peak real estate, noted, “We’ve always struggled with inventory in the mountains, but COVID has changed our market, limiting inventory even more.” Fewer people are exiting the mountains, especially now that remote working is increasingly feasible, and others, packing home office supplies, are eager to escape densely populated areas.

“It’s been a hell of a year,” said RE/MAX Alliance broker associate Kit Magley. “I think we’re all still trying to catch our breath.” One of her Longmont listings recently sold for $63,000 over asking price. “We had 12 offers, three of them cash – cash is not a diamond in the rough anymore – and more and more people are cutting inspections,” she said. “Inventory is so low right now that if a buyer finds anything close to what’s on their list, they’re jumping on it.”

RE/MAX Alliance broker associate Tom Pringle assessed the inventory phenomena: “The pandemic had a powerful influence on supply and demand. We were already low on supply in 2017, 2018 and 2019, and now we have more people moving home to work. They want out of their condos and are looking to purchase a home with more space.” While in an average winter RE/MAX will count about 30 to 35 percent of their properties under contract, limited supply has kept 62 percent of their properties under active contract this season.

The pandemic has also motivated some to prioritize settling near relatives. “So many people are moving here who are retired. They’re not moving for a job but strictly because of lifestyle,” said RE/MAX Alliance associate broker Suzy Williamson. “The pandemic has pushed that 55-plus home buyer to be closer to kids and grandkids.”

Another significant contributing factor to limited inventory is Colorado’s 2021 job growth and expected employment gains in 2022, as detailed in the University of Colorado’s Leeds School of Business’ latest report. “This job growth has created a new crop of homebuyers that have been given permission to work remotely, and they’re picking Colorado for their new home,” said RE/MAX Alliance broker associate Jim Thomas.

The good news for buyers and sellers alike, according to RE/MAX Alliance managing broker and owner Greg Smith, is that even as inventory is squeezed and as prices have spiked, median income in Boulder County has jumped. “The 2010 median income was close to $60,000; now it’s closer to $90,000,” he said. “Higher paying jobs, along with decreased interest rates, give affordability strength to the consumer.”

Thus, despite the struggles, RE/MAX Alliance brokers have harnessed their network of more than 900 agents and their familiarity with the local market to work any challenges to their clients’ advantage. For example, although construction timelines are stretched from supply chain delays, the resale market “has grown that much more strong,” said RE/MAX Alliance associate broker Lydia Creasey. For new home buyers, furthermore, extended construction timelines enhance the equity the buyer gains even before closing, Williamson said.

More importantly, for the buyer or seller of resale homes, RE/MAX Alliance associates are using experienced-based tactics to “dig up inventory,” Magley said. “This is door knocking, direct mail programs and finding something off market by networking with other agents,” she explained. “We’re not sitting around waiting for inventory, and we go the extra mile to find properties that others aren’t seeing.”

For sellers, RE/MAX Alliance has kept up its strong record throughout 2021 by educating clients to make the best possible sale. RE/MAX Alliance broker associate Danna Hinz said, “Part of what we get paid to do as agents is counsel our sellers about what offer to accept. Who is really getting to closing, and who is going to call you on Monday and change their mind? Sellers rely on us to give a good opinion of the value of each offer outside the price, and it’s important to remember that the highest price is not always the best offer.”

Future trends and how to respond
Looking forward, the agents of RE/MAX Alliance anticipate continued low inventory in 2022, along with an increase in interest rates up to about 3.6 percent. Although this year has seen about 13 percent appreciation in home values, it seems likely that homes will appreciate at a rate of six to seven percent through the coming months. Smith believes consumers will hold affordability strength as inventory remains tight and job growth influences the market.

“There’s never a better time to buy than today,” Hinz said. “It’s a stable time because there’s no perceived job losses in the future, and interest rates and appreciation are only going up.” Plus, since the high cost of construction materials is preventing overbuilding, resale remains more economical in Boulder County. “We’re at a very safe time to buy with less than one percent of homes in default,” she added.

Given the trends, Thomas is advising his clients to offer 10 to 20 percent over asking price, depending on location and range. “When we can’t include the buffer, it just causes disappointment and resentment,” he said. Similarly, Pringle encourages home buyers to consider the east side of Erie into Lafayette, Brighton, north Longmont and Berthoud. “One of the things I notice,” Hinz stated, “is all the new schools out east. And money goes a little further if you go a little east.”

Healthy expectations
She continued, “One of the things RE/MAX agents do really well is set expectations and prepare clients from the start. Even given the market, I’ve had a wildly successful last two years because we’re setting expectations correctly.”

As a broker, Hinz said, “My job is to help you put together a personalized plan. You can interview agents and ask them for referrals. An agent is not just there to vet buyers but to work with the lender, title company, the buyer’s agent, to find an appraiser that understands the local values. We are there to be our clients’ advocate.”

 RE/MAX Alliance Boulder County specializes in new and resale residential and commercial properties, as well as lender and insurance services. To learn more about RE/MAX Alliance or to meet with an agent, visit homesincolorado.com.

REMAX ALLIANCE BOULDER COUNTY
Boulder – 4770 Baseline Rd., #220, Boulder, CO 80303, 303-499-9880
Downtown Boulder – 1911 11th St., #200, Boulder, CO 80302, 303-442-3180
Longmont – 512 4th Ave., #101, Longmont, CO 80501, 303-651-3939
Lafayette – 109 N. Public Rd., Lafayette, CO 80026, 303-497-0588
Louisville – 225 W. South Boulder Rd., Louisville, CO 80027, 303-666-6500
Nederland – 286 N. Bridge St., Nederland, CO 80466, 303-258-7020

By Sarah Huber for At Home Colorado.