Putting your house up for sale is stressful enough. Now, sellers find themselves having to cut their listing price after the home is already on the market.
Two to three times more sellers in Denver, Fort Collins and Colorado Springs reconsidered their list prices and then lowered them in June compared to a year ago, according to new data from Zillow.
As What’s Working wraps up its special housing-focused series of reports, results are coming in on how much prices changed in June. Not the average price the house sold for, though. Those have barely budged. There’s also the latest job report that shows Colorado has recovered 110% of the jobs lost in the pandemic, which helped push down the state’s unemployment rate to 3.4% in June. More on that below.
But first, let’s talk about housing.
18% of Denver and Colorado Springs sellers cut sale price in June
Cutting the price of a house after it hits the market is normal. But it doesn’t come without adding stress for the seller.
The share of listings with a price cut in June for Denver was 18.3%, up 7% month over month, according to data from Zillow. So, if there were 4,807 houses available in Denver for active listing according to Federal Reserve Economic Data, 879 cut their prices.
In Colorado Springs, prices were cut on 18% of listings. In Fort Collins, they accounted for 9.5%, a threefold increase from June 2021.
“Sellers in Denver and Colorado Springs are getting anxious due to the sudden pullback in demand from buyers in those markets,” senior Zillow economist Jeff Tucker said in an email. “The Mountain West is transitioning quickly from a white-hot sellers’ market toward much more balanced conditions, and many sellers have been caught off guard by this sharp turnaround. Some sellers overshot the mark with their initial list price, but after last year’s big run-up in home values, they still have a lot of room to find a price point that will sell.”
But price cuts are normal and the trend has repeated itself historically. There were even price cuts last year as the housing price growth in Colorado seemed unstoppable. The number of sellers cutting their list price in June is now in double digits in the U.S. as well at 14.5%.
It’s normal because homeowners who cut their listing price often “overprice and don’t realize (declining) market value,” Zillow economist Nicole Bachaud said.
Denver and Fort Collins both were below the national average for the median size of price cuts. But both places are increasing. The median price cut in Denver was 2.7% in June, compared with 3.3% nationwide. In spring 2021, Denver’s median price cut was 2.3% while the U.S. was 2.9%. Denver was also at a historical low when it came to the number of listings with price cuts at only 6.1% of houses.
“The buyers able to weather the storm are seeing a tiny silver lining in the clouds, as shopping conditions have relaxed slightly from the ultra competitive market seen through most of the pandemic,” Tucker said. “Still, many buyers are currently priced out of the market and will be waiting with bated breath for costs to come down and allow them to re-enter the market.”
Rent increases slowing
Just like home prices, rents are still much higher than they were pre-pandemic. According to Zillow’s data, typical rent in the U.S. crossed the $2,000 per month threshold for the first time. In Denver, monthly rent is now around $2,005, up 20.4% since June 2019.
But the rise in rents is expected to decelerate for a number of reasons, Tucker said. They’re still growing, just slower.
“A rapid run-up in rents that peaked in February was likely a one-time event, driven by a return to cities and people moving out of shared apartments or their parents’ house. We’re expecting rent growth to ease back down over the next several months as vacancy rates rise above historic lows,” he said. “One factor that could slow the return to normal is the high cost of buying a home, which will encourage many renters to renew their lease instead.”
Time is running out for renters assistance
There’s still money available for folks who struggle to pay rent. But the federal Emergency Rental Assistance Program is now in its final phase, according to the Colorado Department of Local Affairs, which has been disbursing hundreds of millions of dollars to help residents pay rent.
During the pandemic, federal funds paid up to 15 months of past-due, current and future rent for thousands of Coloradans who suffered a financial hardship due to COVID. Eligibility for the program is no longer limited to renters impacted by COVID, but time is running out.
On DOLA’s site, the agency said as of this month, it’s changing gears to focus on affordable housing because “it remains our primary concern to keep people housed, and ensure any experience of homelessness is as brief as possible.”
DOLA has been paying out more than $20 million a month this year, according to department officials. It’s disbursed about $246 million in rent, or about 65% of available funds. Combined with earlier programs, that’s helped more than 30,000 households in Colorado.
“The overall impact of this program is significant, with far less families evicted and more applicants having opportunities to stabilize their housing,” said Sarah Buss, director of housing recovery.
→ More on Colorado’s rent assistance program: Details
The pains and gains of Colorado housing
When interest rates shot up in June, most people who took What’s Working’s housing poll said they were happy homeowners.
“No plans to move and on a fixed income,” wrote Chris from Pine Junction. “So glad I own!”
In the survey, 83% of 150 people who responded said they owned their home. And 80.6% said they spend less than 30% of their income on housing each month, a rule of thumb for eons.
But another large chunk said they pay nothing because they’ve paid off their mortgage. Of course, there are still taxes and other housing costs. As Dave from Lafayette wrote in all caps: “WOULD LIKE TAXES TO QUIT GOING UP!!”
In an interesting stat: Only 15.7% of about 150 people who took the survey said their housing costs are more than 30% of their income. Of those, 45% were renters. “House hunter but that mortgage rate hike just put ownership out of reach,” wrote Kylie, a renter in Denver.
Andy Stewart, a renter who spends more than 30% of his income on housing, works as a supervisor in the hospitality industry in Vail. He blamed the short-term rentals that are hogging up housing and remote workers with “high-paying finance jobs.”
“There is nowhere to rent in Vail,” Stewart wrote. “Almost impossible to hire staff w/o a place to live.”
Speaking of housing…
→ A $300,000-ish house? Oakwood Homes put 96 new single-family houses on the market in Green Valley Ranch. These two-story houses were pre-built in a factory and look different from what you’d think a manufactured house would look like. They also start “in the low $300’s,” according to the company.
→ Housing market in Colorado mountain areas: Sky-high prices remain in Colorado’s high country but sales are slowing reports The Sun’s Jason Blevins. >> Read
→ Homeless numbers growing: Metro Denver’s homeless population grew by 12.8% in two years, reports The Sun’s Tatiana Flowers. >> Read
Where Colorado jobs would be if pandemic hadn’t happened
Thanks to a gain of 4,500 nonfarm payroll jobs in June, Colorado has now recovered 110.1% of jobs lost in the first two months of the COVID-19 pandemic. That helped push down Colorado’s unemployment rate to 3.4% in June, the lowest since February 2020’s very low 2.8%.
The U.S. unemployment rate didn’t change for the fourth straight month, at 3.6% in June.
But if the pandemic hadn’t happened, Colorado would have added another 100,000 more jobs by now, according to data compiled by the state Department of Labor and Employment. Before the pandemic, the state’s job growth trajectory was at 4,900 per month.
However, getting to 2,857,400, as the state did in June, still puts the state at one of its highest levels of jobs ever. Colorado had a fast recovery, said Ryan Gedney, senior economist with the labor department. But that job growth is starting to slow.
“I think we’ve gotten out of that recovery mode. The state has regained what jobs that were lost (after) February 2020,” Gedney said.
But he added that had the pandemic not happened, there might have been a recession anyway, or at least a slowdown in new job creation. It was already challenging to hire enough workers before the pandemic.
“Remember, at the end of 2019, the nation, the state, we were still at a historically long economic expansion,” he said. “Was 4,900 a realistic measure? Possibly not. Could there have been a recession that happened? You’d go crazy if you tried to play out all these different what ifs.”
But he did revise that 4,900 pre-pandemic projection, dropping it to a “what if” of 2,500 new jobs per month instead. That puts Colorado closer to reaching the projected job growth had the pandemic not happened. See the red and black lines in the chart below.
Only two regions in the state haven’t recovered all the lost jobs. The Fort Collins metro area has recovered 97% of jobs lost, while the Greeley region is still down 4,800 jobs having recovered just 59% of jobs lost.
The decline in mining and logging is to blame. The industry, which includes oil and gas companies, not only hasn’t recovered, it continues to shed jobs. It lost 2,400 jobs in the first two months of the pandemic, but is still down 3,400 jobs since April 2020.
But as Colorado continued to add more jobs elsewhere and people joined or returned to work, the state is now near its highest labor force participation rate since March 2020. Approximately 69.5% of working-age adults were employed or looking for jobs in June. The preliminary count is 3,248,800 Coloradans in the labor force — the highest number to date.
Industries that saw the most change in June:
- Leisure and hospitality gained 2,300 jobs
- Government (largely in education), gained 2,100 jobs
- Professional & business services, down 1,800 jobs
- Financial services, down 1,900 jobs
→ Wages up again. Average hourly earnings reached $34.21 in Colorado in June, or up $2.61 from last year, according to the Bureau of Labor Statistics. The national average hourly wage was $32.08.
Other working bits:
Unionized workers at the AT&T DirecTV call center in Centennial picketed this week to demand a fair contract. The contract, which was set to expire in February, was extended for one year but bargaining on a new one has been ongoing since January.
“The union is adamant that they won’t accept cuts to health care benefits, nor increases to health care costs. With inflation and cost of living having skyrocketed since the last contract, workers are also seeking compensation that matches that,” said Emily Orlich on behalf of Communications Workers of America Local 7750, which represents 64 workers.
A DirecTV spokesperson responded by email on the situation, writing, “We care about the health and well-being of our employees, including offering comprehensive benefits for employees and their dependents, as well as competitive wages. It’s common for contract discussions to take time and we remain committed to working with the CWA to reach an agreement.”
→ Gas prices sink. That includes a drop in Colorado down to an average of $4.691 for a gallon of regular gas, down 13 cents from last week. Prices have fallen much faster nationwide, which are now down to $4.413, according to AAA. The reasons for the drop are expected, reports The New York Times. People are driving less, oil and gas production is up in the U.S. and for people who are still driving, they’re shopping around for the cheapest options. And, 9News reports, some gas station owners are competing for their business, including one intersection in Firestone where gas was under $3.50 a gallon. >> 9News, NY Times
Back to economy reporting next week but you can still share your two cents at cosun.co/heyww. See you next week! ~ marvis, brammhi & tamara