Escalation of home prices will begin to slow in Northern Colorado but affordability remains an issue. Wochit
LOVELAND — Northern Colorado's home prices this year are expected to bump along at a moderate pace with average sales prices projected to go up between 5 and 9 percent, according to The Group Real Estate.
Loveland is expected to see a 9 percent increase to bring the average price to $415,376. Fort Collins, Timnath and Wellington could see a 5 percent hike to $416,920. The combined average is skewed by some of Timnath's high-end developments, which pushed prices over $600,000 there last year.
President Brandon Wells gave The Group's annual real estate forecast Wednesday at The Embassy Suites in Loveland before a full house of Realtors, developers and others.
While home prices are moderating, they are still climbing, with the average sales price for attached and detached homes in most Northern Colorado communities expected to top $400,000, Wells said.
Only Wellington and Greeley will continue to see average sales prices closer to $300,000.
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Wellington's average sales price jumped 3 percent last year to more than $316,900 while Greeley's prices were up 8 percent to slightly more than $300,000. "Buyers continue to go east for more affordable options," Wells said.
The market is still constrained by lack of supply, particularly in entry-level units such as townhomes or condos, which tend to come with lower sales prices.
With a lack of available building lots, Wells said the best way to plump up supply "is through condo development," which has lagged in previous years because of a construction defects law that some say made it more risky for developers.
The state Legislature modified the law last year and the region is beginning to see some condo developments come through the development pipeline.
Leading indicator
Robust home sales and Larimer County's low 2.5 percent unemployment rate are indicators "the economy is incredibly strong," Wells said.
Larimer and Weld counties last year added nearly 21,000 new jobs, amounting to nearly 40 percent of the total jobs added in the state, according to The Group. That's a strong leading economic indicator of things to come, Wells said.
This year, The Group predicted the number of homes sold in the region will be more than 11,000, about 500 more than last year.
That's in addition to the 3,150 market rate apartments under construction or recently opened — the largest of which is Cycle, about 400 units developed by McWhinney at 3,521 Stanford Road — and another 4,200 student-oriented bedrooms in the pipeline in Fort Collins.
Median rents in Fort Collins and Loveland in the third quarter last year topped $1,300, up about 2 percent from the same time in 2016, according to the quarterly Colorado Multifamily Housing Vacancy and Rental Survey conducted by the University of Denver for the state's Division of Housing.
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According to the survey, median rent for studio apartments in Fort Collins and Loveland was $965 in the third quarter; for two-bed, two bath-units, it was $1,454.
That could be significant if interest rates rise much beyond the current 4.04 percent. If rates go up, buying power goes down, which could push more people into condos, townhomes or rental properties, Wells said.
The National Association of Realtors predicts interest rates will climb to 4.5 percent this year.
Today, some patterns remain true to past years. Landlocked Fort Collins, with a soaring price of water, high construction costs and a dearth of building-ready lots, is seeing the price of existing homes in only one direction: up.
But potential development of two large tracts could help ease demand, particularly in the $400,000 and under market, which remains a seller's market, according to The Group.
In the under $400,000 market, Fort Collins has a 1.3-month supply, which means it would take just over a month to sell all the homes on the market right now. That puts sellers in the driver's seat. The $400,000 to $700,000 market has 2.9 months of inventory while the over $700,000 market is balanced with a six-month supply.
Loveland and Berthoud are seeing similar markets. Greeley, however, faces an even tighter market with less than a one-month supply of homes in the under-$300,000 price point and only a 2.5-month supply in the $300,000 to $500,000 market. The over $500,000 market has a 6.2-month supply.
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Colorado State University is in the process of deciding what to do with its 160 acres at Hughes Stadium, its former football stadium, but some type of workforce housing is expected to be part of the development equation. Earlier this month CSU sent out requests for qualifications, the first step in identifying potential development partners.
And Montava — 900 acres in north Fort Collins — could be a game changer with hundreds of potential homes. The project from developer Max Moss is in its infancy, though he has gotten positive feedback from City Council.
As it does every year, The Group did a market comparison for Fort Collins, Boulder and Greeley. As most know, Fort Collins is less expensive than Boulder and Greeley is less expensive than Fort Collins.
An 1,100-square-foot house built in the '50s or '60s in Boulder sold in December for $640,000. A similar house by the same builder in Fort Collins sold for $365,000 and in Greeley, it sold for $235,000.
Northern Colorado comparison
Attached and detached homes
Average sales price 2017 / % increase over last year
Fort Collins: $400,139 / +6%
Loveland: $376,169 / +9%
Berthoud: $400,751 / -3%
Greeley/Evans: $277,869 / +10%
Timnath: $620,108 / +12%
Wellington: $316,907 / +3%
Windsor/Severance: $434,232 / +11%
Source: The Group Real Estate