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REAL ESTATE INSIDER Vol. 46, No. 5 | June 2022

ANOTHER HOUSING BUBBLE? NOT SO FAST.

Reading real estate headlines these days can be alarming. There’s a drumbeat of dire news about a bubble ready to burst. While some economists want to predict a return to the housing calamity of 2008-’09, the factors that caused the market to unravel during the Great Recession are not in force today.

Yes, the pace of sales is slowing. And for some would-be homebuyers, higher interest rates are pricing them out of the market. But there’s not been a sudden halt to demand, particularly in Northern Colorado.

Sellers are still receiving multiple offers on their homes —just not as many as this time last year—and prices continue to rise­ if not as fast as in recent months.

Unlike 2008, the major hindrance to housing sales today is lack of supply, not lack of demand. When the market tumbled 14 years ago, demand was artificially high. When easy-to-get loans went away, so did roughly a third of all prospective homebuyers. Demand today is more genuine, as the 72-million-member millennial generation is reaching peak homebuying age, and 65 million in Gen Z are close behind.

LOCAL HOMEOWNERS SEEING BIG RETURNS

Owning a home in Northern Colorado is a tried-and-true investment that would make most homeowners around the country envious.

Intrigued by a recent study by the financial technology company—SmartAsset—we looked to FHFA (Federal Housing Finance Authority) to track value growth over the last 25 years in Larimer, Weld, and Boulder Counties.

We used the average priced home in 1996, which was approximately $125,000, plugged it into FHFA’s Home Price Appreciation Calculator, and charted the value increase over the last 25 years (1st Quarter 1997 through 4th Quarter 2021). The results were impressive.

Have a question about the market? I’d love to help!

25-YEAR HOME PRICE APPRECIATION

This chart reflects growth in home prices over the last 25 years in Weld, Larimer, and Boulder Counties, as well as the overall appreciation in the State of Colorado. We used FHFA’s Home Price Appreciation Calculator with the average priced home in 1996, which was approximately $125,000.

These are specific values calculated by FHFA for a given price point and can fluctuate from the averages that are shown below.

COLORADO AMONG LOWEST FOR HOUSING VACANCY

Anyone shopping for a home in Colorado will tell you that available properties are hard to come by.

Here’s another piece of evidence to support that point of view: among the 50 states, Colorado had the 10th-lowest rate of vacant properties based on 2020 U.S. Census data.

Less than 10 percent (9.5) of homes in the state were vacant, according to a report on the Census data shared by LendingTree, an online loan service. In raw numbers, that’s 231,009 vacancies. By comparison, 16 percent of homes (44,767) in neighboring Wyoming were vacant when the Census was taken, making it No. 41 in housing vacancy rates.

Vacancies are not necessarily a sign of neglect or low demand. For instance, a vacant home reported by the Census could be an unoccupied vacation home – a fact that could increase Colorado’s rate compared to other states.

Nevertheless, the states with the lowest vacancy rates – No. 1, Oregon (7.76 percent); No. 2, Washington (7.87), and No. 3, Connecticut (8.09) – are generally experiencing healthy housing demand. The states with the highest vacancy rates were No. 48, Alaska (20.51); No. 49, Maine (22.68), and No. 50, Vermont (22.86). The national average was 9.7 percent, down from 11.4 percent in 2010.

THE GROUP DIFFERENCE

For more than four decades, The Group has been the trusted source for Northern Colorado real estate. Purchasing a home is typically the largest financial decision a person can make and understanding the market is critical. Our interactive market reports are comprehensive and up-to-date. The reports include sales, days on market, employment data, and more. And best of all, the reports are available at your fingertips and accessible from any device. We hope this monthly report will empower people to make educated decisions about buying and selling real estate.

How’s The Market? Check Out Our Monthly Market Reports to Find Out

Click HERE to view the current Market Report

REAL ESTATE BY NUMBERS

  • 58. Where Windsor ranks among the best small cities in the country to start a business, according to a ranking of 1,334 small cities by personal finance website WalletHub. Loveland came in at No. 65.
  • $9.38 million. Price that investors paid to buy a 52.1-acre development lot in Brighton. The land was sold by Vestas Wind Systems and is located next to a Vestas manufacturing facility.
  • 200,000. Proposed square footage for a new cold storage facility in Windsor. As planned, the project in east Windsor would be used by the JBS USA meat processing company.
  • 14,005. Proposed square footage for a new Natural Grocers market, planned at the corner of Lincoln and Eighth Streets in downtown Loveland – close to an existing Safeway grocery store at 860 Cleveland Avenue.
  • 9. Number of Colorado residents listed among the 2,668 people on the 2022 Forbes’ Richest People in the World ranking. The List includes Fort Collins resident Pat Stryker.
  • $52,667. Median house appreciation across the United States during 2021, according to an analysis by real estate services firm Zillow.
  • 3.7 percent. Colorado’s statewide unemployment rate for March, the lowest since the pre-pandemic rate of 2.8 percent in February 2020. Locally, Larimer County’s dipped to 3 percent in March, and Weld County fell to 2.8 percent.
  • 1,801. Number of parking spaces planned for a new Amazon distribution warehouse, proposed for a 151.8-acre site in east Loveland near the Northern Colorado Regional Airport. The warehouse is approved for up to 3.87 million square feet.
  • 51 percent. Portion of American homeowners who are paying on a mortgage loan with an interest rate of less than 4 percent, according to a report by Redfin. That compares to an average rate of 5.11 percent on 30-year fixed loans as of April 22, 2022.

VITAL SIGNS

A QUARTERLY SNAPSHOT OF NORTHERN COLORADO’S ECONOMIC ACTIVITY

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