THREE CITIES. THREE REALITIES IN REAL ESTATE.
For all the differences between Fort Collins, Greeley, and Boulder, there’s one distinction that’s likely the easiest to define: the cost of housing.
That difference becomes clear with our annual look at real estate prices in the three communities, better known “The Boulder Benchmark.”
Once again, we compared recent sale prices for similar ranch-style brick homes in each city. The homes were all built in the late 1950s or early 1960s, and all by the same homebuilder. To the right is what we learned.
While the Boulder prices continue to stand head and shoulders above Fort Collins and Greeley prices, that’s not the end of the story. There are some noteworthy trends to explore.
- On percentage terms, going back to the first Benchmark report from 2009, Greeley was the clear winner in price growth, with an increase of 276 percent. By comparison, the Fort Collins price grew by 182 percent and Boulder by 135 percent.
- Since the end of the Great Recession (2012), Benchmark prices have increased 194.6 percent in Greeley, 131.8 percent Fort Collins, and 112.8 percent in Bolder.
- Fort Collins prices are consistently tracking behind Boulder by roughly six to eight years. For example, the Boulder price in 2009 was $384,554. Fort Collins reached $365,157 in 2016. Boulder first topped $500,000 ($555,404) in 2014, while Fort Collins eclipsed that mark in 2022.
LOOKING AHEAD: REAL ESTATE SETTLING IN AFTER TOPSY TURVY YEAR
Could it be the calm after the storm?
That’s certainly one way to look at prospects for the Northern Colorado housing market in 2023.
After a year made memorable by interest rate spikes and surging inflation – along with the seemingly statistical odd couple of lower home sales and rising prices – the local real estate market is showing signs of stability.
Speaking at company’s 2023 Real Estate Forecast, The Group Inc. President Brandon Wells pointed to various trends that will shape the housing market this year, and the probability that local home prices that will stay essentially flat.
Inflation. The most influential factor in 2022 will also determine the direction of 2023, Wells said. After peaking out at 9.1 percent over the summer, inflation eased to 6.5 percent at the end of 2022. If it continues to slow, it could help keep interest rates on mortgages from climbing.
Mortgage rates. Average rates on 30-year loans reached 7 percent (after starting the year about 3 percent) before dipping back down closer to 6 percent. Consensus predictions from national real estate economists project the rate will hold around 6 percent this year.
Home sales. Wells said to expect total sales to slip this year in Northern Colorado by 10 percent, due in large part to a continuing tight supply of housing inventory, as well as affordability concerns for first-time homebuyers.
New construction. Costs of construction will continue to squeeze the supply of new homes in Northern Colorado, with new home starts likely to decline about 10 percent.
Average prices. After consecutive years of double-digit gains in average home prices, some of the trends mentioned above will help keep prices steady. After sales prices averaged $513,265 last year, The Group predicts a slim increase to $515,000 (just 0.3 percent).
Call me to learn more about how our 2023 Forecast could impact you.
CITY PLANNERS SEE WATER, HOUSING, GROWTH AS MAJOR CHALLENGES
As part of our 2023 Forecast, representatives from three Northern Colorado communities participated in a panel to discuss key planning and development objectives for the year ahead. Loveland Planning Manager Bob Paulson, Timnath Public Works Department Director Don Taranto, and Windsor Director of Planning Scott Ballstadt shared insights on many public policy challenges and opportunities, including:
Water. Getting the most out of existing water supplies includes limiting the use of treated water for landscaping, a trend that is gradually taking hold in some communities. Additionally, securing water supply for future population growth will require creative cooperation between smaller towns that are growing fast and water districts that supply them.
Housing. Using planning policies to allow for more diverse and attainable housing is a pressing topic across the region. Concepts getting attention could include permitting “micro” homes, creating more density with smaller housing lots, or changing zoning to permit existing homeowners to build additional units on their property in traditional single-family neighborhoods. Planners also see rising demand for build-to-rent or rent-to-own housing developments.
Community collaboration. Seeking more ways to work together on topics of shared interest, as bordering communities grow. For example, Windsor and Loveland are cooperating to ensure that commercial development on their borders maintains a common “look and feel” between the communities. Finding solutions for workforce housing are also on the front burner.
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THE GROUP DIFFERENCE
The Group’s 2023 Real Estate Forecast
Our real estate forecast is a prediction of future trends and conditions in Northern Colorado. It typically includes predictions for property prices, sales volume, rental rates, and other key metrics. You can watch our 2023 Forecast in its entirety below.
Visit our website by clicking the button below to access our annual Forecast materials, which include the presentation slides, our Annual Report, and videos.
INTEREST RATES NOT THE WHOLE STORY FOR HOMEBUYERS IN ‘23
In the framework of one calendar year, the jump in mortgage loan rates during 2022 was a shock. Some would-be homebuyers were compelled to rethink their goals for how much house they could buy, or even opt to stay on the sidelines.
But as 2023 unfolds, it’s important for homebuyers to think beyond interest rates and look more broadly at affordability. At our Forecast presentation, Group Mortgage, LLC Branch Manager, Jason Peifer, encouraged attendees to consider if their household income growth has helped them absorb some of the costs brought on by inflation and interest rates.
For some salaried workers in Northern Colorado, that answer could be yes. Here’s what we mean:
At the beginning of 2022, if you were looking at $500,000 house with a 3.5 percent mortgage rate on a 30-year loan, your monthly mortgage payment (assuming a 20 percent down payment) would have been $1,796. A year later, that same house is probably listing for $550,000, with mortgage rates at 6 percent. Your monthly mortgage payment would be $2,638, a difference of $842 per month. Add in the impact of inflation for basic needs (gas, groceries, services), and you’re looking at an additional $241 per month – a total monthly difference of $1,083.
That’s substantial. But what about your income?
ADP Research Institute tells us that annual pay grew at an even faster pace in 2022 for private sector salaried workers, with the likelihood of another boost this year as companies compete to recruit or retain employees. Median monthly pay for these salary earners is up $1,300, which outstrips the $1,083 increase detailed above.
For homebuyers who fit this description, the affordability equation may be in your favor.
Call me to discuss mortgage rate predictions and what these mean to you.
REAL ESTATE BY NUMBERS
- 55. Number of new homes proposed for a 12-acre site in southwest Fort Collins, located at 1925 Hull St. – property that’s south of Drake Road and east of Taft Hill Road. The ground was once a cherry orchard.
- $4.85 million. Purchase price for a 24,885-square-foot building located in the I-25 Gateway Center near Berthoud. The property is currently occupied by an energy-related business.
- 148. Acreage for the proposed Centerra South development in east Loveland. Plans include a 40,000-square-foot grocery as the anchor of a roughly 298,000-square-foot commercial center, as well as 1,075 housing units.
- $2 million. Amount that JBS USA Food Co. recently donated to the Greeley-Weld Habitat for Humanity for construction of affordable housing at the HopeSprings project. Habitat plans to build 176 homes at the site.
- 20,000. Minimum of new home starts that need to occur over the next three years to address a housing shortage in Colorado, according to a report by the Common Sense Institute. The need could be as large as 46,000.
- $530,000. Median price for a single-family home in Colorado at the end of 2022, down from the peak of $600,000 that was registered in April 2022.
- 30 percent. Reduction in single-family home listings in Colorado between 2021 and 2022. Nationally, that decline was 37 percent.
- $13.91 million. Purchase price for a 629.3-acre farm property at 6519 Weld County Road 34 near Platteville. The ground, which includes irrigation, comes with three residential buildings and six outbuildings.
- 40,000. Approximate square footage for the proposed Prospect Sports building in east Fort Collins. As planned, uses for the facility at the southwest corner of Prospect Road and Sharp Point Drive would include basketball and volleyball.
- 78,091. Total number of single-family home sales across Colorado last year, down 20.2 percent from 2021, according to the Colorado Association of REALTORS®. Sales of condos and townhomes dropped 23.3 percent.
- $40 million. Price paid by new owners for a 450-acre estate near Vail. The property includes a 30,000-square-foot main house, a 28,000-square-entertainment lodge with an indoor swimming pool, as well as two shooting ranges.
- $16.3 million. Sale price for the property that includes two automobile dealerships in Boulder. The six-acre site for McCaddon Cadillac and McCaddon Buick GMC was bought by Maroone USA LLC, a dealership chain that also acquired the two McCaddon businesses at 2460 48th Court in east Boulder.
- $2.37 million. Sale price for a 14,664-square-foot medical office building at 770 W. Eisenhower Blvd. in Loveland, located on the south side of Lake Loveland.
- $50.79 million. Price paid by Texas-based investors for the Kimpton Hotel Monaco at 1717 Champa St. in downtown Denver. The new owners also bought the Brown Palace Hotel in 2018.