On January 22nd, we held our annual Real Estate Forecast for about 1,000 attendees at the Embassy Suites in Loveland. The event featured presentations from our president, Brandon Wells, and other local experts, including Jason Peifer with Group Mortgage.
We examined the trends and statistics that defined the 2019 Northern Colorado housing market and made predictions for the coming year. And because the state of the housing market is determined by more than sale prices, we took a look at job growth, population statistics, mortgage rates and more. We also examined the local housing market over the last decade in a special “Decade in Review” report.
In the past, our forecasts have been between 95 and 99% accurate. And as we look back at 2019, we stuck to that pattern. We showed 99.5% accuracy for Northern Colorado home sales in 2019 and 98.75% accuracy for average sales price.
Let’s take a look back at the state of the Northern Colorado housing market in 2019 and see what’s in store for 2020!
From M.I.T. to Main Street, no one saw this happening.
Following a year in which mortgage interest rates climbed as high as 5% for 30-year fixed loans, economists, bankers and real estate insiders were universal in their expectation that rates would stay above 5% in 2019. Turns out, we had another thing coming — and the Northern Colorado real estate market was better for it.
Average rates fell as low as 3.5% during the summer of 2019 and finished the year at 3.74%. The upshot? Unexpected opportunities for both buyers and sellers. Homebuyers could afford to borrow more to buy a house. Meanwhile, homeowners could refinance to lower their monthly costs, or tap into equity to use on home improvements or other financial needs.
While interest rates stayed low, employment kept growing – especially in Larimer County (Fort Collins and Loveland). By the end of the year, 7,000 more Larimer County residents were working than the year before. Weld County (Greeley) employment increased by nearly 6,000. Jobless rates in both counties hovered around 2.1%, well below the national average of 3.5%.
Between favorable interest rates and flourishing labor conditions, it’s not surprising that housing demand remained robust around the region. In fact, the year finished with more homes under contract than 12 months earlier. And homebuilders started multiple projects across the region, beginning to address the tight housing supply that has been a hurdle for would-be homebuyers for several years.
Housing prices continued their recent stabilizing trend. Average sales prices across Northern Colorado increased by 1.9%. At the same time, growth in total housing sales was slight, increasing at 1% – another reflection of the low inventory available to buyers.
Meanwhile, Northern Colorado’s economic strong suits did not go unnoticed. Personal finance website, SmartAsset, ranked Fort Collins-Loveland No. 4 among the country’s most stable housing markets for 2019. And WalletHub ranked Greeley at No. 20 nationally among 300 cities on its list of best local real estate market in 2019 (Fort Collins was No. 34). While it doesn’t show up in the news reports, we should note that these rankings account for real estate activity around the region. So, the strength of smaller communities such as Berthoud, Severance and Windsor are key factors in these rankings.
New construction made a significant impact on local real estate over the last decade, and the dust seems to be flying at building sites up and down the Front Range. Still, as 2020 gets under way, homebuilders are still playing catch up to meet the demand of homebuyers in Northern Colorado and around the country. We’re adding workers, but not the homes they need to live in.
Nationally, the United States faces its greatest shortage ever in housing inventory, according to a new report by Realtor.com. In December alone, inventory nationwide was down 12% from the year before.
In 2020, we expect 10,900 total home sales in the region, an increase from 2019. And the average sales price for 2020 is expected to hit $424,761, an increase from the average from 2019 — $415,669. Wells predicted that the region’s real estate fortunes will not reverse course in the next decade.
“There is going to be continued population increases from people desiring the quality of life we have here in Northern Colorado,” he said. “Jobs are still abundant. I don’t think growth will necessarily continue at the same rate that we’ve seen, but we should see very sustained growth.”
One of the tools we use to understand the local housing market is The Boulder Benchmark. This comparison examines three homes: one in Boulder, one in Greeley and one in Fort Collins. Carefully selected, each home was built by the same builder around the same time, has the same number of beds and baths with comparable square footage, and was sold in 2019.
For this year’s Boulder Benchmark, we looked at three homes built between the mid-1950s and early ‘60s.
Predictably, the 1,040-square-foot home in Boulder sold at the most expensive price: $770,000. This puts it at $740 per square foot.
Next up, was the home in Fort Collins. At 1,026 square feet, it sold for $474,500 or $451 per square foot.
And the most affordable home was sold in Greeley. At 988 square feet, the home sold for $265,000 or $268 per square foot.
You can find links to presentations, reports and more information presented at our Annual Forecast here.