May the Source Be With You!

In 1977 Star Wars was released and “May the Force be with you” became a buzz phrase. The Group, Inc. Real Estate Company (TGI) was launched in 1976 and the next year adapted the phrase, “May the Source be with you”. From the beginning, TGI wanted to be more than just a real estate company where agents helped clients buy and sell real estate. They wanted to be the place where all real estate related questions could be answered…the Source. Last night’s economic forecast at Embassy Suites was at full capacity and the TGI Source presented data and predictions for the coming year in Fort Collins/Northern Colorado.

The Real Estate Story in Fort Collins/Northern Colorado for 2016 indicates there will continue to be a shortage of inventory in the mid to low price ranges, affecting entry level buyers. Here are the top ten factors.

  1. Home appreciation in Fort Collins/Northern Colorado will continue to lead the nation. For the one-year period ending September 30, 2015, Fort Collins was ranked 9th in the nation for home price appreciation (12.87%) and Greeley ranked 10th (12.72%). From 1991-2015 Colorado had a 263.98% appreciation rate compared to the US rate of 122.35%. This trend will continue.
  2. Affordability: the true cost of housing. Colorado ranks mid-range for housing costs with California being the highest and North Dakota the lowest. The factors that affect housing costs are house price, house payment, utilities, household income and property taxes.
  3. Fort Collins is on pace to be the next Boulder County in 10 years for housing costs. Boulder County is land-locked (they have no more land on which to build) and as a result their average home price is twice the price of Fort Collins. TGI for years has been tracking a specific home builder’s 1,000 sq. foot ranch-style home from the late 50’s-early 60’s. The identical Wheeler home was built in Boulder, Fort Collins and Greeley. The appreciation trend has been the same for more than 20 years. In 2015 a Wheeler Greeley home sold for $177,000; in Fort Collins $341,000; and in Boulder $610,000.
  4. Fort Collins Build Out. Fort Collins is quickly running out of land on which to build. Today, 50,000 workers commute to Boulder each day.
  5. Drive ‘till you qualify. With affordable housing being an increasing problem in Fort Collins, first time home buyers are finding their American Dream in Greeley, Loveland, Wellington, Johnstown/Millikin and Severance.
  6. Where are the condos? Condos are a great way to enter the home buying market and help the affordable housing crunch in Fort Collins. However, due to Colorado’s strict Construction Defect laws, a normal 30% market is currently at 3.8%. Builders do not want the liability. Only legislation in Denver can change this alarming trend. Last week TGI searched the MLS for 2 BR/2BA single car garage condos in the $150,000-$300,000 range. There were only 5 for sale. Lenders will not lend on condo projects under litigation so cash buyers or investors are the only option.
  7. Apartment conversions. Watch for this possible trend in Fort Collins. The statute of limitations is 6 years for builder litigation. How will this affect the market in Fort Collins? In December 2015, median monthly rent in Fort Collins for a 2 BR apartment was $1,150 (Loveland $900, Greeley $860). Will paychecks increase as rents increase?
  8. CSU Stadium opportunity. With the new stadium being built on campus, will the old stadium site be an opportunity for CSU to build a neighborhood of affordable housing for its employees? This is a dialogue that needs to be started.
  9. If employment is a leading indicator for housing needs by 12-18 months, Fort Collins and Northern Colorado are going to needs more housing. Larimer County has a 3.4% growth rate and 3.5% unemployment. That means in 2017, 5,000 more people will need to find housing in Larimer County.
  10. Main Street and Wall Street. At the end of last year interest rates were predicted to go up to 5%-5.5%. With the downturn of the stock market, that figure has now been adjusted downward to stay in the 4% range. This should affect the housing market in a positive way.

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