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Home prices will continue to increase by around 10 percent in Fort Collins, Loveland and Greeley in the coming year, according to Everitt Center Executive Director Eric Holsapple, who presented the findings of a research team working on the forecast since May.
However, 2014 will likely bring higher prices on vacant developed lots, according to Holsapple, especially in Fort Collins. In 2010, Fort Collins had a 10-year supply of vacant developed lots, but that supply has dwindled to only two years today.
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While developers have been able to pick up these lots for low prices, often out of foreclosure, prices are increasing as supply falls and demand increases. Lots could eventually reach as much as $75,000, which will drive up home prices.
Greeley may be partially exempt from this trend, Holsapple said, because the supply of vacant developed lots is larger there than in other parts of Northern Colorado. Because of this and the continued growth of the oil and gas industry in Weld County, developers will soon take more notice of Greeley begin building homes there.
“Greeley is up-and-coming, Holsapple said.
In the multi-family market, apartment vacancy rates will increase in Fort Collins to about 7 percent, the forecast predicted, keeping rents below $1,000 per month. Vacancy rates will stay below 5 percent in both Loveland and Greeley, keeping rents high. The Everitt Center predicted that Loveland will average about 3.9 percent in 2014, resulting in an average rent about $1,000 per month.
In Greeley, the vacancy rate will remain very low, at about 2.3 percent, resulting in average rents over $700 per month.
Recovery will also pick up in the commercial market, but most sectors will still not bring in high enough rents to justify new building for most developers, even though vacancy rates are low, Holsapple said.
Office properties are getting rents of $16 to $19 per square foot, while they need to reach into the mid-$20s in order for developers to invest in office construction, Holsapple said. These rents are expected to remain flat in 2014.
Industrial properties are currently bringing in between $5 and $7 per square foot and are expected to increase to $6 to $7.25 in the coming year. In order to investors to be motivated to build speculative industrial properties, Holsapple said, rents should be above $10 per square foot.
Retail is expected to improve more than the other two sectors in 2014, but average rents will remain mostly unchanged, hovering around the $10 to $16 per square foot range, depending on the city.