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 January 1, 1996

Move-up market to keep real estate strong

A combination of pent-up demand and breathtakingly low interest rates in 1992 caused a dramatic shift in Fort Collins’ real estate economy.

But how long this boom will last is subject to the interpretation of the city’s cross-town move potential, says market watcher and chairman of The Group Realtors Inc. Larry Kendall.

In a thumbnail summary to about 400 people attending First National Bank of Fort Collins’ annual economic forecast, Kendall explained that there was an oversupply of housing in the early to mid 1980s which, helped along by relatively high interest rates, resulted in a kind of a recession.

People wishing to move up in the market either couldn’t find buyers or couldn’t sell their homes for much of a profit. The market began to ease a bit in 1985, but it wasn’t until around 1992 that the interest rates dropped, the Fort Collins’ market caught fire, homes

began to appreciate dramatically and home owne rs began to act on their pent-up demand.

“A lot of people, thanks to a combination of factors, were able to get their dream home at a record low interest rate,” Kendall said. “Typically, people will move up in value about 50 percent, from a $100,000 home to a $150,000 home. In the last two or three years, people have been moving up an average of 100 percent or more, and three-quarters of the moves have been cross-town.”

Which begs the question of how many more people are looking to upgrade, and how long the boom can last. The facts:

n About 20,000 owner-occupied single-family homes exist in Fort Collins.

n About 4,000 homes sell in Fort Collins annually, 3,000 of which are cross-town moves.

n If 60 percent of the community takes the chance of the lifetime to sell a house at a profit and reinvest at a record-low interest rate, about 12,000 households will move.

So, if moves progress according to projection, it should have taken about four years to satisfy the pent-up demand, which means Fort Collins may be at the end of its boom, because it is unlikely that opportunity seekers will be willing to pack it all up and move again within a four-year period. But Kendall remains optimistic, noting that perhaps 75 percent of home owners were experiencing a pent-up desire to move, and further, that interest rates are projected to tumble after the first of the year.

“The market still is very strong, but to think that the kind of market we’ve had for four years is sustainable into forever is not realistic,” Kendall sa id. “But I do think 1996 will be a very good year.”

Good-bye to $100,000 house But it may not be such a good year for people who’d like to get into a house for less than $100,000. Kendall said that in the third quarter of 1995, for example, homes in the l ess than $100,000 range sold about 43 percent faster than they came on the market.

“If we continue at this rate, you’re going to see, within a year or two, that you won’t be able to buy a house for $100,000,” Kendall said. “We’re heading the direction of Boulder, where they haven’t had a $100,000 property for years. Here, we haven’t had a $50,000 property for years. The $100,000 house is going to go the way of the $200 apartment.

“Fort Collins is becoming a less affordable community.”

A modest proposal

An d that is a worry. The city’s Affordable Housing Board, Fort Collins Housing Authority and Colorado State University’s Neighbor to Neighbor program are all mulling ways to provide affordable housing, which is defined as housing that people making less tha n 80 percent of the median household income can obtain without spending more than 30 percent of their monthly income. In the meantime, The Group has offered a five-step plan for consideration:

1. Restructure building fees. Currently, permit fees for a two -bedroom apartment or condominium are nearly as high as for a $500,000 single-family

house, The Group reports. Fees generally account for between 20 percent and 25 percent of the cost of an apartment and less than 5 percent for a

single-family house.

2. Educate neighborhood groups. The Group counters the suggestion that apartment or condo development tends to erode single-family property values because of traffic and crime with the examples of Parkwood and The Landings/Warren Lake. There, half-million to million-dollar homes rub shoulders with apartments and condos.

3. Focus on the acquisition of existing housing. Most government agencies and nonprofit groups tend to focus their efforts on new construction, when acquiring existing homes is more cost-effec tive. The Group, which has over the years helped the Fort Collins Housing Authority acquire properties, says new housing runs 20 percent to 50 percent more expensive than existing dwellings.

4. Focus on high-paying jobs. Though Fort Collins’ average home price of $147,159 is near the national average of $144,500 and well below the $188,800 average for the western United States, the city ranks in the bottom quarter for affordability. The Group reports that the average Fort Collins wage is below both state and national averages. About 47 percent of the employed work in service or retail jobs, where wages run $13,213 and $20,300 annually. By contrast, manufacturing jobs pay an average of $37,408.

5. Improve education and skills. One of Fort Collins’ major employers recently had 30 job openings, for which 800 people applied. Only 5 percent had a high-school diploma, could do math at a sixth-grade level and could read at the ninth-grade level. Of that pool of 40, only 18 passed the interview process and were hired.

Notes The Group: “We not only need high-paying jobs, we need our people to develop the skills to qualify for them.”

News follows at 10

Miramont, which runs south of Harmony Road from Lemay Avenue west nearly to South College Avenue, is a prime example of mixed-use development that appears to be holding its value — all over the board.

According to William Neal and Gary Nordic, managing general partners of Miramont Associates, since the development group purchased a 150-acre farm from G.T. Land in 1992, the property has been subdivided into 450 lots in a half-dozen filings.

Most of Miramont Associates’ project is single-family, though the high-end development transitions from Harmony Road through the Harmony Market retail center and the 210-unit MiraMont Apartments. And the proximity to multifamily housing doesn’t appear to be quelling sales at Miramont, where Nordic and Neal report that about 61 percent of the available lots are sold.

In Miramont Ridge, where sales opened in July, 11 lots are available. Just below the Ridge , in Miramont Terraces, 22 of 27 lots have sold, and at Miramont Estates, 10 of 22 lots are sold. In Castle Ridge, where ridgeline lots with stunning views of Longs Peak have sold for $80,000 to $125,000, only two lots are available. Homes in that neighborhood are ranging between $400,000 and $800,000.

“The idea that the top end of the Fort Collins market is slowing is news to us,” Neal said.

Done deals

Rhys Christensen, Realtec Commercial Real Estate Services Inc., brokered a one-year lease agreement for Rocky Mountain Automotive Finishes at 5748 S. College Ave. Owners Larry & Richard Varner are expanding their Loveland-based business to 1,200 square feet in Fort Collins.

Look for a new title company at the Centre for Advanced Technology. Premier Title Specialists, managed by Cindy Minatta, opened a 780-square-foot office in a deal brokered by Christensen and Dan Bernth of Veldman Morgan Real Estate. The office is located at 1014 Centre Ave., Suite B. Minatta’s former employer, Security Title, renewed its lease at Continental Plaza, 2665 JFK Parkway, No. 100-102, and expanded by an additional 2,753 square feet. The deal was brokered by Christensen.

Scott Rice Co., a national distributor of office furniture, has relocated and expanded its Fort Collins showroom. In a deal brokered by Christensen and Everitt Cos.’ Stuart MacMillan, Scott Rice has signed a five-year lease on 8,256 feet in the new Baker Instrument building in OakRidge Business Park, 4812 McMurray Drive.

Scott Rice will be joined by Monarch Tile Inc., a national manufacturer and distributor of tiles. The firm signed a five-year lease on 4,500 square feet in the Baker Building. That deal was also brokered by MacMillan and Christensen.

Front Range Insurance Group has expanded and relocated to 285 0 McClelland, No. 3900 in Fort Collins. The deal was brokered by Christensen and Realtec – Greeley’s Michael Ehler.

A combination of pent-up demand and breathtakingly low interest rates in 1992 caused a dramatic shift in Fort Collins’ real estate economy.

But how long this boom will last is subject to the interpretation of the city’s cross-town move potential, says market watcher and chairman of The Group Realtors Inc. Larry Kendall.

In a thumbnail summary to about 400 people attending First National Bank of Fort Collins’ annual economic forecast, Kendall explained that there was an oversupply of housing in the early to mid 1980s which, helped along by relatively high interest rates, resulted in a kind of a recession.

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