LOVELAND – Members of the Northern Colorado real estate community yearning for good news about the year ahead got it in spades Monday night during The Group Inc. Real Estate’s annual forecast.
The nearly 3,000 faithful who gathered at the Budweiser Events Center heard a characteristically upbeat outlook from Group Chairman Larry Kendall, a forecast that was bolstered by predictions from one of the nation’s most prominent real estate economists.
Continued low mortgage interest rates, new jobs, population growth and market demographics would keep the region’s real estate market humming, said David Lereah, the Washington, D.C.-based chief economist for the National Association of Realtors.
“I recall the Wall Street Journal headline from two years ago that said the real estate boom is going to bust,” Lereah told his audience. “Thank goodness we didn’t listen to them. The real estate boom is not going to bust. It’s going to wind down, but to an expansion.”
Lereah, who flew in for the annual event at the invitation of long-time Group broker and friend Chris McElroy, ticked off a list of factors that would continue to buoy the market, beginning with interest rates.
“Mortgage rates even in 2007 will probably not top 7 percent,” he said. “That’s still historically low.”
The age-and-income demographics of home buyers, with baby-boomers still in their peak earning years, would also drive the market, Lereah said. Their spending power had become particularly apparent in the second home market.
“Thirty-six percent of all homes sales last year were second homes,” he said. “Somebody out there has money. And it’s not just the boomers. It’s the retirees.”
Lereah also cited economic jolts during the past five years, ranging from terrorist attacks to massive job layoffs, that the national and regional real estate markets weathered without wavering.
“The market was hit by a two-by-four several times and kept on ticking,” he said. “In 2002 and 2003, the nation lost 3 million jobs, but real estate went up.”
Viewers of Kendall’s illustrated outlook for the year ahead saw some familiar themes from previous presentations: Interstate 25, and particularly its junction with U.S. Highway 34 in Loveland and Johnstown, would continue as the hottest of the region’s markets. He zeroed in on the eight square miles spanning both sides of I-25 from Crossroads Boulevard to the area just south of U.S. 34.
“This whole area around the Bud Center and soutward is one big construction zone,” he said. “It’s the largest construction area in Colorado today. That’s driving jobs.”
Pressure for regional cooperation would continue to grow as commuting patterns stretch transportation systems in need of upgrades, Kendall said.
“Our two biggest challenges are transportation and regional cooperation,” he said.
In a meeting with reporters prior to his presentation, Lereah said the hot-burning real estate market in Northern Colorado presented dangers, chiefly from home-builders who were busier than reason allowed for.
“Overbuilding has always been a problem, not just here but nationwide,” he said. “If I had to throw out one problem that you have in this region, it’s that you’re overbuilding.”
If asked to identify any emerging theme resulting from the events of 2020, I’d have to say that we are challenging historical norms at a record-setting pace. There is a large degree of discord in our political system regarding the state of our economy and the suggestions on how to fix it are endless.