Residential real estate poised to shake slump

If anyone has more reason for a bleak view of the 2007 real estate market than Greeley broker Bruce Willard, please stand up.

As managing broker of Austin & Austin Real Estate, the region’s oldest residential brokerage, Willard has watched his market closely during 2006 as foreclosures soared, prices flattened, inventory languished and sales slumped.

But Willard is not wrapped in gloom.

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“I’m turning bullish about this,´ said Willard, who is among the few real estate professionals in the region to call a bear a bear when conditions warrant. “In 2001 and 2002, I was a real curmudgeon. I was really bearish during that time. … But I’m positive about the market now because of the economy.”

Willard’s view matches up with those of brokers throughout the region who have suffered through the market doldrums of the past several years. The residential building binge that flooded the market with thousands of empty homes is mostly over as big, publicly owned homebuilders have made their exits. And employment, the indicator that all real estate companies track with their keenest interest, keeps rising.

The Group Inc. Real Estate Chairman Chuck McNeal, a member of the Business Report’s 2006 Economic Roundtable (see page 14), said the fallout from the decline in the region’s high-tech economy was measured in the market.

“The flat market we’ve been in for the last five years, pretty much you can track almost exactly to when we had the high-tech layoffs,” McNeal said.

The rebounding technology sector provides the so-called “primary” jobs – with higher salaries that, in turn, drive spin-off employment – that feed the residential real estate market.

And that’s why residential brokers are starting to smile again. McNeal said the Fort Collins and Windsor markets had already turned upward from the bottom of the slump, and predicted that Loveland’s would follow soon.

“Don’t underestimate Greeley,” McNeal said. “The fundamentals are still strong, and it’s only a matter of time until it turns back around.”

Foreclosure properties in Greeley are selling in a sub-market that McNeal said has been increasingly active. But the mortgage failures still have dragged the market downward, as Willard and his fellow Greeley brokers have observed.

“If it weren’t for this foreclosure mess, which Greeley has more of because of all the starter homes, we’d be in pretty good shape,” Willard said. “All the phony-baloney junk appraisals, and these goofy loans that people have gotten into, have taken a toll.”

But it’s a temporary blip that the market will smooth over in time, he said.

“Right now we are pretty close to the flat bottom, but I think soon we’ll be on the opposite side of the wave.”