After year of housing-market growth, look for more

Perhaps we ought to get used to this. Not only did we see Northern Colorado’s housing market boom throughout 2015, indications tell us that these upward trends will likely continue for years to come.

Over the past four decades, average home price appreciation has settled around 5 percent annually. But in 2015, our region blew those numbers out of the water, with double-digit price gains in all but one of the local sub-markets. In that case – Windsor/Severance – the increase was nearly 9 percent.

Regionwide in 2015, average sale prices increased nearly 12 percent, topping the $300,000 level to reach $305,133. On a local basis, Fort Collins/Timnath saw the largest increase, with average housing prices landing at $339,763, up 13.1 percent. Loveland/Berthoud had a 12.6 percent increase, up to $316,730. Greeley/Evans values increased 11 percent on average to $224,556.

Across the outlying communities of Weld County, consisting of Ault, Eaton, Johnstown, Kersey, La Salle, Mead and Milliken, average prices gained 11.3 percent to $291,431, and Windsor/Severance registered an 8.7 percent increase to $377,627.

We see these upward trends continuing into 2016. At The Group Inc., we’re forecasting an average price increase of 7.7 percent for Fort Collins/Timnath. Our estimates for Loveland/Berthoud and Greeley/Evans are similar, at 6.8 percent and 7.55 percent, respectively.

What does this all mean for homebuyers this year? The combined influences of rising prices and stagnant wages alone could start to squeeze affordability. But other factors come into play as well. Interest rates are expected to increase in 2016, which places a particular burden on first-time buyers.

While nobody knows exactly how much rates will increase, expert predictions have us climbing the range of 5 percent to 5.5 percent. While that remains low by historical standards, every increase of 1 percent in interest rates cuts purchase power by 10 percent. Furthermore, coupled with a lack of condominiums in the area — Colorado has some unusual provisions that prevent much in the way of multi-family construction — many people are simply priced out.

On one hand, these conditions may lead to some exciting market shifts in the near future. Expect to see more buyers adopting the philosophy of “drive ’til you qualify.” That means we’ll see more active home sales in the region’s outlying communities, such as Wellington, Berthoud, Severance and Johnstown, because the home prices there are less. We expect Wellington will be especially popular thanks to its proximity to Fort Collins (the region’s priciest town) and access to Poudre School District.

Larry Kendall co-founded associate-owned The Group Inc. Real Estate in 1976 and is creator of Ninja Selling. Contact him at 970-229-0700 or via www.thegroupinc.com.

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