Local housing market tells two sides of story

In July in this column, we likened the Northern Colorado real estate market to a teeter-totter. Perched high on one side is the average price. Weighing down the other side is the lack of housing inventory.

Three months later, these two market factors seem to be holding their position. We just haven’t seen much movement in the teeter-totter market. September sales data showed that regional housing inventory was down 20 percent compared with September 2015. On the other side, average home prices in September were up 12.1 percent from last year.

With these figures in mind, it’s a good opportunity to explore some of the dimensions of home prices for our area.

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• First, keep in mind that real estate markets are local, and shifts in average prices can vary widely. For example, September prices were up 14.4 percent in the Fort Collins-Wellington-Timnath market, while they dropped 9.9 percent in the Windsor-Severance market.

• Also, be mindful of the difference between average sales prices and appreciation. Average prices, particularly in a smaller sample size, is pushed up when buyers are closing on expensive homes in a given month, or down when less-expensive homes get sold.

• A more accurate way to track how prices are trending is through the Repeat Sale Index that’s conducted quarterly by the Federal Housing Finance Authority. The index compares sale prices on each home as it sells, and calculates the increase in value on that home. From the data amassed on all repeat sales, the FHFA then produces a price-appreciation index for each metropolitan area in the United States.

The latest index, which covers the one-year period between June 2015 and June 2016, tells us that Colorado ranked No. 3 among the states, with a 10.21 percent average appreciation (the national average was 5.61 percent); and that four Colorado cities were among the top 10 in appreciation out of 259 metro areas:

1. Boulder – 14.72 percent.

6. Greeley – 12.39 percent.

7. Denver – 12.23 percent.

10. Fort Collins-Loveland – 11.67 percent.

When looking at local markets with higher average prices, another factor to consider is the volume of new-home construction in that area. New home prices are generally higher then resale. Thanks to the latest report from Metrostudy, we can take a closer look at what that means in Northern Colorado.

In Larimer County, the average price for a new home this year through August was $438,514. As you’ll see in the accompanying chart, that’s a substantial difference from the overall average price for the region — $350,068 in September. Metrostudy’s data tells us that with a 2,502-square-foot home, you’re spending $176.30 per square foot. By comparison, new condominiums in Larimer County are fetching an average price of $293,236.  For a 1,335-square-foot condo, that’s $226.20 per square foot.

In Weld County, the average new home price this year is $354,119. For a 2,227-square-foot home, that’s $161.10 per square foot. The average new condo sales brought $212,184.  This buys you a 1,407-square-foot home at $143.90 per square foot. 

One more note on new homes: Through August, 868 single-family homes and 32 condominiums were sold in Larimer County. Weld County was more active, with 1,164 new single-family homes sold and 28 new condominiums.

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.