FORT COLLINS — The town of Windsor has emerged as the top submarket in Northern Colorado for new-home starts as the region’s population continues to grow.
John Covert, director of MetroStudy’s Colorado-New Mexico region, said builders in Windsor started 600 new homes in 2016, leading the way in Larimer and Weld, the counties that make up Northern Colorado.
Speaking Wednesday at Colorado State University’s Everitt Real Estate Center’s Spring Market Watch, Covert, who has been researching and analyzing housing markets since 1999, said home starts in the region were up 12 percent in 2016, but that fourth-quarter starts were down compared with the same quarter of 2015.
In the region, there were 4,441 new home starts in 2016, the most since 2006 and 2007, but considerably less than the 7,000 logged in 2003 and 2004.
Housing starts in Weld County are up 16 percent, second only to 22 percent in El Paso County, anchored by Colorado Springs. Housing starts in Larimer County were up 5 percent, Covert said.
“This is basically good news, but the market is facing some constraints,” he said. “Prices are being driven up by short lot supplies and some trade-labor issues. … It’s taking builders 10 to 12 months to finish a house because of a labor shortage,” he said. Covert said the average price of a home in Windsor is $359,000.
Covert said the number of jobs is growing at a faster rate in Northern Colorado compared with the Denver area, boosting consumer confidence and the demand for housing.
“Three percent unemployment in Weld and Larimer is the lowest in 15 years, and wages are catching up,” driving improved consumer confidence, he said, adding that the resurgence of the oil industry in Weld County is contributing as well.
The increasing population and new job growth — 8,000 in the last 12 months in Northern Colorado — is contributing to the increased demand for housing.
Covert believes that national builders will become more active in the state and Northern Colorado. He pointed out that 61 percent of new homes in Denver are being built by national builders, 40 percent of new homes in Boulder County are being constructed by national builders, and in Fort Collins and Greeley, national builders construct 35 percent of new homes.
“It will be harder and harder for local builders to compete as national builders expand to the north and south in this region,” Covert predicted. “New home prices will continue to increase because of tight lot supplies.”
David Pierce, who analyzes real estate statistics in Colorado and Utah for CoStar Group, said rentals of single-family homes are on the increase, and it’s not just individuals with second homes putting them up for rent.
“National investors — such as the Blackstone Group — have begun buying single-family homes and renting them,” he said, squeezing the inventory of existing homes on the market.
In the commercial sector, Pierce pointed out what most businesses already know, that office rental rates continue to increase in Fort Collins and Boulder. He pointed out, however, that office rental rates in Greeley have declined.
Pierce said inventory of available light-industrial space throughout the region is extremely low, and that any new product is snapped up quickly, and at increased rates.
“What used to go for $6 to $10 per square foot is commanding $12,” he said.