A quick glance at average sales prices for Northern Colorado last year might make one wonder what’s up with Berthoud? After all, every local submarket in the region saw average sales prices increase. All except Berthoud, where average sales prices declined 3 percent.
But there’s another side to the Berthoud story. And it says a great deal about the potential direction of the area housing market in the foreseeable future.
Most notably, total home sales in Berthoud soared from 218 in 2016 to 451 last year — a year-over-year growth rate of 107 percent. With all that demand, it seems counterintuitive that average prices would slip from $412,225 to $400,751.
The reason? Berthoud is a hot spot for new home construction. And because much of that new construction featured affordable options last year, average prices came down.
With the emergence of the higher end Heron Lakes development, we probably shouldn’t expect Berthoud prices to continue to trend down. But we can expect Berthoud will continue to be a magnet for housing growth at many price points.
First, Berthoud sits in a geographic sweet spot — roughly equidistant from job centers such as Boulder, Fort Collins and Greeley, and easily accessible to Interstate 25 for commuters. Second, Berthoud has nearly 4,000 available housing lots identified for future development — nearly as much as Fort Collins and Greeley combined (4,430). Third, a variety of housing types and price options makes it attractive to a broad range of potential buyers. And fourth, Berthoud provides an accessible alternative to larger markets where housing supply is tight. Greeley, for instance, experienced a 13 percent drop in total sales, largely due to a lack of available inventory for buyers.
Speaking of the future of the housing market, here are some other reflections on what we see to be in store for Northern Colorado:
As stated above, Berthoud’s performance in 2017 is an indicator of how the regional housing market will be responding to continuing population growth that’s forecast in Larimer and Weld counties. Just as Berthoud is stocked with housing lots for the future, so are Windsor (4,650), Severance (1,605), and Wellington (1,215). Among the larger towns in the area, Loveland is the one best positioned for housing growth with 6,592 lots identified.
Typically, retail development follows rooftops — another way of saying that you don’t build a store until you first make sure there are sufficient shoppers living in the vicinity. But Northern Colorado may be flipping the script. All the retail growth that’s popped up in recent years near the I-25-U.S. Highway 34 interchange is surrounded by large tracts of open ground suitable for housing — from Greeley on the east to Loveland and Berthoud on the west. It seems likely that rooftops will start filling in much of that space over the next five to 10 years.
With the Colorado Legislature’s action last year to ease construction defects laws for builders, the hope is that builders can start delivering more condominiums and create more affordable entry-level housing for sale. But it’s going to take time. First, there’s a 24-month design process to determine what the project will look like, followed by another 24-to-30-month effort to get entitlements and actually build the units. We’ll need to be patient.
Brandon Wells is president of The Group Inc. Real Estate, founded in Fort Collins in 1976 with six locations in Northern Colorado.