Construction creates options, inventory issues linger

With the first quarter now in the books for 2019, we are seeing a familiar theme take shape across Northern Colorado. As the spring homebuying season gets under way, housing inventory will once again be a key factor that buyers — and sellers — will encounter in the coming months.

We see two sides to the inventory picture — ample in some parts of Northern Colorado, scarce in others.

First of all, availability, due primarily to the growth in new construction, is a positive influence on surging home sales in smaller communities such as Berthoud, Wellington and Windsor.

Berthoud is leading the way in year-over-year sales gains, up 66 percent over the first quarter of 2018. The principal force behind contracts and closings in Berthoud is the availability of new homes in the vicinity of the recently opened TPC Colorado golf club. Sales in Wellington, up 33 percent, are being fueled by activity in the Sage Meadows and Harvest Village neighborhoods. And the Raindance development is continuing to meet demand in Windsor, where sales are up 18 percent.

On the flip side of the inventory picture is Fort Collins, where supply continues to face inventory headwinds, leading to a 15.6 percent decline in sales between the first quarter of 2018 and the first quarter of this year. At last count, there was less than two weeks’ worth of supply for homes priced between $300,000 and $399,999, which represents the most popular price range category. In both the $400,000-$499,999 and $500,000-$599,999 ranges, supply is at one month or less.

A balanced housing market, when neither buyer nor seller holds a distinct advantage, occurs when available supply is between four months and six months. The only price range in Fort Collins that qualifies? There is an eight-month supply for houses listed at $1 million or more.

Of course, the inventory conditions in Fort Collins — new listings are down 20 percent from a year ago — translate to a sellers’ market. Well-maintained, accurately priced homes will be attractive to buyers this spring.

Fort Collins isn’t the only sub-market in Northern Colorado where listings are down from a year ago. Greeley-Evans, Loveland and Longmont, as well as the group of outlying Weld County communities (Ault/Eaton/Johnstown/Kersey/LaSalle/Mead/Milliken) all experienced a decline in supply in the first quarter. Only Greeley-Evans, with a sales growth of 13 percent, managed to avoid a sales decline as well.

And don’t expect demand to fall off anytime soon. With mortgage rates back down to 13-month lows as of late April and continuing job growth in Northern Colorado, we see a local housing market that was picking up steam at the close of the first quarter.

Brandon Wells is president of The Group Inc. Real Estate, founded in Fort Collins in 1976 with six locations in Northern Colorado