We hear it said many times: balance is the key to life. It also pretty helpful in real estate. And after leaning toward sellers for the better part of the past decade, we can say that Northern Colorado’s housing market appears to be returning to a state of balance.
It’s no secret that our market has largely favored sellers since the end of the Great Recession — a condition characterized by sharply rising prices and even chaotic bidding wars between buyers. By comparison, a balanced market means buyers get choices and don’t need to rush to decisions. At the same time, sellers who price their home right and prepare their property to sell will likely be successful.
That’s what makes the third quarter real estate statistics encouraging. While we continue to see strong demand, housing inventory — very tight here for several years — is showing signs of catching up. Meanwhile, the pace of price growth is more in line the historical average of about 5.3 percent per year over the past 40 years. And while prices are still climbing at a faster clip than wage growth, the gap between those two factors is closing.
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Let’s take a closer at what we mean by examining some of the key data points at the end of the third quarter for the four largest sub-markets in Northern Colorado:
Home inventory after the third quarter was up 8.1 percent over a year ago. Meanwhile, average sale prices over the past 12 months are up just 1.4 percent, after an increase of 5.5 percent in 2018 and 6.4 percent in 2017. Home sales are down 10 percent, and the number of homes under contract are off 3.7 percent.
Inventory in Loveland was up significantly — 28.4 percent — while average prices over the past 12 months are up 4.8 percent. That compares to an increase of 3 percent in 2018 and 9 percent in 2017. Total sales have slipped by 3.5 percent, but homes under contract have increased by 3.6 percent.
Prices have actually dropped in the Windsor-Severance area, down 1 percent over the past 12 months, after dropping 3 percent in 2018. That follows an 11 percent increase in 2017. One reason for the declining prices is a 15.3 percent increase in inventory, including a wave of availability at entry-level prices. Demand is high, reflected in 6.3 percent sales growth and a 33.6 percent hike in contracts.
After 10 percent growth in average prices in 2017 and 8.5 percent in 2018, homebuyers in the Greeley-Evans area are finding an easier time of it over the past 12 months, with average prices up less than 1 percent (0.52). Inventory has increased 4.9 percent, while total sales are down 2.4 percent and contracts are up 4.8 percent.
It should be noted that available inventory — largely from new construction — is also gaining ground in smaller sub-markets such as Timnath, up 14 percent, and Wellington 71 percent. Berthoud is an exception to the inventory trend, down 9.9 percent. However, demand remains strong, with sales are up 37 percent and contracts up 16.3 percent.
The bottom line: The market is closer to a scenario where both buyer and seller can get what they need.
Brandon Wells is president of The Group Inc. Real Estate, founded in Fort Collins in 1976 with six locations in Northern Colorado