COVID-19  June 19, 2020

NoCo Real Estate Summit: Less-dense homes gain steam in market as space becomes a pandemic premium

Coloradans are moving out of the packed Denver metro area and into Northern Colorado in search of a bigger space in case another wave of pandemic shutdowns pins people inside.

That’s the takeaway from Dennis Schick, a broker/owner at RE/MAX Alliance in Fort Collins, who gave a look at the future of the residential market at BizWest’s Northern Colorado Real Estate Summit by video chat Thursday.

Northern Colorado’s population continues to expand; that isn’t new. But Schick said the majority of people coming to the region’s communities are coming from elsewhere in Colorado, with about 17% from the Denver metro. That was a trend before the pandemic struck, but the need to have more space to move around is drawing high-income buyers farther away from Denver’s core.

“People were living in apartments or densely populated areas; they were really locked down quickly,” he said. “…We have learned something now as citizens, that we know now that this can happen. It could be a different disease, it could be a different phenomenon or different pandemic, but we may be seeing things that may say we’re going back into a lockdown state.”

He also noted that Colorado has the largest percentage of remote employees, a trend that points to continued population increases as people ponder where they want to live without considering whether they can find a job there.

“The multi-million dollar sales and million-plus (sales) have just been selling like crazy. It’s astonishing how many high-dollar homes we’re seeing go under contract,” he said.

Notably, Schick said middle-price property sales have been flat in this period, while low-priced homes and condominiums have not been selling as fast as before.

Schick said this additional reason for demand is bringing the lack of widely available housing in the area into greater focus. He said listings for the month of May were down 10.7% in Larimer County and 9.4% in Weld County compared to last year, which he attributes to both a more conservative financial attitude in the current COVID-tinged economy, but also an underlying lower amount of houses available for purchase in the region.

The number of construction permits granted in Larimer County declined about 40% this year from the same period last year, which he attributed to a number of master-planned communities already being built in the area. Weld County’s permits increased by 10% in the same period.

However, Schick said the “de-densifying” effect that’s driving the high-end housing market is the opposite of what needs to happen to build more affordable properties, which require density in order to lower the initial cost of securing water rights.

Although Schick is upbeat on the long-term prospects for the area’s residential sector, he said the short-term difficulties in matching buyers and sellers during both a pandemic and one of the deepest and most rapid economic contractions in history will cull the herd within the area’s broker community.

“Many Realtors are not going to be real estate brokers probably in four or five months,” he said. “… But I also think when you have fewer people selling, the people who are good at selling, they’re going to have a very prosperous career.”

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