Boeding/Roeder: 10 reasons to be bullish on the Fort Collins housing market
Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window. — Peter Drucker
Over the past several years we have increasingly received some version of the following question from friends, family members, clients, and investors: Has the Fort Collins housing market peaked for the near-term? Our answer has been consistent, if not noteworthy: Who knows?
Many investors who balked at 3-4% cash-on-cash returns for residential investment properties 3-4 years ago are now feeling regret as they see the price points that these properties have quickly appreciated to, realizing that they could have doubled their down-payment investment if they had only put away their spreadsheets and purchased a well-located single family house listed on the MLS, in plain sight for the world to see. Many buyers who continued to rent “until the market cools off” are feeling a similar sentiment.
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So, has the housing market hit a peak as of January 2021? We would like to register our official answer as “We don’t think so,” and relay 10 reasons that we are bullish on the housing market in Fort Collins:
1) U-Haul.com released its 2020 Migration Trends Report on Jan. 4, and Fort Collins was named a Top 25 U.S. Growth City. Now that many jobs have gone virtual, people can realize their dream of living in Colorado.
2) According to Worldpopulationreview.com, Fort Collins is growing rapidly at a rate just over 2% per year. The city’s growth rate is currently outpacing the state and county rate.
3) The unemployment rate in Larimer County is currently 5.1%. The unemployment rate in the state of Colorado is 6.4%.
4) The 4,000 home Montava project planned for northeast Fort Collins hinges on finding a solution to water. The developer Max Moss has filed an application in Colorado Water Court to allow him to use an underground aquifer to provide drinking water to the proposed 4,000-home community. He expects that it will take up to 18 months to get a decision, and thus the project will likely be put on hold until mid-2022. Continued low Inventory equals more upward pressure on sale prices for existing homes.
5) More high paying jobs. Broadcom has been one of the most talked about companies in the world over the past year due to its strong presence in the booming semiconductor market. It employs more than 1,500 people in southeast Fort Collins and is currently advertising on Glassdoor.com to hire for 19 additional positions.
6) Fellow prominent player in the semiconductor industry, Advanced Micro Devices, employs nearly 700 people in Fort Collins according to Glassdoor.com, and it is hiring for multiple positions. Microsoft also has a substantial office presence in Fort Collins, and it is advertising on LinkedIn.com to hire for multiple positions.
7) According to IRES.com, there were 251 sales of homes priced $650,000+ (the official luxury home price category according to the National Institute for Luxury Home Marketing) in 2019. There were 382 sales at $650,000+ in 2020, representing a year-over-year increase of 52%. The luxury market will continue to boom in 2021; we believe that a substantial percentage of the people moving to this market are doing so with higher paying jobs than in years past. Pair the new buyers to the market with local “move-up buyers” cashing out on massive equity gains from their local homes and applying that equity to homes in higher price points, and we expect to see the luxury market and median price point continue to climb northward.
8) Bankrate.com predicts that the coronavirus vaccine will push up mortgage rates slightly in 2021 as the economy opens up. If rates start to inch up a bit, we believe that will spur a significant case of FOMO (Fear of Missing Out), and we will see a new wave of buyer activity in a market with historically low inventory.
9) Wellington, a popular sub-market to Fort Collins for those seeking a more affordable home purchase option, recently tripled its water rates for new developments. Landon Hoover, president of Hartford Homes and one of Wellington’s largest developers, says the increase will add about $40,000 to the price of a home in Wellington. The median sale price in Wellington increased 7.4% in 2020, compared to a 5.8% increase in Fort Collins. This higher increase in Wellington, paired with the increase in new home pricing due to the tripled water rate, has narrowed the affordability gap and might sway more buyers to opt for a purchase in Fort Collins.
10) Liveability.com recently ranked the top 100 places to live in the United States in 2020. Fort Collins was ranked #1. Described as a “vibrant and growing city that’s overflowing with opportunity.”
If 2020 taught us anything, it was to take Peter Drucker’s quote to heart and respect the dangers in making predictions. With that in mind, we believe the overarching narrative is that Fort Collins is one of the most attractive places to live in the country, boasts a diverse local economy with a growing number of high-paying jobs in high-growth sectors, and is relatively close to being 100% built out in an environment where construction costs are making it more challenging to add inventory. We are bullish on residential property in Fort Collins.
Abbey Boeding and Greg Roeder are residential Realtors with Waypoint Luxury Residential. They can be reached at groeder@waypointre.com and aboeding@waypointre.com.
