Is there an end in sight to historic housing inventory lows?

From Boulder to Broomfield, from Windsor to Wellington and well beyond, the Front Range residential real estate market is locked into a seemingly intractable state of low inventory.

A confluence of factors, many of which are exacerbated by the COVID-19 pandemic, have combined to create an environment where there is an historical low total of homes on the market.

Those factors include low interest rates, an increasing number of Millennial buyers entering the market, people who now work from home demanding additional space, an influx of new buyers from more expensive real estate markets on the coasts and rising construction costs.

Here’s a snapshot of active listings in March from around the region:

• Boulder: 117 active listings , down 20.4% from 147 a year ago.

• Fort Collins: 301 active listings, down 42.2% from 521 a year ago.

• Greeley-Evans: 141 active listings, down 44.7% from 255 a year ago.

• Longmont: 84 active listings, down 43.6% from 149 a year ago. 

• Loveland-Berthoud: 248 active listings, down 39.5% from 410 a year ago. 

• Estes Park: 42 active listings during March, down 46.8% from 79 a year ago. 

“They are indeed [records],” Information and Real Estate Services LLC CEO Lauren Hansen told BizWest in April. “It’s pretty crazy, but low inventory, high demand, lots of properties under contract, and the number of sales, interestingly enough, still remain strong.”

The result of this low-inventory environment, of course, is sky-high prices. 

March set median price records across Northern Colorado and the Boulder Valley. 

Boulder’s median topped $1.5 million, up 56% compared to March 2020. Fort Collins also set a record of $495,000 for median price, up 16.5% year-over-year.

The tight market is especially challenging for first-time buyers who want to trade their apartments for single-family homes.

“Affordability is a barrier for people renting apartments to be able to jump into a single-family home,” Re/Max of Boulder managing broker Todd Gullette said. 

Condos, of which inventory is significantly looser, could be a good alternative for this class of buyer, he said. 

“Of the last eight years, we’re now in about the middle of the pack when it comes to inventory,” according to Gullette. That’s an area where we can affect inventory much more quickly than with single-family homes.”

This might be little consolation for the apartment dweller who now works from home permanently and is looking for the extra space provided by a single-family home.

“One of the reasons why we’re not at an historic low in [attached dwelling] inventory is because we do have people vying for more square footage,” Gullette said. “…Bigger homes have added more and more relevancy over the last year and that’s probably one of the culprits in getting us to such low inventory for single-family homes.”

Buyers of all types are being forced to adapt to a new normal in which homes are often purchased sight-unseen, with cash and for well over asking price. 

“It’s almost like list price has become … base price,” Moye said. “That’s like a starting spot. So when you see something listed for $500,000, it will be $620,000 when you’re done. … So when you go see something at [$500,000], you don’t offer [$510,000] you offer [$610,000.] That is what is making this market and why you’re seeing the prices jump so quickly, so fast.”

On average, there are 37 buyers for every single-family home on the market in Northern Colorado.

Dave Armstrong, mortgage loan officer for Elevations Credit Union, said it’s not unusual to see eight to 10 offers per property, most of them over list price.

In February, 45% of detached homes sold in Larimer County fetched more than the asking price. In Weld County, the figure was 50% last month.

Buyers aren’t the only people feeling the pressure from today’s market conditions; it’s brokers too.

“We would happily give up these high sales prices for a fluidly moving housing environment,” Gullette said. 

“This is an amazing window into the struggle that buyers have,” he said. “We live through the transaction with them. We’re used to being able to solve problems, but when you get into a market like this, sometimes the solution isn’t within reach. It makes us feel like we’re unable to produce for the people we care about.”

In the past, the region has been able “to build ourselves out of low inventory” with large new housing developments in place such as Louisville or Windsor, Gullette said. 

That’s not really an option anymore as developers are struggling to make those kinds of projects pencil out. 

Developers, faced with rising costs, are in no rush to build new homes, Dennis Schick, broker/owner of Re/Max Alliance, said in April during a residential market forecast at BizWest’s Northern Colorado Real Estate Summit. 

New construction cost increases are driven primarily by water and material price increases.

“Water is a part of everything we’re talking about today,” Schick said. 

The Front Range has roughly 80% of Colorado’s residents but only about 20% of the water resources, he said.

Chad Walker, principal and CEO of Pinnacle Consulting Group, said during last month’s summit that an increase in public-private partnerships such as Title 32 special districts could help ease the housing shortage. As high infrastructure costs prove a barrier to housing construction, special districts allow municipalities to create either single-purpose or metropolitan districts to construct and maintain infrastructure improvements over time through tax revenue from within the district.

Still, the creation of these districts and the construction of thousands of new homes takes years. In the meantime, experts say they don’t expect inventory to loosen in the near future. 

“Barring any disastrous, catastrophic economic collapse, I can confidently say that we are not going to get out of this,” Gullette said. 

From Boulder to Broomfield, from Windsor to Wellington and well beyond, the Front Range residential real estate market is locked into a seemingly intractable state of low inventory.

A confluence of factors, many of which are exacerbated by the COVID-19 pandemic, have combined to create an environment where there is an historical low total of homes on the market.

Those factors include low interest rates, an increasing number of Millennial buyers entering the market, people who now work from home demanding additional space, an influx of new buyers from more expensive real estate markets on the coasts and rising construction costs.

Here’s a snapshot of active listings in March from around the region:

• Boulder: 117 active listings , down 20.4% from 147 a year ago.

• Fort Collins: 301 active listings, down 42.2% from 521 a year ago.

• Greeley-Evans: 141 active listings, down 44.7% from 255 a year ago.

• Longmont: 84 active listings, down 43.6% from 149 a year ago. 

• Loveland-Berthoud: 248 active listings, down 39.5% from 410 a year ago. 

• Estes Park: 42 active listings during March, down 46.8% from 79 a year ago. 

“They are indeed [records],” Information and Real Estate Services LLC CEO Lauren Hansen told BizWest in April. “It’s pretty crazy, but low inventory, high demand, lots of properties under contract, and the number of sales, interestingly enough, still remain strong.”

The result of this low-inventory environment, of course, is sky-high prices. 

March set median price records across Northern Colorado and the Boulder Valley. 

Boulder’s median topped $1.5 million, up 56% compared to March…