Wells: Casting a last look across the Northern Colorado real estate market
As we approach the end of 2023, the Northern Colorado real estate market enters the new year as a dynamic and evolving landscape. Among the influential actors shaping local real estate are housing market trends, economics, and shifting buyer-seller dynamics. Let’s take a closer look:
1. Market trends: Creative incentives define the year
This year’s notable trend in the Northern Colorado real estate market is the creativity that builders and sellers are showing with their incentive packages for buyers. For instance, builders have leveraged buy-down incentives and forward commitments on funds, allowing them to offer lower interest rates to buyers. Additionally, extensive seller concessions – ranging from lot premiums to upgraded finishes – have become more prevalent. In the resale market, sellers are embracing buyer-friendly approaches, offering interest rate buy-downs rather than strict price reductions to attract potential buyers.
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2. Supply and demand: A buyer-friendly market emerges
Over the past 12 months, the market has tilted in favor of buyers. Seller concessions have played a key role in incentivizing buyers; while new listings have decreased year over year, sales have also slowed (see data below). Consequently, we’ve seen a slight increase in standing inventory across most areas in Northern Colorado.
3. Local economy: Post-pandemic recovery and employment growth
Northern Colorado’s economy has maintained its post-pandemic recovery, marked by steady employment growth. Between October 2022 and October 2023, Larimer County added 3,857 employed individuals while Weld County added 769. Although the pace of employment growth has slowed due to tighter economic conditions, the overall trend remains positive.
4. Pricing: Hyperlocal analysis amidst stability
Median prices for single-family homes across the region have held relatively flat in 2023. However, a hyperlocal analysis reveals some areas are experiencing downward pressure on prices due to heightened competition for a limited pool of buyers.
5. Interest rates: A rollercoaster ride impacting market dynamics
Interest rates have been a significant storyline in 2023, rising above 8 percent in the third quarter, causing a slowdown in buying activity. Seller concessions, particularly interest rate buy-downs, have been instrumental in enticing both builders and sellers. As rates have dropped into the high 6-percent range in the fourth quarter, we should see positive impacts from the convergence of higher inventory and greater buyer interest.
6. Demographic shifts: Continuity in attraction
Northern Colorado continues to hold strong appeal for a diverse demographic pool. No notable shifts have been observed in the region’s quality of life, robust economic position, and family-friendly environment, all of which attract residents from various backgrounds.
7. New developments: Thriving communities and economic growth
The region continues to thrive with new developments, ranging from robust commercial infrastructure growth to highly desirable residential communities, such as RainDance in Windsor. The sense of community remains strong, with outlying areas contributing to economic development and overall growth.
8. Challenges and opportunities: Adapting to growth
The long-awaited I-25 expansion – and new land use codes – aim to increase density and tackle affordability challenges, showcasing a commitment to adapting to the region’s growth.
As we conclude 2023, Northern Colorado stands as a strong epicenter for growth. Economic prosperity – and a vibrant real estate market – position the region as a desirable location for residents and businesses. With a positive outlook for the future, Northern Colorado continues to showcase resilience and adaptability in the face of changing market dynamics.
Brandon Wells is president of The Group Inc. Real Estate, founded in Fort Collins in 1976 with six locations in Northern Colorado. He can be reached at bwells@thegroupinc.com or 970-430-6463.
