The Group: Floodgates may open in second half of 2024

LOVELAND — The Group Inc. Real Estate company expects that mortgage rates will moderate at least by the second half of 2024. 

That will open the floodgates.

Buyers who have been waiting will flood the market.

Sellers may, again, begin to experience multiple offers on their properties.

That’s the forecast for residential real estate in Northern Colorado in the coming 12 months.

A look back

Brandon Wells, president of The Group, led a presentation at the annual real estate forecast event at the Embassy Suites Conference Center in Loveland Wednesday night.

He first reviewed where the market has come.

A year ago, he said, The Group predicted that median resale prices for single-family homes would be largely flat throughout the region.

While that was almost true for Fort Collins, which rose just 1.4% in the past year to $620,000, prices fell in Loveland by 2.3%, fell 4.1% in Windsor/Severance, and fell a whopping 9.2% in Greeley Evans to $401,377. 

Other markets in the Northern Colorado and Boulder Valley region were mostly down, except in Berthoud where the median price rose 2.6% to $615,000.

About 78% of the sales last year were single-family homes, Wells said.

While median resale prices may have fallen in many markets, the average annual appreciation — a measure of the value of specific properties over time — remained up at 5.8% in Fort Collins/Loveland and 5.1% in Greeley, he said, quoting the Federal Housing Finance Authority.

Numbers of homes sold in Northern Colorado were down 17.5%, Wells said. Peak sales in the region were in 2021.

The predictions

The Group forecasted that home sales will increase 5-8% in 2024 with much of that happening in the second half of the year when mortgage interest rates are likely to come down, Wells said. The Group said it expects about 8,900 home sales in the Northern Colorado region during the year. 

To accomplish that, Wells said that The Group predicts a “soft landing” for the economy and not a recession. He said remote work will continue to influence where people live and work.

Real wages have increased faster than inflation, and employment continues strong in Northern Colorado, which will influence consumer spending, including spending on homes.

Larimer and Weld counties will lead the state in population growth over the coming year. Wells said that the state demographer predicted that the state will grow by 61,600 people this year; Larimer will capture 5,794 of those and Weld County will grow by 8,198; 23% of the state’s growth will occur in Larimer and Weld.

Wells said that as the years progress, parents will discover that in addition to planning for college educations for their children they will also start to consider planning to help those children buy homes.

Nationwide, Wells said, 38% of homebuyers received a gifted or inherited down payment from family members. That trend will continue as housing costs continue their rise.

Larry Kendall, the founder of The Group, now retired, said rising home prices will result in employers rethinking how they recruit and keep workers.

“Watch as employers become more interested in providing housing for their workers. This is the way it was in the mountains of Colorado back in the day. … On the ranch you had the bunkhouse. On the farm, a house for the hired hand. In ministry, you had the parsonage,” Kendall said.

Employers will consider “either building for employees or negotiating master leases in apartments.”

Kendall said that communities need to “get on board” with workforce housing. “Right now, I don’t think we necessarily have the community on board.”

He cited the Colorado State University Hughes Stadium repurposing. CSU wanted to build workforce housing. “It would have been the largest employee housing development in Fort Collins, but voters said no; they wanted open space.

“The community talks about it, but does it really want it?” he asked.

Kendall also said that governments are finally starting to look at their role in the rising cost of housing, especially the effect of fees.

“Housing isn’t the problem; it’s the solution. Housing is a response to growth, not a cause of growth,” he said.

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