Region’s housing market takes necessary breather

New home construction and existing home sales are down in most areas of Northern Colorado compared with the past two years. But real estate agents and home builders are still expecting a banner year.

“Six weeks ago, I would have told you we would exceed last year by a lot. But it slowed down in September,´ said Jeff Demaske, owner of J & J Construction of Northern Colorado and Journey Homes. “We’re still probably going to do $100 million in sales this year. I can hardly call that a bad year.”

Demaske’s companies, which build homes in six locations from Johnstown to Wellington, did $98 million in sales last year. In the next few months, they plan to start building on three more sites in Mead, Lochbuie and Firestone in southwest Weld County.

Rural Weld County leads the region with home starts. From January through August, rural Weld had a record 2,051 home starts, compared with 2,014 for last year and 1,359 in 2003.

Also through August, rural Larimer County numbers are up 32.5 percent over last year. But home starts for Fort Collins, Loveland and Greeley have dropped. The biggest dip occurred in Fort Collins, where 2005 home starts are down 23.2 percent from 2004.

Existing home sales have also decreased across the region. Through September,  home sales are down 1.7 percent from the first three quarters of last year.

Slowing the boom

The numbers may signal a slowing of the housing boom that Northern Colorado has experienced for the past several years. Population growth has fueled much of the boom.

Weld County was the fastest growing metro area in the United States between April 1, 2000, and July 1, 2003, according to the U.S. Census Bureau. Southwestern Weld towns such as of Mead, Frederick and Firestone are growing quickly with people moving in from the Denver area in search of less expensive homes and smaller-town living.

The population may still be growing, but Bruce Willard of Austin & Austin Real Estate in Greeley said he has seen a slowdown coming.

“I started seeing it four years ago, when I could foresee too much inventory,” Willard said. “I actually thought the market would start slowing down sooner than it did. But a slowdown is a good thing. The market has got to take a breather.”

In real estate, the combination of too many homes on the market and too few buyers drives home prices down. The average sales price of a home exceeded $250,000 in Fort Collins this year. The average price in Northern Colorado is $231,856, a 4.9 percent increase over last year.

Home prices certainly haven’t fallen, but Willard said some builders and bankers have been pulling back in their vigor to develop residential areas to keep the inventory in balance.

Demaske said that he has seen the same thing.

“In Greeley, everyone developed in 2003, but there’s been hardly anything developed this year,” he said. “Part of that is subdivisions are being built out, and there are no more permits to pull. But part of it is about inventory.”

Existing homes tougher sell

Team Cook at Cottage Realty, a Berthoud-based company that does business across Northern Colorado, has seen a 20 percent decrease in sales attributed to new home construction this year, said Kevin Cook, owner of the company. Still, Cook expects this year to be his company’s second best, behind 2003.  

“It’s been a tougher year,” Cook said. “We’re having to spend much more money on marketing to get the same results we did in years past.”

With so many new homes on the market, existing homes are also becoming more difficult to sell, Cook and Willard said. Homes have to be priced right to sell within 90-120 days. Many homebuyers also want updated features, making older homes harder to sell, Willard said.

“Things that are only five or six years old are already considered dated,” he said. “People want all the latest styles, and they don’t have the cash to do a remodel.”

Earlier this year, The Group Inc. forecast a real-estate year similar to 2004, which turned out to be a record year despite uncertainty about the market. At its annual real estate forecast in February, The Group predicted 11,550 home sales across Northern Colorado, including 4,000 in Fort Collins.

Figures for the first three quarters of this year are on track with those predictions.

“We’re looking at another record year for residential,´ said Bob Hau, a broker partner with The Group in Fort Collins. “The one thing you have to ask is, ‘Are people still moving here?’ The population growth continues to be strong. The economic and business forecast is very strong. Home sales follow that.”

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