NEW CHAPTER, OLD STORY: ‘BOULDER BENCHMARK’ STICKS TO THE PLOT
If records are made to be broken, then certainly trends are made to go out of fashion. Except, it seems, in the case of residential real estate along the northern Front Range.
After 14 years, the “Boulder Benchmark” continues to run true to form. As much as housing prices are growing in the Fort Collins and Greeley areas, buyers in Boulder keep paying a princely premium for comparable houses.
In 2010, The Group Inc. Real Estate started reporting the sales prices of comparable homes in Boulder, Fort Collins, and Greeley. As The Group co-founder Larry Kendall explained “Basically, we look at homes built around the same time – late 1950s to early 1960s – constructed by the same homebuilder, and all of similar size – roughly 1,000 square feet, not including basements.”
Here’s a look at the latest price spread between the three communities for homes sold in 2023:
- Boulder: 1,156-square-foot home in Martin Acres subdivision (2,196 s.f. with basement), sold in March 2023 for $925,000. $800 per s.f. without basement, $421 per s.f. with basement.
- Fort Collins: 981-square-foot home (1,962 s.f. with basement) in South College Heights subdivision, sold in August 2023 for $599,000. $611 per s.f. without basement, $305 per s.f. with basement.
- Greeley: 1,026-square-foot home (2,062 s.f. with basement) in Greeley Farr subdivision, sold in March 2023 for $375,000. $365 per s.f. without basement, $183 per s.f. with basement.
Besides the expected finding that Boulder prices are much higher, the more interesting observation is how Boulder prices consistently run about 8-10 years ahead of Fort Collins prices. For example, the Benchmark price for Boulder in 2010 was about $385,000, when the Fort Collins price was about $203,000. In 2020, the Boulder price had increased to $783,000, while the Fort Collins price reached $435,000.
If you’re interested to see how Fort Collins home prices may shake out by 2030, keep the 2020 Benchmark price for Boulder on a sticky note.
FORECAST: ECONOMIC TAILWINDS TO LIFT LOCAL REAL ESTATE
Predicting economic outcomes boils down to deciding which will be stronger – headwinds that stymie job growth and consumer spending – or tailwinds that stimulate those two factors.
Looking ahead to Northern Colorado’s housing market performance in 2024, the tailwinds are poised to win out. That was the message delivered at The Group’s 2024 Real Estate Forecast, the firm’s annual report on trends in local real estate.
The Group President Brandon Wells predicted that, despite the presence of mounting consumer credit card debt and weaknesses in commercial real estate, the American economy is set to achieve a “soft landing” and avoid a much-anticipated recession.
After a sluggish year for local home sales in 2023, Wells cited several national and local “tailwinds” as reasons to believe housing sales will pick up in 2024:
Improving inflation has prompted the Federal Reserve to say it will cut the Federal Funds lending rate, which should help to lower interest rates on home loans during 2024.
Real wage growth outpaced the rate of inflation during 2023, which should contribute to greater consumer confidence.
The U.S. inflation rate, which hit a high point of 9.1 percent in the summer of 2022, tapered off to 3.4 percent by the end of 2023. While still above the 2% Federal Reserve targeted baseline, the tightening monetary policy has worked to ease the inflationary pressures last year.
- Improving inflation has prompted the Federal Reserve to say it will cut the Federal Funds lending rate, which should help to lower interest rates on home loans during 2024.
- Real wage growth outpaced the rate of inflation during 2023, which should contribute to greater consumer confidence.
- The U.S. inflation rate, which hit a high point of 9.1 percent in the summer of 2022, tapered off to 3.4 percent by the end of 2023. While still above the 2% Federal Reserve targeted baseline, the tightening monetary policy has worked to ease the inflationary pressures last year.
- Local employment has surpassed pre-pandemic levels in Larimer, Weld, and Boulder counties. Also, Larimer and Weld are predicted to be two of the fastest-growing counties in the state in 2024 in terms of population numbers. Combined, they are projected to make up 23% of the states growth in 2024.
Another trend with potential impacts on housing activity: older family members increasingly pitching in to help younger buyers, who may have been deterred by high interest rates or rising costs. Last year, 38 percent of first-time buyers used gifted or inherited funds from family members to make down payments. It’s one reason the share of homes sold to first-time buyers increased to 32 percent last year, up from 26 percent in 2022.
Bottom line? Look for total housing sales across Northern Colorado to increase this year by 8 percent, with median prices to climb slightly more than 3 percent.
Call me to discuss how the 2024 economic conditions could benefit you.
A CLOSE CALL: THE GROUP MOSTLY ON TARGET WITH SALES PREDICTIONS
An old saying goes, “Prediction is very difficult, especially about the future.”
Still, The Group keeps making predictions about the performance of the housing market and keeps coming close to the mark every year.
How did we do for 2023? Here’s a rundown of how our 2023 forecast matched up with the final figures:
Home sales. Based on our annual survey of Group partners, we predicted 8,970 total home sales (single-family and condominiums/townhomes) across Northern Colorado for 2023. Actual sales totaled 8,219, translating to 91 percent accuracy. Looking ahead to 2024, we’re estimating 8,900 sales – a gain of 8 percent for the 2023 total. That would also end a run of two straight years with lower sales.
Home prices. Our partners estimated median prices of $515,000, meaning that half the sales would be priced above $515,000, and half would be priced below. With an actual median of $507,200, we achieved 98 percent accuracy. This year, we see that median price nudging up to $524,000, or an increase of 3.3 percent.
THE GROUP EXPANDS MOBILE BROKER MODEL AND PLANS TO CLOSE HORSETOOTH OFFICE
The Group recently launched a mobile broker model, accommodating the 29 sales professionals who choose to work remotely. Consequently, with the need for less office space, The Group plans to close its 40-year-old office at 375 E. Horsetooth Road in Fort Collins, which it opened in 1983, initially serving 18 sales partners.
“When we formed The Group Inc. Real Estate in 1976, we had the discussion about whether our future was one big office or smaller offices disbursed throughout the city. We decided that we wanted to go with multiple offices and we knew the next office would be south because that was the direction of growth,” co-founder Larry Kendall shares. “So, really, the plans for a south office were formulated even before we finished the Mulberry office and opened it in 1979. In 1980, we purchased the land on Horsetooth Road with the intention of building a permanent office there – which we completed in 1983. As an aside, we had trouble getting financing for the building because the banks thought it was too far out of town!”
WHY HORSETOOTH ROAD?
Kendall explains, “We wanted to be on a major arterial street, plus the Foothills Mall had been completed a few years earlier, and we felt it would be a magnet drawing growth to it. We knew The Landings residential area was under construction and would be the largest new home community in Fort Collins to that point. Our Horsetooth office is at the entrance to that community.”
The Group always wants to be a leader and get in front of the inevitable. The trend towards sales associates being more mobile and remote working has caused us to realize that we don’t need as many bricks and sticks, so we are making that transition with our 40-year-old Horsetooth office. The Timnath office was built with the modern, more mobile Realtor in mind and will be a model The Group uses as it expands into Weld and Boulder counties.
REAL ESTATE BY NUMBERS
- $12.3 million. Price paid by investors for the 1 million square feet (about 23 acres) of development ground located along the east side of Interstate 25 near Mead. The site, known as the Elevation 25 parcel, is located near the Ritchie Bros. Auction grounds.
- 1,323. Number of housing units that a developer plans to build on a 185-acre site at the edge of southeast Fort Collins, near the intersection of Horsetooth and Ziegler roads. As planned, the acreage will be annexed into the city limits before development is authorized.
- $10 million. Price paid for a 26.5-acre industrial development site near the Northern Colorado Regional Airport. Old Dominion Freight Line Inc. plans to build a freight-transfer facility on the site.
- $127,300. Average price nationally for a mobile home in 2022, according to Lending Tree, up 77 percent from $71,900 in 2017.
- $280 million. Estimated investment that UCHealth is making to expand the Medical Center of the Rockies in Loveland. Construction recently started on the project, which includes a new cancer center, expansion of the emergency department, and space for up to 132 more beds.
- 3.9 million. Estimated number of housing units needed to meet current demand in the U.S., according to housing advocacy organization Up For Growth. In all, 32 percent of U.S. counties experience underproduction of housing.
- $2,050,000. Median price of housing in the 81615 zip code (Snowmass Village), making it the 96th most expensive zip code in the U.S., and the most expensive in Colorado.
- 627. Proposed number of residential units for the Union Park development in southeast Fort Collins. The project, located near the Front Range Village shopping center along East Harmony Road, calls for a variety of townhomes, multi-family units, and live-work units.
- 112. Number of housing units proposed for a new seven-story, multi-family development at 209 Cherry Street in downtown Fort Collins. The project would be located at the southwest corner of Cherry and Mason streets.
- 944. Average square footage that a renter in the United States can expect to acquire for a monthly lease rate of $1,700, according to a survey by RentCafe. In parts of Manhattan, $1,700 affords about 211 square feet.
- 144. Number of housing units, both for sale and for rent, proposed for the former Happy Heart Farm ground in northwest Fort Collins. As planned, the development would include a mix of condominiums, townhomes, and apartments near Overland Trail, located between West Elizabeth Street and Orchard Place.
- $766,550. The conforming loan limit set by the FHA for borrowers in Larimer and Weld counties during 2024.
- 66. Number of single-family homes that a developer wants to build on a 19-acre site in North Fort Collins. The building site is located along West Willox Lane, between North College Avenue and Shields Street.
- $65 million. Sale price for a 197-unit apartment development known as 281 Willow in downtown Fort Collins. Located along Willow Street, between Linden Street and North College Avenue, the apartments were recently built.