Last week we reviewed the local Fort Collins real estate sales over the decade ending with 2010. To complete the 2010 review we thought we should take a look at how our neighbors in Denver and northern Colorado performed so here are the 2010 residential sales ranked by market size:
Metro Denver is certainly the elephant in the room but it is notable that 2010 is the first time since 1999 that their total volume did not break the $10 billion mark. And then there is the ‘Republic of Boulder’ with an average selling price about double any other area. It is interesting that the average selling price increased in all of these areas which should rank Colorado near the top when the national sales reports come out in February.
The Fort Collins area compares pretty well with a modest drop in closed home sales and a modest increase in average selling prices. This is probably about the best we could have expected from a year shadowed by uncertainty. The tax credit certainly helped the first few months but the fragile economy, high unemployment and more difficult mortgage lending took many potential buyers out of the market. A good balance between supply and demand helped hold prices steady.
For the New Year, we expect a slow start because we are up against relatively high sales for the first six months of 2010. At the end of June last year, sales were up 23.6% over the previous year and this year we do not have the benefit of the tax credit to try and keep up with these numbers. We do seem to have an improving economy and a higher level of consumer confidence but the slow growth in employment will serve to hold back on consumers making major financial commitments. The historically low mortgage rates are projected to increase into the 5.5% to 6% range by the end of the year but these low rates are somewhat offset by tougher underwriting standards. Depending on how we get through the first six months, in the summer we should start to see a pick up in sales compared to last year and we fully expect that 2010 will prove to be the bottom and look for a small increase in home sales for the year. We also don’t expect much movement either way in the average selling price. Sellers seem to have accepted the low rate of appreciation and are pricing their homes appropriately. In the price range up to $400,000 there is a very balanced market so prices should be stable and in the higher price ranges, financing is more available, the inventory is down and this market should start to balance out. The one thing that will keep a lid on the selling prices is the fact that there are a number of potential home sellers – including banks with inventory – who have held their homes off the market. As the demand starts to increase so will the supply of homes, serving to cap any increase in selling prices. In summary, we expect total sales in 2011 to be in around 3,000 homes at an average price of $250,000 for a total market of $750M, a 6.1% increase. Now watch that come back to bite us!
If you would like more information, or if you did not get a copy of the January 8th report, please let us hear from you.