Northern Colorado Economic Snapshot - December '11

As a new year peers over the horizon, the hope is that 2012 will bring with it a more prosperous year for the Northern Colorado (Ft. Collins, Greeley, Loveland & Windsor) real estate market. Since the peak year of 2005, overall sales activity has dwindled each year, with the years 2009 through 2011 having reached some level of stability.

Home mortgage interest rates have trended down over the course of 2011. The traditional thirty-year-fixed-rate loan peaked at a tad over 5% in February and currently resides at around 4%. Using the average sales price of a single family home in Northern Colorado ($238,257) with a 5% down payment ($11,915), the difference in the monthly principle and interest payment of the resulting loan amount ($226,342), between 5% ($1,215.05) and 4% ($1,080.59) is $134.46. At 4% interest, a buyer could borrow $254,505, with a monthly principle and interest payment of $1,215.05; $28,163 more than they could have borrowed at 5%.

Home values have stabilized. Mortgage interest rates have declined. The end result is that a home buyer’s purchasing power has increased.

Below is statistical information from IRES (Northern Colorado MLS) through November of each year for the Northern Colorado real estate market.

• Single Family Sales: 4,403 (2011); 4,546 (2010); 4,538 (2009)
• Single Family Average Sales Price: $238,357 (2011); $237,213 (2010); $225,997 (2009)
• Attached Unit Sales: 923 (2011); 853 (2010); 962 (2009)
• Attached Unit Average Sales Price: $149,815 (2011); $156,380 (2010); $154,666 (2009)

The number of new active listings declined across the Northern Colorado real estate market in a year-to-year comparison. In November of each year the number of available listings for single family homes was: 2,164 (2011) and 2,664 (2010); approximately a 19% reduction. For attached units the numbers are: 350 (2011) and 470 (2010); approximately a 25% reduction.

The Colorado Division of Housing recently reported that foreclosure filings are down nearly 28% and foreclosure sales are down approximately 20% thus far this year compared to 2010. Mesa County (-35%) and Denver County (-32%) experienced the largest declines; Boulder County (-26%) and Larimer County (-27%). Pueblo County (-12%) reported the smallest decline across the state. On the surface this bodes well for the Colorado housing industry as bank foreclosures and short-sales have had a noticeable impact on real estate market activity and home values for the past few years.

Look for 2012 to mirror the past three years with sales activity continuing to stabilize; mortgage interest rates remaining at reasonable levels; and new home construction expanding as inventory levels of available properties remain low. Bank foreclosures and short sales will continue to be a viable part of the market as financial institutions persist in purging them from their books. Home buyers will still prevail, continuing to negotiate from a perceived position of strength. Which means home sellers will need to be conscious of shifting market conditions relative to the market value of their home.