Forecast Takeaways

Here are some of the big takeaways from our annual Market Forecast with Economist Matthew Gardner:

  • Interest rates will continue to trend down during the year and reach 6.08% by the end of 2024.
  • Home prices will have another year of modest gains increasing 2.0% to 2.5% in Northern Colorado
  • 53% of homeowners in Larimer County and 38% of homeowners in Weld County are “Equity Rich” meaning that they have at least 50% equity in their homes.
  • Inventory levels will increase in 2024 but will remain below normal which protects prices from any sort of major decline

To receive a copy of the full slide deck from the Forecast, feel free to reach out to us!

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No Drop

The numbers are in and it turns out that not even 8% rates could make prices drop in 2023.

When mortgage rates jumped this last year, many people believed that home values would fall as a result.

The fact that prices stayed flat in 2023 even though interest rates doubled between March 2022 and October 2023, shows that values along the Front Range are incredibly resilient.

Here are the 2023 average prices along the Front Range and their change compared to 2022:

Larimer County:  $621,538 / 1%

Weld County:  $527,600 / 1%

Metro Denver:  $679,710 / 0%

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No Drop

The numbers are in and it turns out that not even 8% rates could make prices drop in 2023.

When mortgage rates jumped this last year, many people believed that home values would fall as a result.

The fact that prices stayed flat in 2023 even though interest rates doubled between March 2022 and October 2023, shows that values along the Front Range are incredibly resilient.

Here are the 2023 average prices along the Front Range and their change compared to 2022:

Larimer County:  $621,538 / 1%

Weld County:  $527,600 / 1%

Metro Denver:  $679,710 / 0%

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Increasing Reductions

More and more sellers are having to reduce their listing price.

Nationally, 37% of all home sellers have recently had a listing price reduction. This is according to a recent report from Altos Research.

This is up from 30% in May and is now at the second-highest level since 2018. The highest it has been in the last five years is November 2022 when it stood at 41%.

A “normal” range is between 25% and 30%. Today’s number is a result of softening demand based on higher interest rates.

Proper pricing is always important for a seller and is especially so now as we enter a typically slower time of the year with added challenges related to interest rates.

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Larimer Resilience

To see the resilience of the Front Range market, look no further than Larimer County.

The average price for closed single-family homes in the month of July was $724,000.

This is only the third time in history Larimer County has exceeded $700,000 for average price in a month.

July’s average price is a whopping 12% higher than February’s average price which was $646,000.

A 12% difference in just a few months is significant in any market.

What makes this increase especially significant is that interest rates have been above 6.5% the entire time.

Higher rates did not keep prices from going higher.

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Rate Prediction

Our Chief Economist, Matthew Gardner predicts that interest rates will hit 5.4% by the end of 2023.

His prediction is aligned with most expert real estate economists.

While rates will continue to bounce up and down as the year goes on, the general trend will be lower rates.

This prediction is mainly based on the Fed tempering their increases as inflation starts to ease in the second half of the year.

Because of this prediction, we see housing demand increasing as rates decrease throughout the year.

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Versus 2019

Because 2021 and 2020 were such unique years in real estate because of the considerably low interest rates, many people in our industry believe it makes sense to compare 2022 to 2019 when looking at the key statistics.

Here’s how 2022 looked along the Front Range compared to 2019:

 

                                             Prices                   Number of Transactions                Properties for Sale

Larimer County                 +41%                    -6%                                                     -37%

Weld County                     +39%                    +2%                                                    -16%

Metro Denver                   +40%                    -14%                                                   -6%

 

Generally, what we notice is that:

  • Prices are up significantly
  • The number of transactions is similar
  • Inventory is down compared to 2019 even though it is more than double 2021’s inventory

 

The annual Market Forecast featuring Chief Economist Matthew Gardner is February 1st at 5:30pm.  To see the details and to RSVP, visit www.ColoradoForecast.com

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The Big News

The big news this week is obviously the rise in interest rates.

Average 30-year fixed mortgage rates are now at 6.7% which is the highest they have been since July 2007.

So, how is this affecting the market?  Here is what we notice…

There are fewer buyers in the market.  Sales activity, measured by closed and pending sales, is down 30% compared to last year.

Prices, however, continue to rise.  Average prices are roughly 11% higher than last year.  This is driven by the market being under-supplied.

Inventory levels, as measured by months of supply, tells us we still have a Seller’s market.  There is 2 month’s of supply currently for sale.

Ultimately, we expect the rise in interest rates to slow the pace of price appreciation.  We believe the market will return to its long-term average of 6% per year.

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What We Notice

Here is what we notice about the market right now:

  • Listings are receiving fewer offers compared to 60 days ago – instead of 10 offers, a listing might have 2.
  • There are now several instances of a listing only having one offer.
  • Sellers who were overly-aggressive with their list price have to quickly reduce in order to generate activity.
  • Inventory is up and in some areas significantly, giving buyers more options and flexibility.
  • Home buyers who are under contract with a new home waiting for that new home to be built have been negatively impacted by rising rates.
  • More buyers are considering 7 and 10-year mortgage products in order to have a lower interest rate.
  • The pendulum is swinging away from the drastic seller’s market we have seen for the last 18 months.

The post What We Notice appeared first on Fort Collins Real Estate | Fort Collins Homes for Sale & Property Search.

What We Notice

Here is what we notice about the market right now:

  • Listings are receiving fewer offers compared to 60 days ago – instead of 10 offers, a listing might have 2.
  • There are now several instances of a listing only having one offer.
  • Sellers who were overly-aggressive with their list price have to quickly reduce in order to generate activity.
  • Inventory is up and in some areas significantly, giving buyers more options and flexibility.
  • Home buyers who are under contract with a new home waiting for that new home to be built have been negatively impacted by rising rates.
  • More buyers are considering 7 and 10-year mortgage products in order to have a lower interest rate.
  • The pendulum is swinging away from the drastic seller’s market we have seen for the last 18 months.

The post What We Notice appeared first on Fort Collins Real Estate | Fort Collins Homes for Sale & Property Search.