The Group: Numbers of Homes Sold in Northern Colorado Will Continue to Increase

Jonson Kuhn | North Forty News

Hey, did you know the word “forecast” can refer to something other than weather?!  Apparently, it’s related to real estate, as well, and I know this because on January 26 Northern Colorado’s leading realty firm, The Group held their annual real estate forecast presentation. This year’s presentation featured key speakers Colorado State Demographer Elizabeth Garner, as well as Group President Brandon Wells.  The presentation was held virtually and streamed from their website, so if you’re at all interested in checking that out for yourself, it’s posted at thegroupinc.com/forecast-2022.

Before the presentation took place, however, the esteemed members of Northern Colorado’s journalistic brass, (of which I am, of course, associated with) were given a chance to throw some questions at the Prez Brandon himself. One of the first things Brandon was able to address for us was the ever-so-popular question of how new developments in Fort Collins, like Montava are likely to change the market in the coming years?

“Dependent upon the project, Montava for example, has water challenges; they’re going to get phase one off the ground but solidifying a water source for the full development, that’s to be determined whether that happens. All of these projects, in my opinion, are much needed[…]a lot of people don’t want growth, but in all honesty, what happens when you limit growth is you start to see prices and cost of living really grow rapidly.  We just looked down south in Boulder where the median detached price this year was $1.2 million, those things have a trickle-down effect, from everything to how you pay wages to where you find lower to minimal wage-earning workers, so the growth is necessary,” according to Brandon.

Another popular concern is this idea that Brandon termed as the ‘No Inventory Myth.’  The myth partially comes from this idea that older homeowners hold onto their homes longer (because they often can’t find anything else) within certain areas or specific neighborhoods that may become more sought after or popular over time for whatever reason, therefore leaving the landscape looking pretty vacant.  However, Brandon assured us that the lack of homes for sale is but merely an illusion…sort of.

“I think the missing component is that we’re used to seeing a marketplace where the consumer can go online, they can look and self-select through maybe 20 or 30 properties, they whittle that down and then go out and look at those properties and decide what matches their needs and desires, they then go back and work with their real estate professional and submit an offer.  The marketplace looks very different today because of the velocity in the marketplace, so there’s not a storefront[…]The sales are happening but it’s at a certain speed and that’s evident by the month’s supply; there’s really only a 15-day supply if everything was held constant in Loveland and really Fort Collins, as well.  So, I think that’s made a lot of people nervous, like ‘hey, there’s nothing to buy’ but that’s just not the truth based on the data we see at the national level of 6.1 billion homes sold, which is the highest it’s been since 2006 and then at the local level,” said Brandon.

So…it’s tricky but the point is homeowners should have their worries laid to rest because even though it appears as though nothing is available within all of the neighborhoods you’d love to live within, apparently there still are, much in the same way that water still appears to you in the distance of the desert.  It all raised a question I had been wondering about since I read an article in the Wall Street Journal about private management firms such as Vanguard or Blackrock buying up substantial portions of older single-family homes throughout the nation, establishing themselves quite prominently amongst the landlord industry.  So, I wondered while sales might be on the rise with that 6.1 billion figure Brandon shared with us, how much of that number consisted of actual families versus these firms paying 20% to 50% over the asking price and in hard cash.  Brandon said though some of that has landed on Colorado’s radar, it’s mostly focused elsewhere.

“The way I classify those (firms) is institutional investors, that is something we have seen a little bit of[…]what happened with Zillow, (for instance) selling off a big portfolio of those acquired properties that they had to institutional investors.  Where that is primarily focused on within the US is areas like Phoenix, Atlanta, a lot of what I would call homogenous housing[…]We are seeing some of those just because of the desirability of Colorado, but I wouldn’t say it’s similar to what we see in other parts of the country.  To me, those institutional investors represent a bigger challenge, and that challenge is for the next generation of homebuyers because they’re now not only competing with just the regular population, but they’re also competing with deep-pocket investors that are chasing returns in other asset classes.”

Brandon also added that more than institutional investors, what they are seeing more of is something called BFR’s, which is just short for Build For Rent. Specifically, there’s a Built for Rent proposed project north of Front Range Village and south of English Ranch.  It’s being proposed by Landmark Homes to be located at Corbett and Edmonds, with roughly 400-500 for rent apartments and 250-300 for-sale townhomes and condos.  Brandon said they are seeing developers throughout Northern Colorado keep certain segments of their development as not having any sales costs, they don’t have any marketing costs, they just basically keep them for their own rental inventory.  With the continued desirability to simply live within the state, as well as with the recent and tragic Marshall fires, BFR’s are more than likely to become a popular trend.

I could be out of line in suggesting this but with the state of the world, or even just this country, so many of us are just struggling to just keep our heads above water. The idea of purchasing a home right now seems lightyears away, and even for those who are in the midst of house hunting, there’s no denying that inflation is on the rise and can’t help but affect us all, renters and buyers, alike.  So, what with BFR’s becoming more of an option, coupled with the overall constipation of the inventory along with inflation, I couldn’t help but ask whether Brandon felt as though Northern Colorado was still a wise investment.  Despite it all, Brandon feels very much as though Northern Colorado is still a safe bet and will be for quite some time to come.

“From an investment standpoint, I think if you’re a homeowner here, you’re grateful that you’re a homeowner here because I think there are a lot of homeowners within the state who look at the market today and don’t know if they could afford to live here if they hadn’t gotten in when they did.  I think that continues; we always look back and hindsight is 20/20, but you know, there’s never a better time to plant a tree than today and I think moving forward that continues to be the truth of Northern Colorado.  This is a beautiful place to live, it offers a lot of quality of life, we do have really great socioeconomics in terms of our safe communities, we have well-paying jobs with an educated workforce and it’s a great place to raise families; I think that’s what a lot of people are seeking, so I do think it’s a great place to live and it’s a great investment,” Brandon concluded.

For more information regarding the presentation or if you’d like to catch it in its entirety, that can be done so from their website at thegroupinc.com.