Housing In Short Supply – The Crisis Continues as New Listings Drop 39.6%

Kareen Kinzli Larsen (RE/MAX Alliance)

By: Kareen Kinzli Larsen, Realtor at RE/MAX Alliance

The Northern Colorado Real Estate market is nearly at a standstill for homebuyers.  Last year’s shortage of homes brought multiple offers and buyers paying tens of thousands over the asking price.  According to the Fort Collins Board of Realtors, the January Fort Collins inventory of new 2022 listings was down 39.6% compared to January of 2021.  If you look back a few years, starting in January of 2019, 279 homes were listed in the greater Fort Collins and Wellington areas in January.  In 2020 the number was 234.  In January of 2021, the number declined to 203 new listings and in January 2022, only 134 new listings hit the market.  That means 57% fewer homes are on the market this January than in 2019.   The Colorado Association of Realtors stated that statewide, new listings are down 44.5%.  The situation for buyers just went from bad to worse.

What is happening?  The problem began with increased demand for Colorado real estate.  According to 2020 census data, provided by the Colorado State Demography Office, Larimer and Weld Counties were among the fastest-growing counties in all of Colorado with Weld adding 30% in population and Larimer adding 20%.  The pandemic is adding to growth with new work-from-home freedom, as many are moving from the Denver Metro and other densely populated areas to enjoy our idyllic Northern Colorado lifestyle.

The market can usually count on new construction to fill the supply gap in times like these, but builders have been challenged with labor shortages, dramatically higher costs of goods, supply chain issues, and most critically the lack of available water taps.  Northern Colorado Water Association, servicing areas north of Fort Collins, stopped issuing taps in June of 2020.  The Town of Wellington is rationing taps until the expansions of both the water treatment and sewer treatment plants are complete in two to three years.  North Weld County Water District (NWCWD), servicing eastern Larimer and northwest Weld County, is limiting new taps to 120 per year until additional infrastructure can be completed.  This announcement directly limits the Town of Severance as the town’s water is provided by NWCWD.  Northern Colorado is growing faster than the infrastructure can keep up.

Compounding factors, such as the rush for buyers to lock in low rates as interest rates continue to rise and the seasonal slowdown of listings during the winter months, are contributing to the perfect storm of keeping demand for homes high.  But why the dramatic drop in new listings?

The Northern Colorado real estate market is stuck in neutral.  Most buyers have a home to sell.  It sounds exciting to have a bidding war for your current home, but then, what are you going to buy?  If you have a contingency of a home selling, your offer won’t stand a chance in a multiple offer shoot-out.  Countless homeowners would like to move and upsize, downsize, or move to the country, but they are unwilling to uproot their lives and families without knowing they have a house to move to.  The lack of mobility is preventing would-be home sellers from listing their homes.

While measurable inventory may not increase anytime soon, what is certain to rise in the coming months is the value of Northern Colorado real estate.

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