Northern Colorado Market Update - February 2024
The entire real estate industry cheered as rates dipped to 6.6% in December and January. But those cheers turned to boos as hotter than expected inflation data has once again driven rates over 7%. Low transaction volume, low numbers of homes coming to market, homes taking longer to sell and fetching on average 98% of list price is the norm. Just 2 years ago our average list-to-sale price ratio was as high as 104%. The median price for a single family home in Larimer County is down 2.5% to $555,000 compared to this time last year. Weld County prices are up 4.4% to $490,000.
Different segments of the market are impacted in different ways and the market feels very hot and cold on a house-by-house basis. Last week I looked at a listing just outside Old Town Fort Collins priced at $550k, it had been on the market for 5 months. It was small but nicely updated, had an open concept floorplan and an ensuite primary bath. I would expect, even in the current market, for this home to be snapped up in a month or less but it sat unsold and was withdrawn from the market.
But other members of our team share conflicting anecdotes and feel the starter home market remains more active than the story above suggests. The median price for homes under 1,500 sf sits unchanged compared to a year ago and these homes average 37 days on the market.
The other end of the market is a different story. Larger homes above 3,000 sf which attract move up buyers who are typically cashing in on the sale of another home, are selling at a better clip and have appreciated 7% year over year. Despite $4,000-$6,000 per month mortgage payments, plenty of dual income and high wage earning households are biting the bullet.
They are enjoying more negotiating power and very few buyers to compete with. Their bet is that rates will be at 5.5% sometime in the next few years. If it takes two years to hit that mark, and they have to pay $24,000 in extra interest between now and then, the math may work in their favor as lower rates will likely unleash a torrent of pent up demand that could quickly drive list prices higher. This could make their $24,000 in additional interest feel like a wise investment.
But of course, no one knows the future and we council our buyers that they must commit to their payment long term and not count on anyone’s future interest rate projections, not ours, and not any fancy bank or market analyst. Still, some folks do. Rates will almost certainly drop at some point, we just don’t know when.
We are seeing an interesting seasonal cycle that seems to start much earlier than normal. In 2023, and again in 2024, January has brought a flurry of activity. Last year that activity carried into July, and then the last half of the year felt particularly slow. Sell early and buy late has been the best advice we can give. But with low inventory, most folks can’t afford to try and time the market, all they can do is wait for the right house to present itself.
Locating properties off market has been a great strategy for us, over half the transactions we closed in January occurred off market because there are a number of homes that were listed last year, did not sell, and were pulled from the market. If you’ve picked over all the online listings and aren’t seeing what you like, drop us a line to receive a list of off market properties that match your criteria.
We hope you’ve enjoyed catching up on Northern Colorado real estate! To all of our past, current and future clients, your trust means the world to us. Please reach out to talk shop, or just say hi!
- Grey Rock Realty
