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ARCHIVED  August 13, 1999

Home prices head through the roof

Thinking of buying a house?Now would be a good time, as prices are expected to continue to increase annually by as much as 3 percent to 8 percent — and more — for at least the next three to five years.
Several factors are driving the price hikes, including supply and demand, increased development fees and rising costs of building materials. All of these increases are passed on to the consumer. Another factor affecting home prices is curtailed growth, especially in Fort Collins and Boulder County.
In Greeley, “Home prices will remain steady, with modest appreciation in certain price ranges,” predicted Curtis Sears, president of Sears Real Estate in Greeley.
With the amount of new construction going on in the city, there’s a good chance those prices will stay constant, Sears said. “Having said that, prices will be forced up if some of the increased development fees they’re talking about are adopted,” he added.
And that has indeed happened. In June, the city of Greeley voted to increase water and sewer-tap fees incrementally — in January and July of each year — over the next four years. Combined, they are currently $4,028. By January 2003, they will be $10,850.
Sears is concerned that wages in Greeley are not keeping pace with the increases in cost of construction.
“Greeley wants to avoid being a bedroom community,” he said, but higher home prices mean fewer Greeley residents can achieve the American dream of home ownership. Instead many buyers are coming from Larimer, Boulder and Adams counties. ” We’re kind of creating what we don’t want to be,” he said.
In Fort Collins, another scenario is developing. “If you want to be in a nice area in Fort Collins, you have to pay the price tag,´ said Jerry Crawford, managing broker for Fowler Real Estate in Fort Collins. Crawford said homes in some of the more desirable, mature neighborhoods can see up to 15 percent increases in appreciation.
He encourages clients not to put off buying a home.
“The more you put it off, the more it will cost you,” he said.
Interest rates, however, won’t be a factor unless they go above 8 percent. “If rates stay stable, if they can buy at 8 percent or under, I think they’ll do it,” he said.
When gauging the real-estate market, Crawford said he looks at the number of days a house is on the market, the difference between final sales price and list price — for example, if a house is listed at $200,000 and the seller gets $199,000 — and the buyer pool.
The last factor, he said, can be an interesting statistic. It shows how many times a property was shown. If there are a lot of showings, say 12 or more, it tells him that many people are looking at that price category, and there is sufficient product that allows them to look around. On the other hand, if only two or three showings take place before an offer, that indicates that supply is down and buyers are having to act quickly.
At the moment, properties in Fort Collins are averaging 12 showings, Crawford said. “That tells me there is a pretty good buyer pool.”
He also noted that the supply of homes in Fort Collins will increase significantly when Rigden Farm, at Timberline and Drake roads, goes on line. The development will have 1,100 homes when complete.
“That’s a lot of inventory. It will help us catch up to some of the commercial base, which is ahead,” he said.
Sharianne Daily, president of The Group in Fort Collins, pointed out that it is the average sales price that is going up, not necessarily the price of homes in all categories.
But, she noted, the days of a starter home in the $80,000 to $90,000 price range no longer exist. Starter or first-time homes now cost $115,000 to $125,000. The majority of new construction in Larimer County is $150,00 to $175,000, followed by homes in the $200,000 to $250,000 range.
Buyers looking for a starter home cannot be too choosy about location or lot size, she said. “Location is not always the most important. They just want a house.”
Those looking for their second or third home, however, often do care about lot size, location and view.
Daily also sees no indication that the aging Baby Boomer generation will be looking to downsize when it comes to their homes.
“Boomers are not wanting to retire, most don’t want smaller homes by any means,” she said. “They want different types of homes — larger, better-equipped, perhaps with a home office. The empty-nester downsizing is a myth. At least we’re not seeing that in our area.”
In Loveland, the supply of houses, especially in the $130,000 to $160,000 range, is so low that bidding wars have erupted in recent months, said Karen Colton, broker associate with Re/Max of Loveland. When buyers go up against each other, sellers often get $1,000 to $3,000 above the asking price.
“It’s not uncommon for a house to be on the market for 30 days with no offers, then receive four (offers) on the same day. It takes awhile to get the word out that the home is available,” Colton said.
Although new subdivisions are going in with homes in the $130,000 to $160,000 price range, Colton said the homes are selling just as fast as they’re putting them out.
“The reason home prices have gone up tremendously in the last three to five years has been supply and demand,” she said. “Northern Colorado has been written up positively in every single major publication nationally — everything from Readers’ Digest to Money Magazine. They’ve cited Loveland on RGood Morning America’ as the best place for retirement. This is the reason so many people are coming in droves. If this kind of publicity continues, I don’t think the builders will be able to keep up with it, and prices will continue to escalate. If publications don’t keep mentioning our name, it’s very possible supply and demand will even out.”
Jim Green, broker associate with Coldwell-Banker in Longmont, also believes housing costs will continue to increase.
“Barring any huge increase in interest rates or Y2K slam that sends us in recession, home prices will continue to increase by 5 to 8 percent annually,” he said. “I don’t see any downturn in sight. Boulder County is so premium and so tight in residential building as far as availability of land.”
The average home price in Longmont now stands at $182,900.
“It’s tough to find anything for under $150,000,” Green said.

Thinking of buying a house?Now would be a good time, as prices are expected to continue to increase annually by as much as 3 percent to 8 percent — and more — for at least the next three to five years.
Several factors are driving the price hikes, including supply and demand, increased development fees and rising costs of building materials. All of these increases are passed on to the consumer. Another factor affecting home prices is curtailed growth, especially in Fort Collins and Boulder County.
In Greeley, “Home prices will remain steady, with modest appreciation in certain price…

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