So what is the real estate market in the northern Colorado Front Range doing right now? I think the safest answer is… it depends.
One example is the impact Leprino Foods has had on the farm and ranch market. As many of you know, Leprino Foods, with plants in Greeley and Fort Morgan, is the largest producer of mozzarella cheese in the United States and uses 7 percent of the nation’s total milk supply. That’s a lot of milk and it takes a lot of cows to produce that milk. As a result, good farms that can be used for dairy operations or to grow the feed for the dairies have been in high demand and have brought handsome prices.
If you were fortunate enough to have sold one of those farms, congratulations and be glad that the federal capital gains tax is only 15 percent for the rest of this year… enjoy your hard-earned windfall.
With respect to the housing market, I think the future is very bright.
It wasn’t more than two years ago, Colorado led the nation in foreclosures. The most recent statistics are from September 2012, but I am happy to report we are now No. 44th out of 50. In other words, there are 43 states that now have higher percentages of foreclosures than Colorado. This is one time I am glad to be at the bottom of the list.
Interest rates are at an all time low — hovering between 3.5 percent to 3.75 percent. For example, if you were to borrow $100,000 to buy a house at a 3.5 percent interest rate on a 30-year mortgage, your payment for principal and interest would be approximately $450 per month! You can’t rent for that in most places.
How long these rates will stay low is anyone’s guess, but I think they won’t get too crazy until the housing market recovers nationwide (remember, we are doing better than 43 other states).
In real estate vernacular, a buyer’s market is when we have more than six month’s worth of inventory. Conversely, a seller’s market is when we have less than six months worth of inventory. In the greater Metro Denver area, there was a 10-month supply of homes in February 2011. Last month there was only a two-month supply of homes. Interestingly, prices have not increased considerably, as would be expected in a low-inventory market, but the speed at which homes are selling has certainly increased.
In the past 10 years, Colorado has seen an influx of residences at a rate of 35,000 people per year. For the most part, new construction has been non-existent since 2007. But 35,000 new people have to live somewhere. The future housing market looks bright.