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Northern Colorado Market Insights

for the month of April 2015

Here’s a question in keeping with the pending arrival of spring and the birth of a new baseball season. What’s the most expensive baseball card ever sold? Is it the Tulowitzki rookie card? Not! You’d have to go back over a hundred years for the card that sold in 2007 at auction for $2.8 million to Ken Kendrick, owner of the Arizona Diamondbacks. It’s the Honus Wagner T206 card produced by the American Tobacco Company between 1909 and 1911.

With that bit of baseball trivia, let’s segue from baseball to real estate and the concept of scarcity. What made the Honus Wagner card so valuable was the fact there were so few cards distributed – only forty to the public. What has made home values increase over the course of the past few years across Northern Colorado and the Front Range is too few homes available for sale.

As an example of appreciation, the average sales price of a single family home in Northern Colorado in 2011 (when the real estate market bottomed out) was $232,673. The average sales price of a single family home in Northern Colorado in 2014 was $288,999. That’s a collective increase of 24.20% over that period of time. For attached units the numbers are $147,561 (2011) and $187,056 (2014) – an increase of 26.76%.

Here’s another way to look at the Northern Colorado real estate market during the above periods of time. In March/2011 there were 3,688 active listing single family homes on the market for sale. In March/2014 that number was 1,885 and in March/2015 the number was 1,414. For attached units, the numbers were 563 (March/2011), 295 (March/2014), and 316 (March/2015).

Balanced real estate markets are where there are a somewhat comparable number of buyers and sellers actively involved in the process. There is an adequate inventory of properties available for sale, which provides buyers with the opportunity to make educated decisions and sellers don’t feel stressed about having to deal with multiple contract offers, but can assess their options and make practical decisions.

In a real estate market where either the buyer prevails or the seller prevails i.e. a skewed market, the rules are different. Time is the dominant player, because the buyer can choose to move onto another property (buyer’s market) or there’s another buyer waiting on the front porch (seller’s market).

Since 2005 we’ve experienced three types of real estate markets across Northern Colorado. The market peaked in 2005 in terms of the number of overall sales transactions, but inventory was plentiful. Buyers and sellers didn’t feel frazzled. It was a balanced market.

Then, almost overnight, things changed and not in a good way. Dark clouds moved in. To quote Dickens, “It was the best of times, it was the worst of times …”, but the best of times were missing. Can you spell “buyer’s market”? The reality facing sellers was there were no buyers, unless you count banks and mortgage companies who were the unfortunate recipients of foreclosed properties.

It took nearly six years for the Northern Colorado real estate market to begin to rebound. Driven by historically low mortgage interest rates, the housing market climbed out of a hole and began a spirited revival, which still exists to this day. For home sellers, it is the best of times.

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