Recent years have brought a series of shocks to real estate, both locally and nationally: a pandemic, a war in Europe, and a spike in inflation. While 2023 might have avoided the same level of disruption, some twists and turns kept real estate watchers on their toes. Here are some developments that influenced the Northern Colorado market last year:
‘LOCK-IN’ EFFECT OF INTEREST RATES
With rates for 30-year fixed mortgages nearing 8 percent, buyers and sellers adopted wait-and-see attitudes. Buyers hoped for lower rates and lower monthly payments. Sellers were reticent to exchange low rates on existing loans for higher rates on new loans. Caution on both sides meant slower sales. But as 2023 proceeded, rates retreated (back to 6.61 percent by the end of the year), unlocking a feeling of optimism for both buyers and sellers.
HOME PRICES HELD STEADY
After a long run of robust appreciation, home price growth stayed relatively flat last year. That stability came as no surprise, given how interest rate lock (see above) helped to limit the supply of homes for sale and cool demand by keeping some buyers on the sidelines. Homes spent more days on the market, which helped keep prices in check.
INCENTIVES GAVE BUYERS A BOOST
Sellers have held sway across the region for several years. But tables started to turn in favor of buyers. Home builders offered buyer incentives, such as mortgage rate buydowns, to unload extra inventory. Builders also began making forward commitments – setting aside a pool of funds upfront – to provide below-market interest rates to stimulate demand. And sellers of existing homes also started including incentives to attract buyers.
EAST IS WHERE THE ACTION WAS
Developers continued to look east of Fort Collins and Loveland for the next wave of housing and commercial construction. In most cases, that means construction along I-25 or east of I-25. Expansion of the highway, with the new I-25 express lane between Mead and Fort Collins, is expected to ease congestion and keep I-25 as a functional “Main Street” for the region.