The growth along the Front Range of Colorado is also causing rising building costs. Because of this, the number of building permits dropped significantly. The reason is that most people can’t afford the prices in the bigger urban areas, so they are building homes in smaller nearby towns that haven’t been affected as much by the housing bubble.
This post by the Coloradoan gives more details on the reason Wellington CO is growing so quickly.
Fort Collins home building permits sink to 4-year low
Building permits for single-family homes hit a four-year low for the first half of 2016, the result of increasing land and water costs.
The number of single-family home permits issued in Fort Collins hit a four-year low at the end of June, the result of disappearing inventory, rising construction costs, and escalating sales prices.
Through the first half of the year, the Fort Collins building department issued 288 single-family permits, the fewest since 2012, when home starts began rebounding from the Great Recession.
Fort Collins has run out of the developable lots that began to stack up like cord wood and sold at below-market prices during the recession. Now, “next-generation lots are more expensive,” said Larry Kendall, co-founder of The Group Real Estate in Fort Collins.
Combined with the rising cost of water, new home costs hit $100,000 before builders start to pour the foundation, Kendall said. “The net effect is new construction in Fort Collins in the $400,000 range on up.”
That lack of affordability continues to send many potential home buyers to Wellington, where new home construction is booming. “It’s purely a matter of affordability,” Kendall said. As Fort Collins becomes more pricey, more buyers look out of town, depressing demand for new construction within city limits. It’s the same pattern Boulder County experienced.
“We’re 10 years from that, but it’s the same cycle. … We’re just in the early stages now,” he said.
The competition for homes priced at less than $350,000 is well documented, with buyers fighting each other to put in the best offer and homes selling for more than list price before they even hit the market. Kendall calls it a “mosh pit” market. “You jump into the mosh pit with lots of pushing and shoving and hope to come out with a house.”
In the past 29 months, from December 2013 until the end of May, the average Fort Collins home price increased from $279,111 to $373,626, a nearly $100,000 increase, according to statistics from The Group. Loveland experienced the same price escalation from an average $258,347 to $357,492.
“It’s stunning,” Kendall said. “The result will be a slowdown in the number of homes sold because of lack of inventory and lack of affordability.”
In terms of inventory, there is virtually nothing under $400,000 within city limits, he said. Fort Collins has less than a two-month supply of homes for sale, which translates into a sellers’ market. A six-month supply is considered a balanced market.
The inventory of higher-priced homes listed for more than $700,000 is 13.3 months, a buyers’ market. Kendall said it’s the best “move-up market” he’s seen in his 43 years in real estate. “You can sell your $400,000 house in a few days and go buy a $700,000 house and be in a buyer’s market and close it at less than a 4 percent interest rate,” he said.
All that means is Fort Collins is likely to see a prolonged slowdown in residential building while Wellington booms.
“The attraction for Wellington,” Kendall said, “is it’s fairly close and … it’s in Poudre School District. A lot of buyers up there are young families or couples that plan to have families or have kids in PSD and want to stay in the school district. They don’t even consider outlying areas.” Fort Collins home building permits sink to 4-year low
Maybe the home featured in this tweet could be an alternative to buying a home in Fort Collins? This home on wheels looks like a great choice for someone who doesn’t need much space.