10 Jan Market Outlook for 2018.
While it is all too easy and all too common for real estate brokers to give a generalized synopsis to their clients that the market is “Hot” or a “Seller’s Market” (something we have heard and seen numerous times over the last 5 years), in reality, the Front Range of Colorado is made up of numerous “Sub-Markets”. Over the last 12 months, we have seen that these Sub-Markets can behave very different from each other.
Most notably, by year end (2017) the City of Boulder (thought to be the “Hottest” Sub-Market by many of my clients), experienced less appreciation than any other Sub-Market along the Colorado’s Front Range. Boulder’s single-family home market appreciated roughly +2.5% in 2017, and its condominium and townhomes market actually depreciated about -5%. In 2018, I predict that the City of Boulder will level off, and prices will move up or down a few percentage points depending on the strength of the buyer demand this coming spring, but I do not expect to see significant appreciation in the City of Boulder as seen from 2012-2016.
Due to the Front Range’s lack of moderately priced housing, the “hottest” markets are in the moderately priced suburbs. To look more specifically at these communities – the more moderately priced homes in the more moderately priced communities are in the highest demand, and are therefore experiencing the greatest rate of appreciation. The Erie, Frederick/Firestone/Dacono and Broomfield Sub-Markets experienced the greatest appreciation rates in 2017, and I predict these two markets will continue to outperform the more expensive Front Range Sub-Markets in 2018.
Therefore, for an overall market prediction, most Front Range Sub-Markets will continue to experience more modest appreciation in 2018 as compared to the last 5 years. Although, some of the more expensive Sub-Markets could be flat or experience a mild depreciation. The most significant factors that will contribute to market appreciation include a continued lack of inventory, an insufficient number of new units being built as compared to the influx of new residents to the Front Range and the continuation of low interest rates. Also, the more modestly priced housing will remain in the highest demand as income levels have not kept pace with real estate appreciation since 2012, and the middle and higher Sub-Markets have simply become unaffordable to many of the Front Range residents.