Northern Colorado: Moderate Gains in 2006
The real estate market in Northern Colorado will mirror the national market, slowing down in 2006, but the industry here will still expand slightly as the state continues to see slight population influx, said David Lereah, chief economist for the National Association of Realtors.
“The real estate boom is over. But as you’ve seen in Colorado, it’s been a soft landing, not a crash,” said Lereah. “It’s not a real estate bubble, it’s a balloon, and in Colorado, you’ve seen the air has come out with overbuilding on the market and with job losses.”
Three risks facing the Northern Colorado market are overbuilding, drastic interest-rate increases and a simultaneous mass exodus of “flippers” - or small-time investors putting properties on the market that they bought on speculation.
The region also should be wary of a high percentage of homes purchased by buyers who didn’t fully understand exactly how much variable-interest loans would increase after two or three years.
Aside fro risks, Lereah said, there are many more reasons for him to forecast a slight expansion rather than a bust in the real estate market the next several years:
> Baby boomers are continuing to buy second homes. Thirty-six percent of all national home sales last year were second-home purchases, Lereah said.
> Immigrants who arrived a decade or more ago are contributing to the real estate market.
> Threats of terrorism caused many people to invest in real estate, rather than quit investing all together, Lereah said.
> Despite job losses nationwide in 2002-03, the real estate market continued to perform fairly well nationwide, Lereah said.
On the regional scale, primary job growth will continue to be important. Job growth attracts workers and keeps markets attractive to retirees, Lereah said.
Tthe number of homes sold in Northern Colorado last year was 10,731. Area agents are predicting that this will increase to 10,829 homes sold this year.
(Source: Coloradoan.com)