After a stagnant couple of years, at least by Northern Colorado’s standards, the housing market is heating up in preparation for the Fed’s first interest rate cut of 2024. While many were expecting the first of three cuts to happen in June, it seems more likely that there will only be two cuts this year, with the first in July or September, says Chris Murphy, senior residential mortgage broker and co-founder of The Murphy Whitlock Group in Fort Collins.
“For the real estate industry—mortgage professionals, real estate agents, title companies—it was a recession from the summer of 2022 until the end of 2023,” Murphy says. “I think we are getting out of that. The big question is, ‘When rates come down, and they will, are home values going to rip higher?’”
That doesn’t seem too likely, at least not to Jamie Hammond, bilingual Realtor with the Jamie & Nolan Team at Hub by eXp, who primarily serves first-time homebuyers across Northern Colorado. The market has always been hot here, she says, but the “hyper-seller’s market” we experienced during the pandemic was unusual. Still, she thinks the market will heat up a bit once rates edge back down.
An expanded buyer pool
Aside from lower interest rates, competition among buyers is expected because there are more of them in the pool, Hammond says. Some had already been looking at homes when rates ticked down at the end of December, and others who had been sitting on the sidelines also jumped in. Rather than pulling out of the buyer pool when rates went back up in February, many stayed.
“They saw that the interest rates came down and compared it to what it was, close to the eights [in October],” she says. “They were like, ‘You know what, I’m not going to wait anymore. I don’t care that it’s over six percent; it’s probably not ever going to come down to three percent or four percent, at least not anytime soon, and I want to buy.’”
Due to the early injection of buyers, Hammond says we’re trending toward what she predicts will be a normal, pre-pandemic Northern Colorado housing market. It’s always been a seller’s market, she says, even as sellers gave in to more of buyers’ wishes to get their homes sold when rates were high. Now sellers don’t have to be as giving, she says, because there are lots of buyers who still haven’t changed their minds about buying.
When rates come down, the market won’t be as friendly for buyers, says Joe Whitlock, senior residential mortgage broker and co-founder of The Murphy Whitlock Group.
“Now they’re getting more competition, so they’re really having to pay more and waive a lot of their rights,” he says. “It’s only going to get harder these next few months to buy, especially for first-time homebuyers who don’t have a chunk of money to put down.”
Many don’t have the extra funds to go over asking price or waive inspection or appraisal items, Whitlock says, which can cause appraisal gaps where the buyer brings in the difference if the appraised value comes in less than the agreed upon purchase price. Those factors make it even harder for first-time buyers to afford a home.
Facing outside pressure
A lot of people have transitioned to remote work over the last few years, which has resulted in an influx of high earners moving to Northern Colorado from other states, Murphy says. Colorado State University also plays a big role in the Fort Collins housing market, he says, bringing retired parents of college students to the area. Many of his and Whitlock’s clients have recently relocated from Texas, Virginia, Maryland and Kansas because they want to—and they can afford to.
“When you have a place where everybody wants to live and you keep showing up on lists that say, ‘the most peaceful place to live,’ people go, ‘I’m going to check that place out,’” he says. “For the people who own real estate, it’s wonderful, and those values are continuing to go up. For the person who is sitting there waiting for values to come down, they’ve been [increasing] for a long, long time.”
As an example, the median sales price for homes in Fort Collins was $627,500 in March, Murphy says, which is up about 0.6 percent year over year. Whitlock remembers seeing a number like that in Boulder about five years ago. He thinks Fort Collins is on that same trajectory.
When Fort Collins prices people out, they’ll look to Loveland or Wellington, Murphy says, but those markets are also getting more expensive. Timnath and Windsor have even higher home values than Fort Collins, and many homes in Severance, Johnstown and Berthoud are comparable to those in Fort Collins.
Time in the market
If you can afford to buy a home, and you plan on staying in it long enough to benefit from its appreciation, experts agree that it’s a good investment.
“You have to look at it in terms of your values, your comfort and your risk level,” Hammond says. “It’s that old adage of investment: It’s not timing the market, it’s time in the market. If you look at all the historical data in this area, we know that it’s probably going to appreciate here.”
The best time to buy is when you feel most comfortable, she says, and when buying a home aligns with your lifestyle and needs. Murphy echoes that sentiment, warning buyers not to try to time the market because you never know what’s going to happen with interest rates.
“If you’re buying a house because of [interest rates], you’re buying a house for the wrong reasons,” he says. “Buy a house because you can afford to and you want to.”
Prepping for what’s next
No one knows exactly when or how much interest rates will drop, but Whitlock predicts that conventional rates in the fives would get people off the fence about selling their house and upgrading. That would also bring in the buyers who have been waiting for rates to drop and who are currently priced out, he says.
If you’re considering buying, either now or when rates come down, Murphy and Whitlock suggest calling a lender and seeing where you stand. A lender will do a soft credit pull, and if you can’t get pre-approved, they’ll give you steps to improve your situation so you can qualify later. When it comes to interest rates, mortgage brokers can offer more options than retail mortgage companies, Murphy says, because they have access to dozens of investors—each with their own competitive rates.
“When you think about a loan amount of $400,000-450,000 and you compare a 7.5 percent rate to a 6.75 percent rate, it’s hundreds of dollars a month,” Murphy says.
Hammond says it’s a good idea to interview more than one real estate agent to get a feel for their experience and strategies, and she recommends learning about the process, especially if you’re a first-time homebuyer.
Prior to becoming a Realtor, Hammond did homebuyer education and foreclosure prevention for Neighbor to Neighbor, a local housing nonprofit, and she currently teaches classes as part of their Homeownership Advisory Board. She says they hold a free homebuyer education class once per month that anyone can take.
“Having come from the foreclosure prevention side of things, I see what it looks like when someone took out a mortgage that they didn’t really understand,” she says. “What I’m thinking when I’m talking to buyers is, ‘Do you think that you can make that mortgage if you can’t refinance out of it? And if you can’t, what things do we need to do so that you can feel more comfortable with this investment and still see it as a valuable investment at the end of the day?’”
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Increase Your Curb Appeal
The front of your house is the first impression for buyers, says Kristina Portillo, co-owner of Northern Colorado Landscaping. Here’s what she recommends to spruce up your home’s exterior:
Take care of the grass. Spring is a great time to aerate, fertilize and mow your lawn. Water it regularly so it’s green and lush.
Do a spring cleanup. Trim shrubs, pull weeds and make sure everything beyond your grass is well-manicured.
Refresh mulch and rock. If your mulch looks dull, or if fabric is showing beneath the landscape rock, add a fresh top layer.
Stage with spring flowers. Place hanging baskets near the front of your home and keep them watered.
Add landscape lighting. Solar-powered landscape lighting is affordable and helps illuminate pathways at night.
Repair the fence. If your fence has a hole or needs to be restained, fix it up and give it a little TLC.
Replace cracked concrete. Cracked concrete can pose a tripping hazard. Have it torn out and repoured if necessary.
Install a sprinkler system. Many old homes need a new, water-efficient sprinkler system, which can add value.
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Stage to Sell for More
A vacant room versus a staged room by Peterson and Plum Home Staging. Photography by Boxwood Photos.
Agents used to have to talk their sellers into staging, says Aundrelyn Knott, owner of Peterson and Plum Home Staging in Fort Collins, but now, more sellers are asking their agents to provide that service. Staged homes were moving even when homes were sitting on the market, she says, so sellers know that staging will help them sell their home quicker and for top dollar. She shares these tips to stage your home and sell it for more:
Declutter and clean. Clear the space, including bookshelves, desks and other surfaces.
Expose continuous floor. Remove any small rugs (and huge rugs) so you can see as much of the floor as possible.
Add a fresh coat of paint. Keep it neutral—think Agreeable Gray and Accessible Beige—so anyone can envision themselves in the space.
Install light fixtures. “Light fixtures are the jewelry of the home. You walk in and there’s a sexy light fixture and it’s like, ‘I get to have that,’” Knott says.
Choose appropriate furniture. Furniture that is too small or too large can make a room look strange, and a lack of furniture makes flaws stand out.
Take good pictures. Make sure your furniture isn’t blocking important features, like the fireplace or windows.
