As home prices continue to rise in Northern Colorado, I hear this familiar refrain with increasing frequency: “are we in a real estate bubble, and when is it going to burst?” My response is, I don’t know – only time will tell. Yes, I don’t know, but I do have an opinion. Let’s consider the Fort Collins market.
What better way to form this opinion than to look back at/compare the national real estate markets that collapsed in the late 2000s and the Fort Collins market at that time. In 2008, when multiple markets around the country began to collapse (e.g., parts of California, Las Vegas, parts of Florida, etc.), Fort Collins’ market remained largely stable. Some of the higher priced neighborhoods did come down in value, and even a few moderately priced neighborhoods experienced a slight downtick. But for the most part, Fort Collins experienced a stabilization of, rather than a downward trend in, home values.
One precursor of the significant, and in some cases astonishing, decline in certain U.S. housing markets was rampant speculation. Investors buying homes in these markets often did not live in the area, nor did they have any intention of living in or renting the homes they purchased. Frequently, these investors were buying these properties, holding them for a time, and then selling them before they or anybody else lived in them; basically, they were looking to make a quick buck and then move on. The increased values were largely due to false demand, which led to markets that not only could not be sustained, but had no hope of even stabilizing.
What I am seeing in the market now, and what I was seeing in the market in the early-to-mid 2000s, when Fort Collins experienced large increases in property values, is the opposite of that scenario. In my now nearly 20 years in real estate I have yet to come across a buyer purchasing a property on speculation alone. My experience has been that people buy in our area because they are moving here for a job, are needing/wanting a bigger/different home, or are buying an investment property for the long haul. In my experience, people buy in Fort Collins because they want to live, grow, play and work in Fort Collins – not because they are hoping to strike it rich in the real estate lottery.
In the end we don’t know what is going to happen, but if we look at recent real estate history, and if we consider the tangibles (many good jobs, new jobs being created every day) & the intangibles (beautiful parks, great trail systems, university town, etc.), it would seem there are good reasons to believe our market will remain stable for the foreseeable future.