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What is Happening with the New Construction Home Market In Greeley Colorado?

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As of May 27, 2016 there are 132 new construction homes for sale in Greeley Colorado. That may seem like a lot of new houses for sale in the area, but I believe that is a very small number considering our housing market. There are about 34,000 total housing units in Greeley, which includes single family and multifamily housing. 132 units for sale is a very small number when you consider how many total housing units there are in Greeley and many of those homes are under contract. There are only 57 new houses available to buy, which are not under contract and many of those have not been built yet.

Why should you care how many new homes are for sale in Greeley?

I have been studying our market for quite a while, because of the huge jumps in values we have seen. In the last five years, prices have doubled in many areas of Northern Colorado. Prices are increasing at record levels, because there are not enough homes available for the number of people who want to buy a house. As a Realtor I see constant bidding wars, homes going under contract in hours, and very frustrated buyers. It may seem to be a great time to sell as well, but we are seeing frustrated sellers too. There are have been appraisal problems, buyers backing out routinely because they didn’t have time to make an educated decision, and buyers using inspection contingencies to negotiate after their contract is accepted.

The government has tried to implement some programs to help buyers afford homes, but that will not solve the inventory problem. The only way to solve the inventory problem is to build more houses. More new construction homes would help ease the inventory problem and create a healthier market. Of course you do not want to build too many homes and oversupply the market, which could cause a downturn in prices. There are not many houses being built in Greeley right now, even in a tight market.

How many homes do they historically build in Greeley?

new construction housing graph greeley

As you can see from this graph the building of new homes in Greeley, fluctuates greatly. This graph was provided by the City of Greeley planning department in their yearly housing projections. This graph show the total amount of new construction permits issued in each year. In 2002 there were 1,300 permits issued, but from 2008 to 2012 less than 100 permits issued each year. It makes sent that the amount of building permits would increase each year, because the population of Greeley has increased from about 64,000 people in 1990 to over 100,000 people in 2016. There may have been over-building in the early 2000’s (I believe there was), but as you can see there have been very few homes built in the last ten years, while population continues to rise.

Why are there more multifamily homes being built in Greeley Colorado?

Another interesting fact to consider about the Greeley housing market, is the number of multifamily projects being started. Historically there have been more new construction single family homes than multifamily units. However, in the last three years there have been more multifamily units built. In 2015 there were 449 single family permits compared to 492 multifamily permits. After talking to the City of Greeley, it was clear that it is much cheaper to build multifamily units, because of the water and land cost. While there are more and more new construction permits being issued, less of those permits are single family homes.

The projected amount of permits for 2016 is actually less than 2015, which means there may be even fewer new homes in Greeley in the next year.

How much do you have to spend to buy a new construction home in Greeley?

The other major issue with new homes in Greeley, is the price you have to pay. The cheapest new home for sale in Greeley right now is $272,400. When they were building many more homes in 2002 to 2005, they were starting at less than $200,000. Prices for new homes has skyrocketed compared to what it was 10 years ago. The cost of water is higher, building material costs are higher, land costs are higher, labor costs are higher, and building permit fees are higher.

I have previously thought that housing prices in Colorado would slow down due to all the available land we have to build on. However, the land keeps increasing in value, water keeps increasing in price, and new construction prices continue to increase. Now that I have seen the City of Greeley projections for even less building in the future than what they are doing now, I don’t see how prices cannot continue to rise without a major economic collapse.

What is the median house value in Greeley?

Conclusion

I assumed in a tight market with almost no houses for sale, that building would take off. I thought the new construction homes would meet supply and we would start to see our market stabilize. However that has not happened. There continue to be very few homes for sale and even fewer new homes for sale. For those who are waiting for the market to slow down so they can buy a home, they may have to wait a while.

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