Predicting economic outcomes boils down to deciding which will be stronger – headwinds that stymie job growth and consumer spending – or tailwinds that stimulate those two factors.
Looking ahead to Northern Colorado’s housing market performance in 2024, the tailwinds are poised to win out. That was the message delivered at The Group’s 2024 Real Estate Forecast, the firm’s annual report on trends in local real estate.
Despite the presence of mounting consumer credit card debt and weaknesses in commercial real estate, The Group President Brandon Wells predicted the American economy is set to achieve a “soft landing” and avoid a much-anticipated recession.
After a sluggish year for local home sales in 2023, Wells cited several national and local “tailwinds” as reasons to believe housing sales will pick up in 2024:
- Improving inflation has prompted the Federal Reserve to say it will cut the Federal Funds lending rate, which should help to lower interest rates on home loans during 2024.
- Real wage growth outpaced the rate of inflation during 2023, which should contribute to greater consumer confidence.
- The U.S. inflation rate, which hit a high point of 9.1 percent in the summer of 2022, tapered off to 3.4 percent by the end of 2023. While still above the 2% Federal Reserve targeted baseline, the tightening monetary policy has worked to ease the inflationary pressures last year.
- Local employment has surpassed pre-pandemic levels in Larimer, Weld, and Boulder counties. Also, Larimer and Weld are predicted to be two of the fastest-growing counties in the state in 2024 in terms of population numbers. Combined, they are projected to make up 23% of the states growth in 2024.
Another trend with potential impacts on housing activity: older family members increasingly pitching in to help younger buyers, who may have been deterred by high interest rates or rising costs. Last year, 38 percent of first-time buyers used gifted or inherited funds from family members to make down payments. It’s one reason the share of homes sold to first-time buyers increased to 32 percent last year, up from 26 percent in 2022. Bottom line? Look for total housing sales across Northern Colorado to increase this year by 8 percent, with median prices to climb slightly more than 3 percent.
