Top 5 Housing Market Predictions for 2022

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If you’re thinking of buying a house in 2022 or considering investing in one, this is a great article for you. The housing market had an interesting year in 2021, but what will happen to it in the months to come? Today, I’m sharing my Housing Predictions for Fort Collins Colorado!

Population increases

Fort Collins has continually been listed as one of the best places to live so naturally, the population numbers have increased pretty dramatically over time (around 1.5-2% annually). 

And just like I mentioned on a few occasions, Fort Collins is a relatively affordable place to live. From dining out to gas prices, we generally do a job on cost of living, EXCEPT on the housing front. The cost of housing definitely is higher than the national average.

Housing is what drives our cost of living in Colorado. And with more and more people moving to the state, the housing prices may become even higher. All things considered, it’s safe to assume that the housing prices could impact the general desire to move to Fort Collins in 2022.

Political Topics

Some political barriers to our housing affordability and a crunch on supply are:

The U+2 rule is an occupancy limit that forbids more than 3 (unrelated) people from living in one rental unit. 

When it comes to tiny houses in Fort Collins, you’re allowed to build them, but most neighborhoods and developments have governing laws that require certain minimum size requirements. Also, most tiny homes must be on foundations. They’re not that common in the area. 

As for additional dwelling units (ADUs), it’s pretty difficult to build them in Fort Collins because there’s a significantly demanding process to go through to get those approved. This process needs to be streamlined and made easier.

Finally, we have height restrictions on our downtown building which allows everyone living in Fort Collins to see the mountains. And let’s face it, the fantastic view is one of the best things about living in Northern Colorado! But height is where you have to build if there isn’t room to go wide.

When it comes to these political restrictions, I mostly see the potential for change on the ADU front because it might help reduce our housing prices in the future. 

Inventory

Low inventory has been one of the largest issues with housing affordability in the United States over the last year and Fort Collins is no exception. We’ve seen less than 1/2 month supply of inventory for more than 6 months in Fort Collins

But with a reduced demand (due to potentially higher interest rates and more sellers wanting to leverage the market), I do see a potential for the inventory to pop up to one month’s worth of supply by the end of the year. 

While the interest rates are low, the demand will continue to be high and inventory extremely low.

**Updated 2/8/22 – Interest rates are nearing 4%. A significant amount of buyers are moving their timeline up to purchase due to the fear of more rate increases.**

Interest rates increase

With that said, we could see interest rates increase up to and near 4%. According to CNBC, interest rates were quoted at 3.62 as of yesterday but I think it will level off around 3.2 to 3.5% for the next 3-4 months. 

By the end of the year, I think we can expect to see interest rates increase to 3.8% and 4%. As I previously talked about, higher interest rates could impact affordability and therefore reduce the housing demand.

**Updated 2/8/22 – Interest rates are nearing 4%. A significant amount of buyers are moving their timeline up to purchase due to the fear of more rate increases.**

Housing prices

The housing prices in Fort Collins for December 2021 versus 2020 had about 22% appreciation which is very high. Historically in Fort Collins, we’ve seen about a 5.5% appreciation year on year on average since the 70s. 

With that said, I do believe we’ll get back closer to that 5.5%. But with such a strong demand, interest rates increasing and people wanting to lock those interest rates in, the next three months are still going to see dramatic demand with low inventory levels. This will eventually push us higher than that 5.5% interest rate, probably closer to 7%. 

So, we could see the median sales price going from $535,000 to around $570,000 by the end of 2022. 

Finally, all things considered, I don’t see a market crash happening any time soon. But we will see at the end of the year how these 5 predictions faired.

I hope this blog post on the Housing Predictions for Fort Collins and get a better picture of the current market situation. If you have any questions about Fort Collins or Northern Colorado, please reach out!

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