It's taken about a decade, but the Grand Valley real estate market appears to be recovered from the latest recession and the market is projected to surpass peak numbers it reached just before the last economic downturn.
"It's taken that long," Bray Real Estate CEO Robert Bray said.
After four straight years of growth, 2018 should be another strong year for the residential and commercial real estate industries, experts say, with only a lack of inventory posing any barrier to robust growth.
Residential sales and median prices grew again in 2017 and should continue their upward trend in 2018. However, inventory — the number of homes on the market — continues to decrease and new home building this year should only keep pace with current totals.
"We'll maintain our shortage of inventory we have this year. We will replace it, but won't grow the inventory," Bray Real Estate Development Coordinator Kevin Bray said.
According to a report from Bray Real Estate, there were 3,796 residential homes sold in 2017, a 14 percent increase from 2016. This followed a 10 percent increase in 2016, 11 percent in 2015 and 2 percent in 2014. That 2017 total is still under the high water mark of 3,988 home sales in 2006, which should be surpassed in 2018, even with more modest growth expectations of 8 percent to 10 percent.
Residential median sale prices were up 7 percent from 2016 at $218,000 and should pass the 2008 total of $225,000 this year with growth.
As of December 2017, there were 675 homes on the market, an eight-year low, leaving the industry with about two months in inventory — the length of time it would take to exhaust the market if no new homes were listed. A healthy market should have about five or six months of inventory, Robert Bray said.
If inventory drops even further, the community will see prices go up and fewer people buying homes until they can find what they want.
"When you affect the amount of inventory that people can purchase or the selection, then you start limiting buyers," Robert Bray said.
A rising interest rate could also affect home sales, Bray said, as the rate is expected to climb about half a point in 2018. But rates are already very low at 4 percent on a 30-year loan, especially compared to the 16 percent to 18 percent that people were paying in the early 1980s. An uptick would only slightly affect the buying power of some home shoppers.
The Mortgage Bankers Association predicts the interest rate will rise to 4.6 percent in 2018 while the National Association of Realtors expects it be around 4.5 percent.
But while those are potential barriers that would most likely not be felt until 2019, all other projections seem positive, including foreclosures. Last year saw 396 foreclosures filed, a 28 percent drop from 2017 after an anomaly in 2016 that saw numbers rise slightly over 2015.
That number should continue to go down, according to Mesa County Public Trustee Mike Moran, as fewer people are upside down on mortgages and can sell their homes at a profit.
"I do think it will continue to be a lower number," Moran said. "It looks like it's as it has been in the last seven years. It's going to continue to improve."
In 2017, building permits rose 39 percent over the previous year with 664 filed. While that number should go up again, matching that percentage of growth in 2018 is unlikely, according to Kevin Bray. "I don't think it can continue to grow at that rate," he said.
However, the low inventory and continued migration of people from the Front Range and other parts of the country should keep building going strong.
RE/MAX 4000 Managing Broker Joe Tripoli said that transplants moving here for more affordable housing and a change in lifestyle have helped drive the market. He expects to see more building in 2018.
"I think this year is pretty poised to be similar to last year," he said. "The difference for this year is we are going to have more residential building lots potentially available or coming on the market."
Building continues in areas such as the Redlands and in the north part of Grand Junction and more lots could start going through the planning process in north Grand Junction and Fruita in 2018. Those units would likely not break ground until 2019.
The majority of building is still in single-family homes; however, Tripoli feels that could expand to multifamily housing in the coming years.
Up until now, the market hasn't really forced anyone from shopping for houses. As prices go up, so will the need for multifamily housing such as apartments and condominiums.
"I think it would do relatively well. It depends on the price point," Tripoli said.
Bray Real Estate Broker Associate Brian Bray notes that the commercial real estate industry typically follows residential, but that 2017 was a very good year. He feels there are no indications that 2018 will be any different.
"Building homes and creating jobs helps our economy start to churn, then others will invest in community. I expect some pretty good growth this year," Brian Bray said.
He cited successful projects such as the Factory co-working space at 750 Main St. and the 417 Monument retail center in the Redlands as examples others can look to when building from the ground up or rehabbing a structure. He expects more investors to look at the valley with price points continuing to climb on the Front Range.
Some significant sales have shown him that the market in Grand Junction is back and there is a good amount of land for redevelopment. Space remains limited for businesses such as quick service restaurants, but he added that there are plans in the works for a new national chain that he could not reveal to move to town and a few Starbucks sites that should get off the ground soon.
"Investors are finding projects that are making sense," Brian Bray said
A GOOD YEAR
With high prices forcing some out of the Front Range, more individuals and small businesses will look to the Grand Junction area for a new home.
While the Front Range has surpassed its peak numbers from before the recession. Robert Bray feels that even though the valley has yet to surpass those figures, there is plenty of room to grow even after 2018.
"I don't think we're at the top of the peak. I sense there is more room because we were so slow to recover," he said. "There is still room to catch up and others are still ahead of us."