2006 Forecast 'Might Now Be Too Optimistic'

The Greeley Tribune looks at the housing market in that area of Colorado. "Fewer homes sold in Windsor in 2005 than the year before, but average prices jumped 15 percent. The jump in housing costs worries Gary Haddock, a Windsor Town Board member and affordable-housing advocate. 'I'd love to see how many incomes increased by that much,' he said of the recent price spike. 'It just highlights the difference between our incomes and the cost of housing.'" "To buy a $300,000 home requires an annual income of at least $85,000 with $10,000 for a down payment, according to LoanWeb.com Haddock said 48 percent of Windsor households earn less than $50,000, and the town's average household income is $60,000. Most homes sold in Windsor last year fell in the $150,000-$300,000 (285 homes) and $300,000-$500,000 price ranges (212)." And one economist was in northern Colorado to perk up the troops. "The real estate market in Northern Colorado will mirror the national market, slowing down in 2006, but the industry here will still expand slightly as the state continues to see slight population influx, said David Lereah. 'The real estate boom is over. But as you've seen in Colorado, it's been a soft landing, not a crash,' said Lereah." "'It's not a real estate bubble, it's a balloon, and in Colorado, you've seen the air has come out with overbuilding on the market and with job losses.'" "Three risks facing the Northern Colorado market are overbuilding, drastic interest-rate increases and a simultaneous mass exodus of 'flippers,' or small-time investors putting properties on the market that they bought on speculation. The region also should be wary of a high percentage of homes purchased by buyers who didn't fully understand exactly how much variable-interest loans would increase after two or three years." "Though Mike Sutton in Fort Collins, agreed the real estate boom won't completely bust, he said home prices have leveled off recently. 'We do have a lot of supply (of available properties for sale on the market) right now,' Sutton said. 'We're experiencing what a lot of other markets may see in the near future.'" "The main message Sutton took away from the regional forecast? 'It's time to be careful, to be thoughtful and creative,' Sutton said." "Across the country, home sales declined 5.7 percent from November to a seasonally adjusted annual pace of 6.6 million, the slowest since March 2004, according to the NAR. 'I hadn't expected that for two or three months,' said David Lereah, chief economist for NAR, who conceded that his forecast for 2006 might now be too optimistic."