According to The Denver Post, there are signs that home prices in and around Boulder, Fort Collins, and metro Denver may be in for a fall as predicted by Location Inc.'s Scout Vision computer model. Greely on the other hand, could be the place to be. The model is pointing to potential price drops of 10%. “We still predict that the market will go down, more in some markets than in others,” said Andrew Schiller, CEO of the Connecticut-based analytic firm. The same company issued a warning in the spring of 2017 that prices along the Front Range were going to peak in the fourth quarter of 2019 and then decline 15.6% over a five-year window.
A stronger-than-expected economy has caused the model, which is adjusted quarterly, to push out and temper its forecast, Schiller said. Location is now calling for a 9.9-percent decline in northern Front Range home prices over the next five years, with the price peak regionally coming in the second quarter of 2021.
The model looks at dozens of variables, but one of the most important is affordability –- to what degree can incomes support home values. Along the Front Range, homes prices have never been more misaligned with incomes, Schiller said. So far, migration has delayed the day of reckoning, Schiller said. People have moved here from more expensive markets, helping push up prices. But that will taper off, especially as the economy contracts.
“You need enough earned income in a market to support the costs of houses,” Schiller said. “You can’t always support it from people carrying a black bag of money from other places.”
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