Continuing our semi-annual series of reports on Northern Colorado* real estate market trends, this report takes a look at price per square foot. This data is derived from taking the sale price of a home and dividing it by the total square footage of the home, which in our market includes any basement space but excludes garages. Note that the value of the lot is not subtracted from the value of the home, nor is the size of the lot considered.
We're mostly concerned with the trend shown by this chart - since home sales do not occur uniformly, the bumps and jumps are best explained as just variability in the market. Because the time period for this report is relatively short - 25 months - it is likely that this indicator is showing us a measure of value. The most probable way to account for the observed increase in price per square foot is for home prices and values to be increasing.
Over a longer time period, we become less certain of identifying one clear factor - improvements in building practices, price fluctuations in materials, changes in design and other factors could cause homes to become more or less costly and thus affect the indicator. But 25 months is a short enough period to minimize those effects and still show us a trend, if one is there.
And it seems that there is: Over the last 25 months, price per square foot has increased around 8%. While that's neither a dramtic jump nor a smooth one, it is reasonable to suspect that home values in the Northern Colorado market are increasing. That suggests that buyers should think about getting off the fence, particularly since interest rates are still very low. It is good news for sellers, and also for potential sellers who have been waiting for more favorable market conditions.
If you would like to follow the Northern Colorado real estate market data in more detail, please take a look at Mary & Dick's Blog, where we report regularly and in greater detail on what's happening in each city and county, as well as on specific market segments and neighborhoods. And if you would like specific information that we're not reporting, please give us a call. If the data is available, we'll get it for you.
* We're defining Northern Colorado as all of Larimer & Weld Counties, which include the cities of Fort Collins, Loveland, Estes Park, Berthoud, Wellington, Greeley, Windsor, and Johnstown.
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