New podcast -A discussion about the state of the NOCO real estate market during and after the covid lockdown
In this episode, Ryan chats with longtime friend and new Grey Rock agent, Scott Lowe, about how the NOCO real estate market is holding up in the pandemic over “take-out” beers from Lucky Joe’s.
“As we look back on May and June’s actual prices, we actually gained like a couple of points in Fort Collins. Some markets were flat. Some markets had really small price drops, but considering the fact that we had 40% volume decrease and we maintained prices, I guarantee you that dynamic has probably never happened in a real estate market in the history of the world, like anywhere. Cause you can’t have volume drop like that and have prices hang on.”
Below is a transcript of the podcast…
Ryan: Okay. Now we’re recording. So we can hear you eat the fries. I’m gonna eat the fries too.
Scott: That’s amazing. That was a fry. Lucky Joe’s fries. Lucky Joe’s on the square. Hmm.
Ryan: What kind of beers? This is the COVID beer or shut down beer. What is it called?
Scott: It’s like New Belgium Shut Down. No, the Quarantine or shut down beer. Um, everything’s falling apart. Beer. That’s right here.
Ryan: I think this is the first time I’ve ever had a beer “to go” in Fort Collins. I got Rio margs for, um, one of my clients who closed on their house. I brought him Rio margs to go. And I was like, this is awesome. now that you can buy alcohol to go. It’s a great closing gift. Cause like you show up to closing, you have Rio Margarita, is like, it’s kind of hard to do any better than that.
Scott: My wife and I did the same thing. We actually got Rio marks to go. And we went up into the Poudre Canyon during all the Covid shut down and we were like, Oh, this is going to be fun. And then we thought someone’s going to catch us sitting in the, in the Canyon trying to drink a margarita and we’re going to get arrested or something like that because we didn’t drink in the Canyon. Well, we just didn’t know. Cause you hear how crazy Covid was. Oh yeah. And everything was just like, can you do anything? Can you go anywhere?
Scott: And we were like breaking the law and you get like shamed for stepping out of your house.
Ryan: But it was, it started like that. People would post pictures of like, I posted a picture of myself fishing or there’s like a Poudre Facebook feed where everybody, the fishers, the Poudre like we’ll post pictures and people would post pictures and then people would shame them for going fishing. And I was like, if that’s where we’re at?
Scott: The COVID-19 shame was tough. It was a lot of shaming.
Ryan: That’s what we need is another reason for people to like, be able to look down their nose at somebody else, its like, we already just I’ll do that way too much.
Scott: So much of that. So we felt good. And then we felt nervous. I mean, like we pick up our, you know, margarita to go. Which was super cool. So now we’ve got our beer to go. The best part is it’s this from new Belgium, but they put it in a Coors Light cup. Cheers buddy.
Ryan: Cheers. Yeah, for sure. Okay. Grey Rock Realty, podcast number something or other? Not sure.
Scott: Well, it’s what happens after COVID right? Cause I think as our subject, right?
Ryan: Yeah. I mean, it’s kind of good to have perspective. I feel like we’re getting some perspective, obviously. We’re not post COVID, but we’re post shut down at least for the time being. And I remember in March, I don’t know if it was February or March when I was just, okay, we can’t, well, for awhile we could show property. And then we got completely shut down for a few weeks and then we were deemed essential and then we kind of went back and forth, but it wasn’t so much not being able to show a property. It was just the, you know, spectacular amount of uncertainty that, you know, clients were calling us saying, we’re out. We want nothing to do with real estate right now.
Scott: Or what’s happening. Is everything tanking. Like, yeah, there was the whole, like if they’re prospective buyer, if they’re ready to sell or do something like that, they were shifting, pivoting away from that. And then there was just random questions constantly. Like it’s all going down.
Ryan: Yeah. And, and like, you don’t know the future, but you have people, all your clients are calling you saying like, well you don’t know the future, but tell me the future. And so, man that was tough, you know, because I felt like we were getting, we were getting more Zillow leads than we’ve ever gotten, ever. Like we were getting flooded from Zillow. Everyone was home. Everyone was sitting around looking at real estate. You know, obviously they may or may not necessarily been ready to buy, but they sure were bored enough to spend a whole lot of time, there was a lot of tire Casper video tours.
Scott: There was tire kicking, like crazy. And people were out at the same time. They still turned into buyers that were like serious. But there was, there was a lot of,
Ryan: They were, so that was the rub. It was like, you know, my friends on Facebook were like fist pump the Fort Collins market’s going to drop 30%. And we’re finally going to get like deals on real estate and Fort Collins, which didn’t happen. And we’re like, I’m like, well, I don’t want to, you know, it’s not like I’m going to get on there and say, Hey, you all are crazy. Like if you could see what we’re seeing, people are still, you know, active in the market. We’re not even able to show property. And we’re still writing offers for property site unseen. I mean, that wasn’t like the norm, but it did happen. But the norm was extraordinary level of activity, but volume dropped 40%, And then now that we look back on, you know, may and June actually prices, we actually gained like a couple points in Fort Collins. Some markets were flat. Some markets had really small price drops, but considering the fact that we had 40% volume decrease and our, and we maintain prices, it’s like, I guarantee you that dynamic has probably never happened in a real estate market in the history of the world, like anywhere. Cause you can’t have volume drop like that and have prices hang on.
Scott: You know, so on, uh, on this note of, uh, calls in, cause there was that, how many raw land deals, how many, we just hung out with there for a second. Cause everybody is trying to get out of town.
Yeah, everyone’s like, I’m buying an RV and I need a place to park and I’m going to buy some raw land. Now that was, there was an extraordinary amount of calls for that. I need it like a bunker for nuclear warfare, I need like root, root cellar, storage, greenhouse, RV hookup. Like, can you do that for me for like $8,000?
Scott: And could we get a mortgage support?
Ryan:Yeah. I need a loan for that too.
Scott: There was a lot of interesting activity.
Ryan: There was. Yeah. And you have to, you have to tell people like, look, I mean, I know it sounds great to have an RV parked somewhere, but at the end of the day, like you’re either going to haul water in and you’re going to like run your RV down and like dump the tanks or you’re going to spend, you know, $50,000 putting utilities in that is what most people don’t realize is 25 grand for septic 25 grand for a well,
Scott: about 15 to 20 grand for just a foundation. If you wanted to actually build on it and get a mortgage, because then you have to have a whole plan with the mortgage company, with a builder planned out to get the house built in is about what 200 plus dollars a square foot.
Ryan: Yup. But Zillow will tell you, when you, when you’re looking around at vacant land, it’ll say, Oh the, this $50,000 lot, the payment, your payments, aren’t going to be $400 a month. You ever seen that? Like, they’ll still give you the mortgage estimate even though no bank in the world will ever lend on that piece of raw land without you committing to build in six months. So, you can’t blame people. It’s like, they’re like, well, Zillow is telling me I can.
Scott: Yeah. I mean, they’re just throwing a number out there if, but the yeah. Mortgage companies won’t do that. And so there was a lot of conversations with people kind of explaining kind of the fuller picture of what they can / can’t do. And then there’s hos with those raw lands and you know, pieces of land. Yeah. There’s so interesting.
Ryan: It’s not like an easy way to just buy property and be able to live for cheap. You know? Um, I mean, I suppose if you do want to haul water in, you can do that, but at the end of the day, like once winter comes, then you’re going to be in a tight spot because you’re going to have to have power. And, anyway, we’re getting off in the weeds on.
Scott: But the reason that’s in the weeds is because I think everybody who was in the weeds and there were so many calls on that. So that was an interesting piece. Right. Kind of along with the covert kickoff. Yeah.
Ryan: Yeah. So we just had to figure out like, what do we tell people? Like, we don’t want to sit here and be like, rah, rah, Hey, the real estate market is perfect and you should come by in the middle of a pandemic. Don’t worry about it because people are still buying homes and everything’s going to be fine. We certainly didn’t want to say that, but we also had to tell people like, Hey, if you’re in the business, this is what you’re seeing. Like, it’s not, you know, this is not 2008. It was very different. You know, 2008, you had yard signs, like you drive down the street. Every other house had a yard sign in it. You know? Um, the absorption rate was like, you know, the average days on market was like seven months, you know, right now the average days on market’s two weeks.
And, and I wasn’t sure how bad the job loss is going to be. Like, maybe even though we had spectacularly low inventory, maybe there was going to be enough job loss to counteract that. And, maybe we were going to see a big uptick in the number of listings. And, then we would start to see prices fall a little bit. But at the end of the day, you know, you read all these articles about there’s a black cloud over the real estate market. You know, uh, this person predicts real estate going to tank, you know, all these predictions, but I would tell people like, all you have to do is watch inventory levels. You don’t have to do anything else. That’s the, there’s one metric you, you need to watch. And that will start predicting what’s going to happen in the future. And so, as long as those inventory levels are crazy low, prices aren’t going to magically drop. If there’s not, if, if homes aren’t sitting on the market and there’s not a whole bunch to choose from.
Scott: It was, it was fascinating going through that process. Because as I remember, you know, Ryan just, we would talk, it was a weekly thing where we’d say what’s happening this week and what can we tell people this week? And it was, you know, things like, uh, we can’t show home, but we can do, we can show them on zoom or we can walk through a property with the, um, that kind of thing to… Okay, can’t show anything at all. Uh, we can show you pictures of it and talk to you about it. Um, but just do that whole process as they were asking that same question, like, what are the houses going to do? I just remember the conversations where, you know, we might see the market soften a little, but we don’t think it’s going to swing into the, you buyers being a buyers, uh, on the buyers side. And so far that’s been true.
Scott: It has, I mean, It’s softened for sure. I mean, May was the, probably the biggest softening or how would you say it made June or would you well, or was there a softening move?
Ryan: Softer? I should define a softening. I mean, yeah. I feel like once the shutdown, um, was ended, you know, it took a little, it took a few weeks for it to come back online. But so I, I kind of was telling my clients, everything is getting pushed later into the summer. Like a lot of times once we hit July, end of July, things started to slow down. A lot of people that were going to buy already did, May and June are huge months may, you know, was pretty lean. Still the volume was pretty low in may and then June started roaring back. Um, but interest rates were so low. I felt like, um, I’m sure that was a big part of it. But also there was a, there was still a whole bunch of people that didn’t want to put their house on the market. Cause they didn’t want a bunch of people walking through their home, giving them Covid. So, whatever increase in the number of homes we have from job loss probably seemed like it was counteracted by people not wanting to put their house on the market to have the public walking through,
Scott: Which goes back to your point, low interest rates
Ryan: I would just balance it out. And then we had 3%, we still have 3% interest rates on 30 year fixed. Like we’re having people lock at 2.9 for 30 year.
Scott: Yeah. I just talked to somebody at locked at two seven, five. And that’s insane
Ryan: Now we’re back to bidding wars, you know, um, one of my clients went 31,000 over list.
Scott: Yeah. Talk about that
Ryan: Really, yeah, he,
Scott: He was, he was really ready to buy. I mean, he had seen some he’d been in those low inventory situations.
Ryan: He wanted to be in central Fort Collins. He didn’t, he didn’t really want to be South of prospect. We looked down there a little bit, but ideally it was, it was going to be Old Town for him and he could spend 500, you know, that was kind of, he could probably spend five 50, but most of the stuff we were looking at was under 500. So we had some stuff pop up. We had one in university acres, which is just like East, that area between old town and the hospital. Where there’s like those big, like sprawling mid-century ranches. We had one pop up in there, uh, was listed for 500, like 1700 square feet. It wasn’t tricked out, but it was clean. It wasn’t a flip, you could tell somebody lived there. They’d never like gone crazy updating it. But those are the houses my clients seem to really gravitate towards. I actually really struggled to sell the flipped home product. I don’t know what it is if people feel like they’re not getting a good deal because they’re paying top dollar for all the like fancy finishes
Scott: Or it’s as I’ve, I’ve run across that a little bit in some conversations. And, uh, one of my clients was saying, I don’t really want to flip because it’s not the style I want. So, I think sometimes when somebody flips it, they don’t make it neutral enough. And um, they may trick it out the way they like it, but it may not have a general enough.
Ryan: Right. Or it feels so neutral that it doesn’t have like character. Like it doesn’t like somebody like lived it and loved, you know? So anyway, this one, we were like, no appraisal, if the appraisal’s low, we’re not going to ask you to drop the price. We, of course, still have to do an appraisal. We went 20,000 over list with an escalation. I think we went in at 12,000 over list and we escalated up to 20. Um, and we got beat by a cash offer. I think they, but I thought, I was like, dude, you’re making a super strong offer. I’m pretty sure we’re going to get, at least we’re going to get a kind of a seat at the table. Like, they’re going to say, if you want it, this is what you have to do, but it ended up, they took the cash offer.
Ryan: So that was tough. Especially when you have a client that is completely comfortable with like, he trusts you. Like he, if you’re telling him you, if you pay $20,000 over list on this house, you’re not overpaying. Or, if you waive appraisal on this house, you know, it’s a, it’s a reasonable thing to do because here are the comparables that I think the appraiser’s going to use. And, I think it’s going to appraise for the purchase price. So that’s a thing that we talk a lot with clients about is, you know, what is it mean to waive appraisal? Like that sounds like the dumbest thing in the world to do. It sounds really scary. You know, the bank hires an appraiser to tell you if you’re overpaying for a property and you base your loan to value ratios off that. And if that appraisal is low, then all of a sudden you have to bring more money to closing. But at the end of the day, that’s what, that’s what a lot of sellers are looking for. And 90, I would say probably 96, 97% of our properties appraised for the contract price. Um, and so the probability of that appraisal coming in low, you know, is pretty low to begin with. Um, but you can look at the comparables with your client and say, here’s one that sold down the street, same house, you know, or similar square footage. Like we think we’re going to be in the ballpark.
Scott: Which builds confidence, right? Looking at all the comparables. And, um, but it also puts you in the hunt to get under contract.
Ryan: Right? So 96% of the time, the house is going to appraise for your contract price. And you got this huge incentive. You incentivize the seller in a huge way by waiving the appraisal, but it never costs you a dime. And that’s what, you know, we’re talking clients through, but there’s going to be a handful of times when it will cost you money. And when the property will appraise for less than the purchase price,
Scott: You know, as, you know, just advise the, the buyer that way and they can take that risk,
Ryan: Yeah. I mean, they can, they can walk away at the end. At the end of the day, you have a financing contingency. So if all this goes south and you do get some appraisal that you’re unhappy with, you can walk away. But obviously that’s the last thing we want to do. Like the sellers gone under contract with us, the appraisal happens three weeks after you go under contract. We’re way down the road. We’ve already gone through inspection. And so we don’t want to waive appraisal and tell our clients it’s okay if you waive appraisal. Cause if you get a bad appraisal, you can just walk away. Like we don’t want to do business that way, that really screws the seller over because they were banking on you. You tell them you’re not going to ask them to drop the price. If you get a low appraisal, like you got to back that up. And what does it look like? If, if the appraisal is $10,000 below the purchase price and you’re getting an 80 20 loan, the lender is gonna ask you to bring $8,000 more to closing in order to keep your 80 20 ratio, which keeps your mortgage insurance out of the picture. So, you got to talk them through that. You know that this is what would happen if it was $10,000 low, you’d have to, you’re not paying more for the house. You’re just having, you just can’t finance as much of the house. So you have to bring more money to, to complete the purchase. So once you start to walk people through that and they really wrap their head around, okay, you’re right. I’m not paying any more for the house. I mean, I’m not paying a higher purchase price. I’m simply being asked to put a higher amount of money down.
Ryan: Right. And so if they’re okay with that, then you can go to the seller and say, not only are we waving appraisal, but my client has, is completely okay with, if the appraisal does come in low, like we’ve talked, what that looks like. He knows he’s going to have to bring more money to the closing. He’s totally fine with that. Like, we’re the people that have walked through all these scenarios. We’ve looked at it from all the different angles and we’re going to close on this house cause we really want it. So you start telling a seller that like, that’s what they want to hear. You know, there’s a lot of people that just waived the appraisal, but they don’t, they’re just like, we’re putting it in the contract. We’re going to waive it. But that’s, as far as it goes, whereas I want to communicate to the listing agent that we’ve put clients through these situations many, many times, you want somebody that there’s no surprises here. They know what they’re signing up for. When they put something in the contract, they’re going to back it up with action. And those are the people that win, you know, in a multiple offer situation.
Scott: And so yeah, your client ended up. So that one didn’t that one. But then, nest one
Ryan: And he got another one that had eight offers. It was $400,000 house. It went from 31,000 over and you know, it’s beautiful lot.
Scott: I think I was covering for you that day just for a couple hours. And, um, it was, it was great because we got to, I got the call that he had actually won this offer on this second house, um, because of the strategy that you’ve put in place with him. And, I’ll tell you what it was like when I said to him, I said, Hey, it looks like you’ve got the counter. And it’s what you’re expecting. And, um, it was silence on the phone from him.
Ryan: This is the second one he lost, he had lost two
Scott: So this is the third one. Okay. Yeah. So when we got to that point, um, it was just silence. Cause he had he’d basically at day, he just hadn’t signed it. He had won the deal finally after eight with eight other offers. And um, yeah. Anyway, so that was a, it was a sweet thing, but in a tight market with low inventory and there’s a big incentive to buy with low interest rates, uh, things like that. It’s it makes for, it makes for challenging times, but not if you have the right strategy.
Ryan: Yeah. And you know, I think rightly so people have probably heard us talk about these situations before and like a lot of people, depending on where they are in the purchase process, there’ll be like, you know, I don’t want to compete. I’m not interested in a bidding war. And like, of course I get that. Like there’s no, it’s not fun. Um, it’s stressful. And, but what, what they need to ask their themselves, in my opinion, what I ask them to think about is do you want the bidding war to be the litmus test for what? Whether or not you want to offer on a property, right? Like, do you want offer on a property because you love it or because nobody else is looking at it. And that’s essentially what they’re saying. I don’t want to get in a bidding war. So I don’t want to buy a property that a bunch of other people want to buy. I want to buy a property that nobody else wants to buy. And like, maybe that’s an oversimplification
Scott: actually, that makes yeah, it makes a ton of sense. It’s like, well, of course it’s a really good property. A lot of people would want it and you want it. And so what I always loved about our conversations is instead of thinking about like a bidding war, it’s about how you put your best foot forward.
Ryan: Yeah. It’s not an auction. It’s, you know, most of the time, sometimes a seller’s agent will come back and be like, will you do this price? Will you do this price? And then it’s an auction, but most of the time it’s just, make your best offer. And we’ll pick one to choose from. We’re not going to like go back to everybody and go round and around and around and bid up the price.
Scott: which I think takes a lot of pressure off on one end. But then you’re thinking the pressure is can I make my best offer? How do I do that? So, a lot of different ways. So COVID is I think, turn the dial on that. Hasn’t it? Just, you know, it’s with a lot of people sitting around looking at property maybe for the first time, if for a long time, two months, maybe three months of it just sitting at home and all of a sudden they’re thinking is my home big enough? Is this situation big enough to spend every waking minute at home for the rest of my life? Yeah, I am. I cannot do this in the right house. I mean, I’ve talked to multiple people like that. They’re like, Oh my, if this keeps going, there’s no way I can have a home. I can’t do this makeshift home office. I need an actual home office. And, so I think it’s, it’s definitely turned the dial on a lot of looking and, and, you know, investigating. And so any other thoughts on the Covid for you?
Ryan: I don’t know, like so much about COVID, I’m just trying to figure out, like, how do I tell clients like longterm? Like what can they expect from this real estate market? You know, for a long time, I’m, I’m so conservative with what I tell my clients for the last, like, you know, seven years ever since we got into this seller’s market, I’ve been telling them like, don’t expect appreciation. You know, the market been up for a long time and I don’t want you to, buy assuming that the property is going to appreciate, I want you to buy, to buy assuming that the property is going to kind of hold its value and sort of stay flat, but, um, don’t bank on it, you know? Um, don’t come here expecting to like speculate on property and have us continue to add like 5% per year. Now, I’ve been telling people that, but maybe I’m being too conservative because those properties have been appreciating a lot at like, you know, three, what is it? And maybe I’m doing them a disservice by not saying like, you can bank on some appreciation here, but I just don’t.
Scott: But these are kind of uncertain times. And how would you, cause you went through, I mean maybe. Okay. So I’m going to think of uncertain times. So I’d love good to hear your thoughts. Um, this is kind of fun cause great. 2008, 2008. And then being in the middle of 2020 20, um, I don’t know the comparisons and differences in your mind.
Ryan: I don’t know that there’s any, any even way to compare it. Like there’s no similarities, you know, there was, you could take a buyer out, a buyer coming from out of town. You could take them out and look at 30 homes and you could offer like 30,000 under list on any, any one of them that you chose. Um, you know, it was just, there were so many foreclosures. You know, obviously everybody knows why. Um, but what they probably don’t realize right now is that the, our foreclosure rate at the moment is lower than it’s ever been in history. That’s a big difference. In 2008, there was one in 60 Americans was filing for foreclosure. Right now, it’s like one in 2000. So it’s like orders of magnitude less. And one of the things that I’m keeping current matters is like one of the data companies that we use, they were like, this is what you’re going to see. You’re going to see headlines saying that the foreclosure rate has doubled or the foreclosure has tripled. And the reason for that is because we are already at a historically low foreclosure rate. It’s not going to take much for it to double. So, and, and I never actually even saw those headlines. Um, I don’t think, you know, and part of the part of what’s driving that is you have, you know, the average American across the board, not even talking about our area is $110,000 in equity in their home. So, you don’t go into foreclosure when you have a hundred, $10,000 in equity, you sell your house and you walk away with $90,000. Right. So you’re not, I just don’t think that’s going to add to it
Scott: In a sense that like, um, on one level it’s having more equity in the home and the house is not back in 2008, everybody was upside down. All right. I mean, everybody owed more than they, than they had in, in equity, in the home or what the home was worth. And now it’s, um, in a different spot and at least where we’re going into these last several months, we’re in a, I guess, a stronger position, the way you’re describing that.
Ryan: Yeah. I mean, it’s not even like, you can’t even compare it. You know, we never really, we saw a big drop in volume, but we never saw enough increase in inventory to change our prices and our price prices. Basically, they’re continuing to appreciate it. Like small gains every year, one, 2% somebody you’ll see 5%, which is still, most people consider for a real estate market. That’s a big jump, but since we’re used to like eight and 10% every year, that seems more subdued. Um, but I think at the end of the day, you have to look at, um, I can’t speak for like, I’m not an economist. It’s hard. I can’t speak for like the whole country, but what I can tell you about our area. Cause, I am an expert in our area. I’m not an expert in like, you know, the country as a whole and what could happen. But, I do know that we have an office in old town square. It’s a retail center in Fort Collins. People come by our office all the time. You can pop out and talk to them and ask them, you know, just chat them up. And they’ll be like, well, we live in New Jersey and we pay $1,500 a month in property tax and I’m on a fixed income and my kid just moved out here. And so I’m going to move out here and I’m going to pay $200 a month in property tax and buy a house that costs about half as much as my house in New Jersey. Um, that story is told to me over and over and over people don’t understand that our property tax is half the national average. And it’s a quarter of what it is in many States like Illinois, Minnesota, New Jersey, like Northeastern seaboard, like Seattle. I mean, people, they complain about the prices in Fort Collins, but they’re not factoring in like total cost of living. Um, which is property tax wishes, public schools, you know, excellent public schools. Very few people send their kid to private schools in our area.
Scott: I grew up in a private school and that was brutal. I’m sure from my parents, I mean, it’s crazy back in the South and they, yeah. So not the case here. I send my kids to the schools here.
Ryan: Yeah. I mean, we’ve got, you know, like anecdotally you’ll, you’ll talk to teachers and a teaching position will open up at Poudre and there’ll be 200 applicants. So it’s no, we have great schools when you can pick from a couple of hundred people to fill a teaching position. Oh yeah. Um, and then, you know, there’s just, there’s layers and layers, I think, of reasons why this market, you know, obviously we’ve been in a long sellers market across the country. And so people are rightly asking, how long can it hold up? And that’s a valid question that I, of course can’t answer. But what I do tell clients is if you are going to own real estate anywhere in the country, this is one of the best places in the world to do it because the cost of ownership is relatively low. It’s a very desirable area people want to be in. And the new construction is a big deal. So in most parts of the country, it’s much cheaper to build than it is in Colorado. So everybody that’s selling a house in any given area, in a part of the country like Texas, where it’s pretty cheap to build. Um, they’re always competing with new construction. Like there’s always a new community somewhere near their home where somebody can go buy a brand new house on a pretty good size lot. That’s not really the case here. Like of course we have new construction, we have big new build communities. Um, but the thing about those communities is that those developers are paying a, an incredible amount of money to get their utilities put into place, their water taps. You know, a lot of times, by the time they start building that house, they’re at a hundred thousand dollars into like what we call curb and gutter and then water taps, sewer taps. And, and the reason for that, you know, you look around Fort Collins, there’s corn fields, as far as the eye can see, like, it’s not like, we have a shortage of land. We have a shortage of water. So if you go to the Elko water district near the Budweiser plant, where there’s tons of corn fields, where Montava is trying to get a, a big like thousand unit development push through, they have that fully permitted, already to go. They’re just waiting for water. So, you know, Elko is basically like, we’re not, we can’t sell you a thousand water taps. Like we have a finite supply of water. If we continue to sell water taps, like they’re going out of style, we’re not going to have any water left for our existing customers. So you have to go find us water rights.
Ryan: Sorry. We’re, we’re breaking here for a sec. My phone blew up on me, but, um, one second. So that’s essentially like, so in other parts of the country, water is cheaper develop it. It takes a lot less money to, to build a new house. So at the end of the day, the average new build price in Fort Collins, about 525 on a 4,700 square foot lot. It’s hard to sell those homes. Like there is a market for those homes, but most people don’t want to spend a half, a million dollars on a big brand new house and get a 4,700 square foot lot. They’d much rather go into the resale market, buy something that’s not brand new and get some nice trees an established neighborhood, a full quarter acre. And that’s why that resell market gets so much pressure. Cause you can’t just go buy that new house on a quarter acre without spending, you know, $600,000. Um, the other thing is that Larimer County requires developers to turn half of their developed area into open space. So you’ve got a hundred acres. 50 of that hundred acres has to be open space and it’s like, everybody loves open space. But what that, you know, turning into is, is a housing affordability issue. Like you can’t make developers give away half of their developed acreage and expect to have affordable housing.
Scott: Is that, is that also true in like Weld County?
Ryan: There is open space requirement in weld County, but I’m not sure exactly, exactly what it is, but Larry was particularly heavy handed in that area. But you know, obviously it’s like makes for cool neighborhoods, you right. They got greenspaces winding through, but the actual lots are 5,000 square feet, hence expensive price and the small amount of land and right. So, you know, and again, it’s, and it’s just a place that people want to be for all the reasons we talk about, you know, sunshine and sunshine, all that, you know, it’s a good stuff, beer and whatever else you want to say.
Scott: Well, I mean, you know, Fort Collins is the Napa Valley of beer, right? I mean, what do we have? Like 35 breweries, 30 breweries, maybe 29, 30. I don’t know. I can’t keep track. I can’t keep up. They’re always open when they, they even, I, I think I even saw some restaurants opening during COVID-19, which is crazy. And even in college. Oh yeah. Uh, the old, uh, Oh, what is it? I can’t remember the name of it anyway. It’s already left me, but they had like a rooftop right.
Ryan: Youre my restaurant guru. I’m always asking where to go.
Scott: Oh, I know, but I can’t remember that name cause it’s new. Yeah. But anyway, yeah. So it’s new breweries and distilleries. This is a good place to be. All the good stuff
Ryan: It happens kind of longterm. But again, it’s like, you know, I don’t think anybody’s out there saying like, Hey, just go buy speculate on real estate in our area. Like, it’s just going to keep going up and up. You know, nobody’s telling people that, but I am telling people, if you want a roof over your head and you’re going to be in Northern Colorado, like these are the, these are the dynamics that are driving our market. And I want you to understand those and understand why we outperformed, like why Phoenix lost 60% of its median price during the recession in 2008 and why we lost three and a half percent in that same period. Like there’s something there, you know? Um, and then you make your own decision. Like, you want a roof over your head. This is a great place to do it, but I’m not, I just have never been one to be out there trying to get people to buy property just to just speculate on it and hope that the market goes up and up and up.
Scott: Oh man, it’s just, it’s an amazing place to live. Yeah. And that’s a good reason. We got guys,
Ryan: We’ve got guys out at our window right here complaining about our prices. Well, we should put, we should put a placard on there saying don’t worry so much about our prices. Um, consider the other factors like price.
Scott: Yeah, yeah, yeah. It’s so much better. That’s good. That’ll help. Um, that was perfect. Love having some visitors. Well, I got, gosh, this is great.
Ryan: We got it. I got to bring it home. Yeah. You gotta just, we have resolution deadlines and
Scott: I think I’ve got to get home and, you know, get some dinner or something. I don’t know. So, well, Ryan great. This is great stuff.
Ryan: Yeah, we’ll do it again soon. Absolutely. Thanks for, thanks for the beer. Shout out to New Belgium beer.
Scott: Oh man. Yeah. Thanks. If you move into Fort Collins, um, you’ll definitely want to come to Lucky Joe’s and get to get beer. You have great conversations with the folks at the restaurant and that’s true. Good food. Although you have to order everything online when you get in there. Cause COVID, let’s just bring that back to full circle. Sorry. There it is.
Scott: Good talking.
Ryan: Good talking. See ya next time.