Phil Castle, The Business Times
Real estate activity is expected to continue to trend upward in Mesa Country in 2016 with increases in sales and median prices. A projected increase in new home construction could bring with it additional jobs.
Even as interest rates on mortgages likely will remain low, shrinking home inventories and uncertainties associated with a presidential election could affect the local market, according to a detailed forecast presented by Bray Real Estate in Grand Junction.
The coordinated presentation was the first of its kind although the firm long has tracked statistics for the residential, commercial and rental markets, said Robert Bray, chief executive officer. “This is our first road show.”
Bray said the residential real estate market has rebounded in Mesa County in the aftermath of a boom turned bust. But unlike other areas of Colorado — Denver in particular — Mesa County has yet to climb back to the peak that preceded the recession.
For 2015, a total of 2,994 residential real estate transactions were recorded in Mesa County, Bray said. That’s an increase of 11 percent over 2014, but still nearly 25 percent below the 3,988 transactions in posted in 2008.
Bray said he expects the residential market to continue to grow in 2016, although at a slightly slower pace of 5 percent to 7 percent. That would mean an additional 150 to 210 transactions for a year-end total of about 3,200.
Residential real estate prices similarly have rebounded in Mesa County, Bray said. After the median sales price peaked at $225,000 in the first half of 2008 and fell to $159,000 in 2011, the price stood at $190,000 in 2015.
Bray expects the median sales price to increase 6 percent to 7 percent in 2016 to about $203,000.
Interest rates on mortgages remain low, Bray said.
At 3.85 percent on a 30-year fixed-rate mortgage, the interest rate in 2015 was not only well below the 16 percent rate assessed in the early 1980s but below rates charged 175 years ago, Bray said.
For 2016, Bray said rates could decline or increase slightly to a range between 3.5 percent to 4 percent, but likely won’t affect real estate activity much either way. “Interest rates are not a problem in this market.”
Other factors could moderate growth, though, Bray said, including low inventories.
Taking into account the number of active listings and pace of sales, there was only about a four-month supply of houses on the market at the end of 2015. The shortage was most pronounced on the lower end of the price spectrum with a three-month supply of homes priced between $100,000 and $299,000.
Real estate activity also tends to slow during presidential election years because of uncertainty over who’ll be elected and what could happen, Bray said. “It’s a year of distractions.”
Job growth in Mesa County would help drive up real estate demand, he said. But the labor force remains well below peak employment levels in 2009.
As for the multi-family rental market, Bray projected the vacancy rate for 2016 at about 4 percent even as average monthly rents remain flat.
Kevin Bray, development coordinator at Bray Real Estate, said new home construction activity in Mesa County has slowed considerably over the past decade, but should increase during the coming year.
For 2015, 446 single-family home permits were issued, he said. In contrast, 1,525 permits were issued in 2005.
For 2016, Bray said he expects a 15 percent to 17 percent increase with up to 520 permits issued.
Going by one estimate that the construction of three houses creates one full-time job, the construction of 100 new homes would create the equivalent of 30 new jobs, he said.
The low inventory of existing homes for sale should help drive the construction of new homes to keep pace, Bray said. More builders have expressed interest in getting back in the market, he added. “There’s some momentum building.”
Property foreclosure activity in Mesa County has dropped from its most recent peak in 2010, he said. For 2015, 479 foreclosure filings and 304 foreclosure sales were reported. Those numbers are about a third the 1,666 filings and 943 sales reported in 2010.
Bray said he expects filings to level off in 2016 at between 425 and 450. Sales will continue to decline at between 225 and 250.
Meanwhile, commercial real estate activity continues to trend upward, Bray said. For 2015, the collective dollar volume of commercial real state sales in Mesa County totaled $103 million. That’s more than double the dollar volume of $51 million reported in 2011, he said.
Commercial leases rang from $4 to $8 a square foot for large industrial spaces, $12 to $20 for office space and $8 to $24 for retail space, he said.
Sales of industrial land likely will remain flat until a slowdown in energy development related to low commodity prices abates, he said.