In the News
In 2018, Fort Collins can expect slower real estate gains as part of 'boring' economy, experts say
Published 11:34 a.m. MT Jan. 11, 2018 | Updated 12:56 p.m. MT Jan. 11, 2018
Boring. That's CSU economist Martin Shields' take on Larimer County's economy going into 2018. In this case, boring's not so bad.
The county's low unemployment rate, solid job and population gains, improving wages and robust housing market indicate the economy will stay the course through the year. "It's hard to see any real weaknesses," Shields said.
Nationally, the Dow Jones Industrial Average is over 25,000 for the first time in history and the recently passed federal tax cut — love it or hate it — won't hurt things in the short term, he said.
"Despite the fact this is a pretty robust economy, there are people enjoying more of the gains than other people," Shields said.
Whether you are a homeowner, renter, looking for a better job or navigating access to health care, here's what experts say you can expect in 2018 in three sectors of the economy: jobs, housing and health care.
Colorado's minimum wage went up to $10.20 an hour on Jan. 1, forcing some businesses to raise pay to be competitive. Overall, Larimer County's average weekly wage rose 50 cents an hour from the second quarter of 2016 to the second quarter of 2017, Shields said. "People aren't getting rich, but the increase is outpacing inflation," excluding housing costs.
"It is better than the no growth we saw in wages three to four years ago," he said. "That just means employers need workers and need to give them more money to keep them or take (employees) from somebody else."
Despite the low unemployment rate, Larimer County Workforce Center is still seeing "layoffs across the board," said Adam Crowe, business services manager. "In the last few months, higher-tech companies have let people go in small numbers," he said.
Michael Windstorm uses computers at the Larimer County Workforce Center in Fort Collins to take an online course before searching for a job in sales or production management on Friday, Jan. 5, 2018.
For most, layoffs have been business decisions made by corporate offices outside Fort Collins that "happen in any economic time," Crowe said. "It's hard to determine what's happening ... it's a low rumble more than a tidal wave."
In large part, the largest number of layoffs is with middle-skill folks with training and experience significantly beyond high school but not a college degree, he said.
The city of Fort Collins also saw a weakening of sales-tax revenue in the first half of 2017 but a rebound in the second half.
Through December, the city collected $112 million in sales tax revenue, up 2.4 percent from 2016, according to the city's sales and use tax report released Wednesday. December collections reflect November sales.
The 2.4 percent growth was modest, said Chief Financial Officer Mike Beckstead. "It's lower than it's been for the last few years," when sales tax revenue grew between 4 and 7 percent.
Beckstead said "we are growing, we are healthy. We just didn't grow as much as anticipated." The city is budgeting a conservative 3 percent increase this year.
Bright spots continue to be restaurants and bars, taxes paid on Amazon purchases and pharmacies, which include marijuana shops.
Nearly 60 new restaurants opened last year and 14 closed, for a net of 46 new eateries. That helped push sales tax collections at restaurants and bars up nearly 5 percent, to $17 million for the year.
Miscellaneous retailers, including Amazon sales taxes, showed the largest percentage growth, from $6.4 million at the end of 2016 compared with $7.7 million at the end of last year.
Sales tax revenue will likely be helped by Dick's Sporting Goods, which plans to open at Foothills shopping center in July. Foothills was dealt a blow when Sports Authority went bankrupt just months before it was to open in the junior anchor spot at the Midtown shopping center.
Securing Dick's after months of negotiations should be a boon to Foothills and the city's tax collections.
Housing
Fort Collins' housing market will continue to be strong this year, but escalating home prices could begin to moderate as supply and demand even out, said Larry Kendall, founder of The Group Real Estate.
Instead of double-digit price increases between 9 and 12 percent in past years, Kendall predicted more modest increases of 5 to 7 percent.
According to the Fort Collins Board of Realtors, 7,167 homes were sold in Larimer County from January through November, the latest statistics available. That's an increase of 9.4 percent from the 6,549 homes sold in 2016.
Median sales price (the midpoint) rose 6.3 percent from $350,000 in 2016 to $371,920 while the average sale price rose 7.3 percent to $419,020 throughout the county.
Depending on sales price, Larimer County could be either a seller's market or buyer's market. Homes selling for $700,000-plus are staying on the market longer, making it a buyer's market.
Homes selling for $400,000 and less are still being snapped up quickly.
Kendall said inventory for homes priced at $400,000 or less is less than two months. That means it would take only two months to sell the available supply of homes on the market right now.
Conversely, there's more than a nine-month supply of homes in the $700,000 range in Fort Collins.
"That is not unique to Fort Collins or Northern Colorado," Kendall said. "There are fewer buyers in the higher price range" and many of them are Gen-Xers who "have no desire to own a large home." That means sellers are "going to have be more patient and very attune to what buyers are looking for " in terms of design and finishes.
Water and lack of building lots are exacerbating the cost of housing. "Water is available, it's the price of water, which varies depending on where you are," he said. Water purchased from the city of Fort Collins is more affordable than from some of the water districts. Developers building starter homes can have $100,000 in costs just for water before they start putting in foundations, Kendall said. "That's affecting affordability."
With thousands of apartments under construction or in the development pipeline, Kendall said it's the market segment with the most potential for oversupply. He does not foresee a massive drop in vacancy rates or rents. Like the single-family market, Kendall expects rent increases to begin to moderate.
"The apartment market is the one that tends to have the greatest swings in supply and demand," partially because projects take so long to get approved and built and the units all get built at the same time.
Fort Collins last year issued 43 permits for 695 apartment units, a decrease from the 968 units permitted in 2016, a 10-year high.
The apartment market, however, is split between student-oriented units and high-end units, he said. "The midrange hasn't seen much."
Currently, nine student-oriented projects are in the city's development pipeline. If all get approved and built, they will add more than 4,200 bedrooms in Fort Collins.
That's in addition to the more than 3,150 market rate apartments under construction or recently opened, the largest of which is Cycle, developed by McWhinney Inc., at 3521 Stanford Road, which began coming online in November.
As of early January, Cycle had studio, one- and two-bedroom units available, ranging in price from $1,200 for the studios to nearly $1,900 for two-bedroom, two-bath apartments, making them among the highest priced in the city.
Like most new luxury complexes, they come with high-end finishes and amenities, including a dog park, a pool, a hot tub, a fitness center, stainless appliances and quartz countertops.
Median rents in Fort Collins and Loveland in the third quarter last year topped $1,300, up about 2 percent from the same time in 2016, according to the quarterly Colorado Multifamily Housing Vacancy and Rental Survey conducted by the University of Denver for the state's Division of Housing.
According to the survey, median rent for studio apartments in Fort Collins and Loveland was $965 in the third quarter; for two-bed, two bath-units, it was $1,454.
Brinkman Development is getting close to completing three multifamily buildings on Shields Street north of Horsetooth Road. Principal Kevin Brinkman sees opportunity in the multifamily market for developers who pick their spots.
"There has been a lot of multifamily built over the last seven years, but I can't think of much (non student-oriented) west of U.S. Highway 287 (College Avenue). "We look for areas that haven't been overbuilt. There is still opportunity to find demand but you have to look at each submarket. We are doing the best we can to make sure we are designing projects that will be strong even if the market corrects."
Jobs
With Larimer County's unemployment rate at 2.5 percent, the Larimer County Workforce Center is seeing fewer job seekers than during the recession. But it's still seeing workers losing their jobs or looking for better employment, Crowe said.
On the flipside, businesses are searching for help. "There's a lot of pressure on them because of the low unemployment," he said. "It's a really interesting time."
Concurrently, businesses are improving their recruiting efforts and supporting their workforce to avoid costly turnover. Many are investing in leadership training and improving their communications, he said.
The Workforce Center, CSU, Front Range Community College and Fort Collins Area Chamber of Commerce are teaming up on Talent 2.0, a collaborative effort to attract, train and retain a qualified workforce, including expanding apprenticeships and internships.
"It's an opportunity for us to come together to see if we can create regional solutions," Crowe said. "How can we make sure companies are in a position to support people that may not be exactly what they're looking for? How do we get them the training they need? How can they recognize a diamond in the rough?"
Demographers believe jobs and people will continue to move to Larimer County over the next decade. If those projections hold true, Larimer County will face a labor shortage into the next 10 years. "The trick is can we as a community make sure that the people ... have the skills employers need and the employers can find the skills they're looking for," he said.
Still, it's not a one-sided labor market. Some workers remain underemployed, others are losing their jobs and many families are still struggling trying to make ends meet with low-wage jobs.
NoCoNet, a group formed for high-tech workers during the recession, is seeing a resurgence in membership. Its active membership dropped to about 25 last summer, said Linae Warden, but went back up to between 40 and 45 in the fall.
Since then it's been averaging between two and three new people a week, many from out of state, Warden said. She's also seeing three to five people who report finding jobs. "That doesn't mean they are getting jobs that are ideal for them."
Some are getting contract work for a few months at a time, while others, who were once programmers or engineers, have joined the gig economy driving for Lyft, Uber or the airport shuttle.
"We have two or three rocket scientists, people with Ph.D.s and MBAs who are having trouble finding work," she said.
Health Care
Not a day goes by we don't hear about the fight for affordable and accessible health care. How the country as a whole achieves that is up for much debate, but it's something that keeps health-care systems continually searching for ways to become more effective and efficient.
Health care providers are examining how to be more efficient and effective as the health care industry remains in flux.
At Poudre Valley Hospital and Medical Center of the Rockies, it means finding ways to provide more access to patients in the least costly venues. It means getting patients in front of their doctors more quickly, keeping them out of the emergency room and expanding services needed by aging baby boomers.
PVH and MCR chief executive officer Kevin Unger says it means looking at bed capacity, figuring out how best to use the space they have in Fort Collins and Loveland, and providing the needed support.
"We're still growing and we're seeing a big shift from in-patient to outpatient care," Unger said. "People aren't spending as many days in the hospital, but with our population growth, we are still seeing growth."
PVH and MCR are part of the larger UCHealth System that stretches from Wyoming to Pueblo.
With a new UCHealth hospital ready to open next year in Greeley, a one-hospital city for generations, Unger is looking at how to best utilize its beds throughout Northern Colorado to keep pace with the population growth.
North Colorado Medical Center chief executive Margo Karsten said it "will be interesting to have a healthy competitor. But if NCMC "provides high-quality, high-compassionate care at low costs, no one needs to go anywhere else," she said.
NCMC's mission statement this year is to make health care easier so life can be easier. Like UCHealth, the hospital is focusing on bringing health care closer to the community. Banner Health, which owns or manages NCMC, McKee Medical Center in Loveland and Banner Fort Collins Medical Center on Harmony Road, is opening a new Wellington clinic on Feb. 5.
It is using technology to make scheduling easier at urgent care and bringing in a gynecological obstetrics doctor to Banner Fort Collins to accommodate its rapid growth in obstetrics, Karsten said.
Unger said MCR is also seeing growth in its women's and children's services, trauma and cardiac care, and needs more "step down" beds for patients who no longer need to be in intensive care but aren't ready for the medical unit.
The Loveland hospital is also building out two new operating rooms with pre-op and post-op space.
To accommodate the needs, UCHealth is moving the rehabilitation unit from MCR back to PVH and finishing out "shelf space" that has sat empty since MCR opened in 2007. "It will give us an entire floor at MCR to accommodate women's and children and ICU stepped-down beds," Unger said.
Poudre Valley Hospital will also see some shifting around following last year's opening of the new emergency department. But exactly how that will shake out is still up in the air, he said.
The hospital wants to expand and enhance its heart services, much of which moved to MCR when it opened. "We believe there is a void there," Unger said. "We wouldn't do open-heart surgery at PVH, but we could do acute interventions."
Short-term, Unger projects fewer people will have health insurance now that the individual mandate has been repealed. With the state's Medicaid budget "gobbling up far too many resources," he anticipates there will be some shifts in what the state requires from hospitals. "We know we need to reduce costs and improve quality outcomes."
That means he's looking at staffing ratios, supplies and how the hospitals "can be more efficient and effective and provide care in less expensive locations than emergency departments and hospitals," he said.
There's a strong push toward electronic visits through UCHealth's internet portal, where patients could connect with an emergency room physician who could triage the problem.
Conditions such as sore throats, earaches, pink eye, etc., could be diagnosed and a prescription sent to the pharmacy. "You don't have to leave the house until you pick up the 'script," Unger said.
With 500 providers, the UCHealth Medical Group is also looking at scheduling to ensure patients can see a provider with 48 hours, he said.