LOVELAND — Northern Colorado’s real estate market, which rebounded strongly last year, is poised for more growth, the president of The Group Inc. said Tuesday at his company’s annual forecast event.

Using a Monopoly game theme during his talk at Loveland’s Embassy Suites hotel, Eric Thompson laid out the rules of the “game” of real estate in this market.

One rule, he said, is that all markets are driven by supply and demand.

In Northern Colorado, the supply of houses for sale is shrinking: New construction constricted sharply during the recession, and the number of foreclosed homes is down.

On the other side of the balance is strong demand driven by growth in jobs and the population and the entry of real estate investors in the market.

Thompson displayed charts showing how the number of properties on the market has shrunk. “That’s drastic,” he said.

“What happens when you have that compression? Prices have to go up.”

Thompson said a federal index of home price growth ranks Loveland-Fort Collins at No. 9 among 303 markets across the country.

He said a survey of The Group’s agents produced an optimistic view of the area’s market for this year: They predict a 10 percent increase in home sale transactions in Loveland and a 5 percent increase in prices.

In Fort Collins, they expect a 12 percent transaction increase and a 6 percent rise in prices over last year.

Thompson cited anecdotes from his brokers demonstrating the tight market: homes selling before they’re even listed, and would-be buyers offering more than the asking price.

In response, he said, national builders are entering the market again. “A little over a year ago, new-home builders started coming back and very aggressively buying land.”

He said home starts and closings both increased 50 percent last year, and he predicted 50 percent growth in new-home building and sales again this year.

In Northern Colorado, he said about 3,500 new houses will come to market in the next 12 to 24 months.

But the seller’s market doesn’t exist across all price levels, he said. Homes over $300,000 in Loveland and $400,000 in Fort Collins are in oversupply, producing a dual market, he said.

“We’ve never seen this dynamic to this extent,” Thompson said.

Such a dual market is ideal for someone who wants to move up, he said – selling a lower-priced house to eager buyers and buying a more expensive one from sellers who might need to offer discount prices.

Craig Young can be reached at 635-3634 or cyoung@reporter-herald.com. Follow him on Twitter: @CraigYoungRH.