Boulder-area Home Sales Reach New Heights – Again

It’s the same old story, but one we love to hear. Boulder County home sales closed 2017 with yet another increase over the previous year, despite ongoing low inventory, according to Ken Hotard, senior vice president of public affairs for the Boulder Area Realtor® Association.

“All in all, the year was positive. Sales increased moderately over 2016 in both single-family and attached residential housing,” says Hotard.

That’s saying a lot, since sales have increased in Boulder County for several years in a row and prices have increased significantly, while inventory levels never cease to become more challenging.

“The past several years have a pattern of similarity. It’s a sure sign that the demand for a home in Boulder County is strong and undeterred,” he says.

In fact, year-over-year increases in sales were only about 1 percent apart in each market category. Condominiums and townhomes lead with a 5.6 percent rise through December 2017 – 1508 homes sold vs. 1,428 through 2016 – while sales of single-family homes improved 4.4 percent for the year with 4,612 homes sold vs. 4,419.

Month-to-month sales of single-family homes were virtually unchanged, increasing .1 percent in December 2017 compared to November 2017 – 363 vs. 359 units. In the same period, sales of attached dwellings dropped 2.4 percent compared to the previous month – 120 units vs. 123.

Hotard says lack of inventory is a problem plaguing Boulder County that shows little sign of change in the near future.

Inventory of single-family homes dropped 28.3 percent in December compared to November—declining to 557 units from 777, while multi-family unit inventory decreased 5.5 percent—138 units versus 146—over the same period.

Adding to the inventory crunch, demographers say age is starting to catch up with Boulder County. State demographics show the size of the retired Baby Boomer age group will reach unprecedented levels in the coming years.

Experts say older people tend to move less and age in place. Hotard cautions the aging population could make the already tight housing inventory even tighter over the next decade.

Where might inventory easing come from? Hotard notes that Boulder city leaders are looking at land use policies that may bring some limited relief by making it easier to build Accessory Dwelling Units or Occupant Accessory Units. And there’s consideration being given to a targeted zoning change that would allow two homes to be built on larger lots where only one home currently stands.

None of these changes, though, will have the impact needed soon enough or large enough to negate the fact that many people who work in the city of Boulder will likely live somewhere else. Hotard believes that improved public regional transportation will be a needed component of our housing picture.

“We’re in the midst of a big shift,” says Hotard. “Boulder Valley used to be 25 square miles surrounded by reality. Now it’s 25 square miles surrounded by competition. That competition is in shopping, locations for businesses, housing and jobs.”

Housing start statistics show that building has increased in Eerie and the tri-towns of Dacono, Frederick and Firestone north of Boulder.

“Increasing inventory in these towns is helping to keep pricing in check in Boulder,” Hotard says of the competition. “Moderating prices is probably a good thing.”

But he remains confident that Boulder County holds strong as a place that people want to live. He expects 2018 to be another positive year in the area’s residential real estate, beginning with a strong first quarter. With interest rates expected to slowly rise, buyers will be motivated to move earlier in the year rather than later.

“As long as we have the beauty and quality of life Boulder County offers, people will want to live here.” And that means our real estate market will be rock solid.

Posted by Tom Kalinski Founder RE/MAX of Boulder on Friday, February 9th, 2018 at 11:57am.

Posted on February 23, 2018 at 9:00 pm
Jay Kalinski | Category: RE/MAX of Boulder | Tagged , , , , , , , , , , , , , , , , , , ,

Boulder Valley 2018 real estate predictions

Published in BizWest on December 6, 2017.

The Boulder Valley real estate market has undergone a shift in 2017.  While we began the year in a fairly strong seller’s market, it soon became apparent that the indicators we track were pointing to a shift toward a more balanced market. 

Making predictions is always a risky business, but here are my top three predictions for 2018 and what they will likely mean for people in the market.

1. Appreciation will continue (but at a slower pace).

While the Boulder area continues to top the country in total appreciation since 1991 (a whopping 371 percent), we have fallen out of the top 10 — to number 19 — nationally in terms of one-year appreciation (10.84 percent according to FHFA). Nevertheless, many structural factors point to increased upward pressure on home values (including low unemployment, strong net migration, and lack of lots to build upon).

For single family homes, Boulder County experienced 5 percent appreciation through the first three quarters of 2017. While this is solid, it pales when compared to the over 15 percent appreciation during the same period of 2016.

In 2018, I predict we will see about 5 percent overall appreciation in Boulder County, with individual cities varying substantially.  I predict that the highest appreciation rates will be in Longmont and Erie, and the slowest appreciation will be in the City of Boulder.

For attached homes (townhouses and condos), Boulder County experienced a meager 1.7 percent improvement through the third quarter of 2017. This number is somewhat misleading, as most areas were up by a higher percentage while the City of Boulder was actually down 3.7 percent.

For 2018, I predict that attached homes will appreciate by about 5 percent, with appreciation being higher in every locale except the City of Boulder. In Boulder, it is possible that we will see a continued decline in prices, especially if investment property owners who have not brought their units up to Smartregs compliance decide to sell rather than spend the money to them into compliance.

What this means: For buyers, now is a great time to buy, especially if you are in the market for a condo in the City of Boulder.  Waiting will cost you, but not as much as in previous years.  For homeowners, if you are considering selling, you have ridden a strong wave of appreciation over the last several years, and you will not likely see the same rate of appreciation by continuing to hold.

2. Inventory will increase in 2018.

Since 2011, the inventory of available homes on the market has generally gone down when compared to the preceding year. That trend finally broke in 2017, with available inventory of both single family and attached homes rising above 2016 numbers. Without getting too deeply into the weeds, a number of indicators that we use to track the market point to a continuation of this trend in 2018.  Some of the more telling indicators are (1) a falling sales price to list price ratio, (2) an increase in months of inventory, and (3) more expired listings (homes that did not sell on the market).

In the City of Boulder, on the single family side, I predict that inventory will see the biggest increase in the $1 million+ market as a gap has started to open between sellers’ opinions of their homes’ values and what buyers are willing to pay for them. On the attached side, we will likely see an increase as well, partly due to an influx of non-Smartreg-compliant units as well as condos at the Peloton being converted from apartments.

What this means: For buyers, you will finally have more homes to choose from in your search. For sellers, you will have to be much more careful when pricing your home to avoid being rejected by the market.

3. Interest rates will rise modestly.

For the past several years, numerous experts have predicted mortgage interest rate increases. And for as many years, the rate increases have been non-existent or far more modest than predicted, even after the Fed increased its Fed Funds Rate. Speaking of which, the Fed is expected to raise rates again this month as the economy shows continued signs of recovery. However, the number and size of interest rate increases in 2018 is far from certain because of a change in leadership of the Fed.

Lawrence Yun, the chief economist for the National Association of Realtors, predicts that rates will increase to 4.5 percent by the end of 2018, which is about 0.5 percent higher than current rates. This figure could be affected by tax reform, the country’s economic performance, and other political factors. Nevertheless, for planning purposes, an increase to 4.5 percent in 2018 is likely to be in the ballpark.

What this means: While appreciation rates and inventory are starting to move into buyers’ favor, there will be a cost to waiting to enter the market in terms of affordability.  That is, the longer you wait, the more you will likely pay for a home and the more interest you will likely pay for it.

Conclusion: Sellers have been the primary beneficiaries of the real estate market since the recovery of the Great Recession, but 2018 will finally see buyers in a stronger position.

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Posted on February 5, 2018 at 8:46 pm
Jay Kalinski | Category: BizWest, RE/MAX of Boulder | Tagged , , , , , , , , , , , , , , , , , , , , ,