2020 was a chaotic rollercoaster for the Boulder Valley real estate market. Luckily, home values weathered the storm better than anyone could have hoped, and we are now primed for potentially the most real estate sales volume we have ever seen.
Buyer Demand. Our company has tracked buyer demand on a daily basis for many years, and it is higher than it has ever been for this time of year. This demand is especially strong for single-family homes. It appears that the trend of buyers desiring larger living spaces and more land will continue into 2021, as the pandemic lingers on and the work from home movement has finally crossed the chasm into mainstream acceptance. This latter work from home development is particularly salient for Boulder Valley, where our 300-plus days of sunshine per year and world-class quality of life are attracting those who can now work from anywhere. At each of our weekly sales meetings this year (attended by more than 100 of the best agents anywhere), we hear story after story of multiple offers on listings, prices getting bid up by tens of thousands of dollars, and buyers who are getting frustrated with all of the stiff competition. It seems that the pool of eager buyers is very deep this year.
Interest Rates. Adding fuel to the buyer demand fire is the fact that interest rates are forecast to stay at once-in-a-lifetime low rates for the foreseeable future. Our most veteran agents tell stories of helping people buy homes in the 1980s with mortgage rates above 18% — that is like financing a home purchase with a credit card. Now, buyers can expect to obtain loan rates at-or-below 3%, which is as close to free money (when average inflation is considered) as we are likely to ever see in America.
So, what could possibly derail this buyer juggernaut? Well, here are a couple of the most likely possibilities.
Lack of Inventory. In 2020, despite high buyer demand, many would-be sellers opted to stay put in their current homes. It is part of the human condition to become more conservative in the face of uncertainty, and COVID-19 presented humanity with one of the biggest uncertainties of the past 100 years. Thus, it is not surprising that we finished 2020 with only 313 single-family homes for sale in all of Boulder County, down 37% compared to the end of 2019 (498 homes). For added context, consider that at the end of 2002, we had more than 1,800 homes on the market.
It remains an open question as to whether sellers will get the message that 2021 will be an excellent time to sell a home — and an even bigger question regarding whether sellers will act on this message. If the answer to both questions is “yes,” then we really could have the highest dollar volume of home sales ever in Boulder Valley this year. This is a big “if,” however, because of…
COVID-19. At the time of this writing, more than 25 million Americans have contracted COVID-19 and more than 400,000 of them have died. This has — and will — greatly affect home sales in ways predictable and unforeseeable. Thankfully, there are multiple effective vaccines currently being distributed and administered. There remain, however, several unknowns on this front: Will too many people refuse to get vaccinated and thus thwart herd immunity? How quickly will enough of the population be vaccinated to provide such herd immunity and restore more certainty for people’s decisions? Will the current vaccines be efficacious against new (and perhaps more virulent) strains of the virus that are emerging?
A lot of things vis-à-vis COVID-19 will have to break in our favor this year to give enough sellers the confidence to move ahead with their home sale decisions, which is the only way we will even come close to meeting the apparently insatiable buyer demand. If we are lucky, this could be a year for the record books (in a good way).
Regardless of how things go with our fight against COVID-19, 2021 promises to be an excellent time to sell a home if you’re considering doing so… and a very challenging time to be a buyer.
May we all be lucky in 2021.
Jay Kalinski is the owner of ReMax of Boulder and ReMax Elevate.
Winter is coming and, much like the Game of Thrones series, no one can predict exactly what will happen with the Boulder Valley real estate market, but you can be sure that there are going to be some crazy plot twists — and we can hope that the forces of good will win out in the end. So, rather than make bold predictions, this article will look back at the first three quarters of 2020 and identify a couple of trends that are likely to affect Boulder Valley real estate into 2021.
Looking Back at 2020
2020 has been a rollercoaster of a year in real estate. The second quarter of the year was by far the most volatile, with a large dip due to the initial COVID-19 surge and accompanying lockdown, and then a burgeoning resurgence as the situation improved. By the close of the third quarter, you could look at some of our statistics and think that we have had a pretty typical, even robust, year in real estate.
Trend 1: Growing buyer preference for detached homes
While the foregoing statistics indicate an overall strong market, other statistics point toward the first trend we are observing, the change in buyer sentiment in favor of single-family homes over attached dwellings.
As you can see, the inventory of single-family homes available for sale has dropped significantly (to the lowest amount on record) while the percentage of these homes already under contract has gone up tremendously, indicating a very strong demand for these homes. On the other hand, the number of available attached units has actually increased over last year and the percent under contract has only risen modestly. The most compelling explanation for this phenomenon is that, due largely to COVID-19, buyers (and their families) are anticipating working and schooling from home for many months to come and are, therefore, seeking larger homes with at least some separation from their neighbors. I would anticipate this trend to continue well into 2021.
Trend 2: COVID-19 impacts
It appears that COVID-19 will continue to significantly impact people’s lives — and the economy — for months (possibly years) to come. We discussed its ability to affect buyer preferences above, but COVID-19 may likely have a more direct effect on the real estate market in several ways. First, if COVID-19 cases continue trending upward and cause local or state officials to issue another full lockdown (i.e., a stay at home order), it could freeze the market again and have devastating consequences that could take even longer to bounce back from than last time. Second, as COVID-19 continues to be a drag on the economy, the more would-be buyers will lose their jobs and with them the ability to purchase homes. Thus, the longer COVID-19 persists, the more it is likely to erode buyer demand, even with mortgage rates at historic lows.
What can we do?
Looking at the numbers and likely trends, it appears that there are a couple of things we can do to improve the situation going forward. First, it is imperative to drive the COVID-19 numbers back down, which means practicing social distancing, wearing masks, etc. Second, if you own a single-family home and are considering selling, this winter will be an unusually favorable time to sell, given the strong demand and paucity of inventory. If, on the other hand, you own an attached home, you might consider holding off on selling until conditions are more favorable (if you are able to do so). Finally, if you are a buyer, you should carefully evaluate your financial situation before deciding whether to move forward. If you decide to do so, expect stiff competition for single-family homes but also know that you could find some potential deals if you are looking to buy a condo or townhome.
Keep in mind that owning a home Boulder Valley has been one of the best investments you could make over the past 30 years and that trend is likely to continue after COVID-19 is just a terrible memory. Take care of yourselves and each other and we will make it through this better than before.
Originally published by Jay Kalinski, 2020 chair of the Boulder Area Realtor Association and owner of ReMax of Boulder and ReMax Elevate.
By “fall,” I mean autumn, not the fall of civilization, which one could be forgiven for misunderstanding. The past six months have been a crazy rollercoaster ride, and many of the statistics we track indeed look like a sadistic rollercoaster. One statistician remarked to me that “I have datapoints on my charts where no datapoints have ever been before.”
So, where are we now and what is the fall likely to look like? Let us look at a few key indicators that help tell the story.
Appreciation. Many people predicted that as uncertainty grew in the pandemic, people would become more conservative in their decisions and less willing to take the risk of purchasing a new home, and average home prices would fall accordingly. This, however, has not been the case, and single-home values were actually 7% higher at the end of this August than they were in August 2019. The average price of a single-family home in Boulder County is now over $850,000. What has caused home values to generally increase during the pandemic? Much of this phenomenon can be explained by looking at inventory, buyer psychology, and interest rates.
Inventory. Inventory, or more specifically the lack thereof, is the biggest story this fall. At the end of August, the number of active listings in Boulder County was down more than 46% from the same time in 2019. In fact, we are currently experiencing the fewest number of homes per sale that we have ever seen at this time of year. Remember above where conventional wisdom (wrongly) held that people would become more conservative during a pandemic? Well, it turns out that while it may have been wrong with respect to buyers, it appears to have been a spot-on prediction for sellers. It seems that those who already own a home are holding onto it as a form of security and are less willing to part with it in these increasingly uncertain times. And, as basic micro economic theory dictates, when the supply of a good is restricted, it can increase the price of that good, even when buyer demand stays the same. Only in this case, buyer demand has not stayed the same, it has increased.
Buyer Psychology. It would seem that shelter truly is one of life’s basic necessities, and it further appears that many buyers are seeking to own a home in order to feel more certain in their situations. This can be seen in the 11% decrease in the average days a home spends on the market before selling as compared to last year. And not only are buyers looking for just any home, the pandemic has shifted the kind of home buyers are looking for. Because many people are anticipating spending a greater share of their time at home, they are now looking for larger homes (a home office, more room for family members to spread out, etc.), as well as more land. For example, the median price for a single-family home (which comes with some land) in the city of Boulder increased about 2% from last August through this August, but the median price for attached dwellings (which mostly do not include a yard) fell 9% over the same period. Not only are buyers looking for larger homes with more land, thanks to historically low interest rates, they can also afford a lot more.
Interest Rates. I have discussed the 1% = 10% Rule for mortgage rates in the past. Essentially, this rules states that, for every 1% drop in mortgage rates, a buyer can afford 10% more house. And interest rates have plummeted nearly 2%, back to historic lows — to 3% or less for a 30-year fixed conventional mortgage. We are seeing buyers taking advantage of this extra buying power to buy larger homes with more land. In fact, the median price of homes on the suburban plains and in the mountains, which typically feature larger homes on larger lots, are up 16.3% (almost $100,000) and 18.4%, respectively, compared to this time last year.
Looking forward. What all this means as we head deeper into fall is that it will likely be an unusually good time for homeowners to sell, as less competition and strong demand boost home prices. It is also an unusually good time for home buyers because mortgage rates are projected to stay very low — if they can find an available home.
Of course, this party could be interrupted by more significant spikes in COVID-19 and/or the political fallout of a presidential election whose results are not immediately known. So, buyers and sellers, enjoy October and make hay while the sun shines.
Originally posted by Jay Kalinski is the 2020 chair of the Boulder Area Realtor Association and owner of ReMax of Boulder and ReMax Elevate.
Home ownership has been part of the American Dream since the founding of our republic. It confers economic benefits, a sense of safety and security, and can be a source of pride. Sadly, for as long as this part of the American Dream has existed, it has not been equally available to everyone. As you will see, as much progress as has been made in 200+ years, our work is far from done to ensure that the dream — and reality — of owning a home is truly and equally open to all Americans.
Property protection officially began in the United States with the passage of the Fifth Amendment in 1789, but virtually anyone who was not a white man did not receive this right. After the Civil War, the 14th Amendment declared all people born in the U.S. were citizens and the Civil Rights Act of 1866 stated that all citizens had the same rights to real property as white men. This should have been the end of the story, but a series of court decisions, immigration laws and racially discriminatory zoning laws ensured that property rights continued to be denied to minorities and women.
Woefully and to its shame, in the late 1800s and into the 1900s, the National Association of Real Estate Boards (the precursor to the National Association of Realtors) encouraged racial discrimination and segregation. In fact, its Code of Ethics even mandated that its members work to racially segregate communities.
In 1917, the Supreme Court declared racial zoning ordinances to be unconstitutional, so private restrictive covenants were then used to prohibit the sale of homes to minorities. The Federal Housing Administration, created in 1934, used “redlining” in this period to identify African American areas as high risk by shading them in red and steering whites away from such areas, and real estate agents used discriminatory practices like steering and blockbusting (see the resource links below for more information).
In 1948, the Supreme Court struck down racially restrictive private covenants, though they lingered in practice, even if unenforceable. In a small bright spot, Colorado was the first state in the nation to pass a fair housing law in 1959, helping pave the way for nationwide fair housing legislation.
As many know, the Civil Rights Act was passed in 1964, but less well known is that legislators could not agree on fair housing legislation and NAR actively opposed passage of the Fair Housing Act. It was not until 1968, in the wake of the Kerner Commission Report (studying the causes of race riots) and the assassination of Martin Luther King Jr., that the Fair Housing Act was passed to prohibit discrimination based on race, color, religion or national origin.
By 1975, NAR had finally turned the corner, adopting an agreement with the Department of Housing and Urban Development to promote fair housing, educate its members about their obligations under the Fair Housing Act, and recommend fair housing procedures for its members to follow.
Today, the Realtor Code of Ethics requires Realtors to provide equal services regardless of race, color, religion, sex, handicap, familial status and national origin in accordance with the Fair Housing Act, as amended. The code even goes beyond the act by covering sexual orientation and gender identity.
Despite the progress that has been slowly and painfully won, much work remains to be done to ensure truly equal opportunity in home ownership and property rights. In terms of numbers, the homeownership rate for white households in 2017 was 72.3%, but only 46.2% for Hispanic households and 41.6% for African American households (this is about the same rate of home ownership for African Americans as when the Fair Housing Act was passed in 1968).
The truth is, there are many things that need to change to realize this dream. Locally, it is time to revisit zoning and occupancy laws (see, e.g., www.bedroomsareforpeople.com), and more broadly, groups like the Fair Housing Alliance have put together concrete steps toward a solution (https://nationalfairhousing.org/wp-content/uploads/2019/12/Fair-Housing-Solutions-Overcoming-Real-Estate-Sales-Discrimination-2.pdf).
It is incumbent on all of us — especially elected officials, real estate professionals and the mortgage industry — to continue to do better to make fair housing not just the law of the land, but also the reality.
Originally posted by Jay Kalinski is the 2020 chair of the Boulder Area Realtor Association and owner of Re/Max of Boulder and Re/Max Elevate.
It is evident that the world was woefully unprepared for a pandemic like COVID-19, and local real estate was no exception. COVID-19 wrought fright, confusion, and uncertainty on buyers, sellers, real estate agents, and legislators, as everyone tried to discern how best to navigate the crisis unfolding before them. Many contracts to buy and sell real estate that were then in-process fell through or were renegotiated, and the legal fallout from that may stretch on for years.
And yet, life marches forward, and people continue to need to move and buy/sell real estate, so all of the players have learned to adapt in order to help people move on with life. Some of these adaptations will likely become enduring features of the new normal, while others may fade with time. The following is a brief look at some of the most prominent trends to emerge from this pandemic and whether they are likely to last.
- Marketing.Before COVID-19, a small minority of properties were marketed using 3D technology, relying instead on photos and, perhaps, static floor plans. Now, however, virtually every buyer expects (and sellers demand) an immersive 3D tour of a listed property. Pre-pandemic, buyers would likely visit many homes in-person before deciding on which home to make an offer. Now, buyers are almost certain to “tour” a number of homes virtually and then select the one (or few) that they actually want to see in person. We are even seeing this trend emerge in commercial real estate, as being able to tour a property virtually can save companies time and money in assessing whether a potential commercial space will fit their needs.
This 3D marketing trend will almost certainly continue for the duration of the pandemic, but it is less clear if it will continue after or slowly fade back to “normal” as people begin to feel safer again.
- Remote transactions.Before this pandemic, a large portion of a real estate transaction could be accomplished electronically, with agency agreements, purchase contracts and property-related disclosures all commonly being signed electronically. However, when it came time to close the transaction, the parties still had to physically attend a closing and physically sign documents in front of a notary public. This was the case for two primary reasons. First, Colorado’s previous attempts to pass remote notarization legislation, which would have removed the requirement of physical presence and allowed parties to sign documents via the internet, never made it through the legislature. And second, many lending institutions continue to require physical “wet” signatures and in-person notaries to minimize the potential for fraud. To solve the first problem, Gov. Polis signed an executive order allowing remote notarization. However, as we soon learned, even with remote notarization now allowed, lending institutions (inexcusably, in my view) persisted in requiring in-person physical signatures. Thus, we experienced the phenomenon of “curbside closings,” wherein the parties would drive to the title company and sit in their cars while a notary in a mask and gloves would hand them the document, watch them sign, and then notarize their documents. Having witnessed such “curbside closings,” which are clunky and awkward, I can predict that buyers and sellers will demand that the government and lending institutions allow fully remote closings in the future. Once in place, I believe this trend will be here to stay because it is vastly more convenient for people.
- Shifting consumer preferences.With most employees (those fortunate enough to keep their jobs) being forced to work remotely, many people and companies have discovered that, not only do they like working from home, they can actually be more productive. As a consequence, an emerging trend we are seeing is that buyers are looking for homes with an office (or workspace) more than before. And they also seem to be favoring rural (i.e., private space) over dense and urban. This may also portend a coming shift in the commercial office market, as companies realize that they can get by with much less space than before. This trend is likely to continue as more people become accustomed to being productive from home; however, the strength and reach of this trend will be limited by the fact that some jobs can be done only in person and more space at home costs more money, so not everyone will be able to realize this desire.
These are just a few of the trends emerging from the COVID-19 pandemic, and it is likely that others will develop as things continue to unfold. It will behoove buyers, sellers, and landlords to track these trends carefully to best position themselves for the future.
Originally posted by Jay Kalinski is broker/owner of Re/Max of Boulder.
At the start of the year, I read an article about the 10 biggest threats to the global economy in 2020, written by a prestigious international organization. “Global pandemic” did not make the list, which goes to show how generally lousy we humans are at accurately predicting the future. As such, any predictions that I (or anyone else) could give you about how this pandemic will unfold, in terms of its impact on the local real estate market, would likely fare no better than random chance. Similarly, with the situation evolving so rapidly, any advice or best practices I could offer today may become obsolete in short order.
So, rather than peddle advice and predictions, let’s pause and take stock.
Back in 2008, the financial crisis was sparked in the real estate sector and led to a crisis that nearly collapsed the banking system. We see from history that recessions that begin in the housing sector tend to be worse and last longer than recessions ignited by other factors. Today, the recession we are likely heading into has a very different background — our economy and housing market were far stronger and more resilient, thanks in part to the measures put in place after that recession (tighter lending restrictions, more stringent liquidity requirements for banks, etc.). In fact, we were enjoying the longest economic expansion since WWII.
According to National Association of Realtors chief economist Dr. Lawrence Yun, “Conditions today are very different than the last boom/bust cycle. In 2004, we had a huge oversupply of new homes. In 2019, we still had a huge undersupply of new homes. In fact, we haven’t been building enough new homes to keep up with demand in over a decade. During the last downturn, there was the subprime factor and the variable interest rate. Now there are fewer variable rate mortgages and virtually no sub-prime mortgages.”
Colorado is well-positioned as a top economy nationally. Real GDP growth in Colorado ranked seventh in the nation year-over-year, and the state’s five-year average ranks fifth, according to economist Rich Wobbekind with CU-Boulder’s Leeds School of Business. Wobbekind says that Boulder County’s economy has been outgrowing the state economy, and is uniquely able to weather a recession. Boulder County’s economic vitality is fueled by a highly educated workforce and diverse ecosystem of industries including government research facilities, aerospace, biotechnology, cleantech, and information technology — industries that endure in the long term.
Boulder ranks number one in the nation for home value stability and growth for the fifth consecutive year, according to SmartAsset. As discussed in our recently published real estate report, based on our extensive data and market analysis, we have had a healthy housing market through 2019. Even through the grim days of the Great Recession, home prices in Boulder County declined only by 5 percent and recovered quickly post-recession. If you held onto your home for at least six years, there is no period when you would have lost money on your investment here.
While past performance is no guarantee of future results, the real estate market in our area has a history of weathering recent recessions better than other places and recovering more quickly after the storm has passed. Given everything that is going on, I still believe that owning property in Boulder Valley is and will continue to be an excellent investment.
Be well and do what you can to flatten the curve. Stay home.
The year 2019 was another very good year for residential real estate in the Boulder Valley, but unlike the previous five-plus years, it was marked by slowing appreciation, slightly rising inventory (finally), and longer average time on the market.
In Boulder County, median and average sales prices of single-family homes increased by a very modest 1 percent, while attached dwelling (condos and townhomes) appreciation was essentially flat. In the city of Boulder, the average single-family home sales price increased a modest 2.6 percent to an immodest $1,246,250, while attached dwellings increased 2.4 percent to $538,360.
Single-family listing inventory in Boulder County reached a peak of 1,058 homes and attached dwellings topped out at 370 units on the market, both reaching their peak in June, and both above the peak inventory of the last several years. To put this in perspective, however, the inventory of single-family homes in 2006 (just before the Great Recession) reached a peak of 2,763, more than two-and-one-half times the peak of 2019. That is, we still have far less inventory available than we used to.
The average number of days homes stayed on the market before closing reached 61 days, an increase over last year by 5.2 percent for single-family homes and 15.1 percent for attached units. The average months of inventory (the time it would take for all existing homes to sell if no additional homes came on the market) rose to 1.8 months, an increase of 6 percent for single-family homes and 28.6 percent for attached units. By traditional standards, this would still qualify as a seller’s market (when months’ of inventory is in the 5-6 percent range, it is considered a balanced market, and we are still a long way from that). Charts on top show a snapshot of the Boulder County 10 vital statistics we track to gauge the market.
So, what is going on? Why do the months’ of inventory indicate that we’re in a strong seller’s market when many of the other metrics are pointing toward a more balanced market? And what can this tell us about 2020?
Explaining the months of inventory question
There appear to be a couple of key factors keeping our months of inventory much lower than historically. First, the nation as a whole — and Boulder County especially — have been building far fewer new homes that we were building pre-Great Recession. This graph from census.gov illustrates the situation well:
In Boulder County, we are getting close to full buildout under our current zoning and land use regulations, meaning that unless they are amended, we will run out of available lots on which to build new housing. (In practicality, this means that neighboring counties will become our bedroom communities, as Boulder still has the lion’s share of jobs in our area and people will be forced to commute farther and farther.)
Thus, with people continuing to move into the area at a strong pace while building is lagging behind, demand will structurally continue to outpace supply.
Second, people are staying in their homes longer than they used to. In 2010, homeowners nationwide stayed in their homes an average of eight years before selling. By 2019, that figure had increased to 13 years. With people selling less frequently, inventory goes down and, with strong demand like we have in Boulder, months of inventory stays low, too.
In Boulder, this issue is exacerbated by the fact that a lot of our homeowners are older (the National Association of Realtors reports that homeowners 73 years and older stay in their homes for an average of 17 years) and many of these Boulderites want to continue to age in place. Moreover, the Boulder Valley does not have a lot of options for the elderly looking to downsize and stay in their current community.
Accordingly, housing turnover is lower than it used to be, and this trend is likely to be even stronger in Boulder, further suppressing inventory.
For 2020, it appears that our available housing inventory will continue to be reined in by the structural impediments of inability to build sufficient new housing and current homeowners staying in place. That will put upward pressure on prices. Continued migration into our area fueled by our (currently) robust economy will keep demand high and put additional upward pressure on prices. Additionally, our return to very low interest rates will allow more potential buyers to qualify for our expensive property than would have otherwise been the case.
On the other side of the equation, home prices have risen so high (especially in the city of Boulder) that, even with low interest rates, the pool of buyers able to buy in our area will be relatively small. Moreover, the political uncertainty of election years can cause people to take fewer risks (such as buying a home). The fact that this promises to be an especially colorful election cycle will likely be a drag on demand as we get closer to November.
Based on the foregoing, if I had to make a prediction, I would suspect that the first part of the year will have very strong activity, with prices rising and multiple offer situations being not uncommon. Then, I suspect that the market may cool as we get closer to the election, which may be an especially good time to buy for those with intestinal fortitude.
Originally posted by Jay Kalinski
As we enter a new decade, the massive wave of technological advancements fueled by entrepreneurial tech companies has reshaped consumers’ expectations. Companies such as Uber and Amazon have both dramatically shortened the time that people expect to wait for gratification and raised consumers’ expectations with regard to the ease and smoothness of the experience. That is, consumers now expect to press a button and have whatever it is that they want delivered to them in a matter of a couple days (Amazon shipments), hours, or even minutes (Uber rides); moreover, they want to be able to track their shipment’s progress through a simple, pleasing interface on their phones.
While consumers now expect smooth, pleasant and near instant gratification in most aspects of their lives, the real estate home sale process still typically takes 30 to 45 days and — due to its complexity, legal ramifications, and the fact that it is an ongoing negotiation between multiple parties — it is usually neither frictionless nor “fun.” This growing friction between consumers’ expectations and the longer duration and complexity of completing a real estate transaction has made the industry ripe for innovation. What follows are the likely developments that will make real estate transactions faster and easier over the coming decade.
1. The home search-to-closing customer journey. The days of agents-as-gatekeepers of real estate listings are gone. These days, most buyers start their search online and look at up to hundreds of homes to educate themselves. When they get serious, though, about 90 percent of buyers (and sellers) choose to use an agent to help them with the home buying/selling process.
Why is that? It’s because Realtors realized that they needed to change their value proposition to buyers and sellers in order to stay relevant and, well, valuable. One of the challenges for buyers and sellers is that, with the exponential growth of information available on the internet, the amount of “noise” has grown exponentially as well, but the valuable information (the “signal”) has become harder to find. Today’s Realtors have things that are in short supply online: hyperlocal and market knowledge, a network of trusted vendors and professionals, expert negotiation skills, a refined process to make the home buying/selling experience less painful, etc. These skilled Realtors who have adapted to consumers’ shifting expectations provide their clients with better technology, a smoother process, and expert advice. Those agents who fail to adapt will eventually exit the business.
Other innovators, such as so-called iBuyers, will make you an offer, often within a day, to buy your home for cash quickly. This convenience, however, comes at a cost, as many iBuyers will likely cost you two-to-five times more out-of-your-pocket than using a Realtor would.
2. The loan experience. Typically, the longest (and perhaps most annoying) part of a real estate transaction is the loan process. Many lenders can take 30 days or more to complete their due diligence, including their assessment of your loan-worthiness and an appraisal of the home, before approving a home purchase loan. Anyone who has been through this process knows how frustrating and slow it can be.
Fortunately, at least for many people, this process may get a lot shorter and easier. Lenders are using artificial intelligence (AI) to conduct automated appraisals on properties and help with assessing buyer’s applications. For “in the box” situations, with well-qualified “W2 employees” buying homes that the AI algorithms can value with a high degree of confidence, the underwriting process can be dramatically shortened without the need for a physical appraisal. This is already a reality — last fall, we represented buyer clients whose lender did not require an appraisal on the home they were buying and gave them very fast loan approval.
3. The title and closing process. Almost everything can seemingly be accomplished these days online from the comfort of your home. However, at least in Colorado, you still need to physically go to the title company and hand-sign a stack of documents in front of its notary public (how barbaric, right?). Well, this isn’t actually the title company’s fault, as many lenders — and state law — still require physical notarization of certain documents.
The good news is that this may change in 2020, if the Colorado legislature passes a bill similar to Senate Bill 18-109, which would allow optional remote notarization of documents. If such a bill were to become law, then notarizations could be done using audio-video recording of the document signing (kind of like signing over Skype or FaceTime, but with more layers of security). Thus, you would be able to close on the purchase/sale of your home from anywhere in the world, so long as you have a good internet connection.
Conclusion. The players in the real estate industry have (finally) recognized that consumers’ expectations and demands have shifted and are innovating quickly to make the home buying and selling process faster, easier, and more enjoyable (or, at least, less painful). Within the next few years, many people will be able to buy/sell a home in half the time or less than it takes on average today, and with a lot less disruption to their lives.
Originally posted by Jay Kalinski is broker/owner of Re/Max of Boulder.
If you are like a lot of people, your eyes may start to glaze over at the mere mention of “Opportunity Zones,” but stick with me as there is a fascinating story of apparent desperation, questionable motives, and possibly deceitful tactics in order to stem any growth in Boulder.
What are Opportunity Zones anyway?
Opportunity Zones were created by the 2017 federal tax reform package, the Tax Cuts and Jobs Act, as a way to incentivize investors to improve and revitalize communities across the country that have languished while the rest of the US enjoyed a terrific boom. Specifically, an Opportunity Zone is a census tract that Congress designated as eligible (read struggling) to receive private capital investments through “Opportunity Funds,” which allow investors to receive a deferral, reduction, or possibly even elimination of federal capital gains taxes, depending on how long they keep their money invested in a qualifying property and how much they improve it.
This is where the story gets interesting. Gov. Hickenlooper, seemingly with support from Boulder at the time, designated a Boulder census tract that runs from 28th to 55th Streets and from Iris to Arapahoe Avenue as an Opportunity Zone. While virtually every other municipality welcomed these designations as an opportunity to revitalize their struggling communities, the Boulder City Council placed a moratorium on its Opportunity Zone, blocking investment. And did I mention that this is a limited time offer?
If you are new to the area or have not been following local politics closely (and who could blame you?), it might seem surprising that Boulder would block such investments. However, as discussed in a previous column, a majority of the Boulder City Council appears to be beholden to Boulder’s CAVE people (Citizens Against Virtually Everything) who do not want growth of any kind. It seems they want things to be like it was “back then,” an apparently bygone era with fewer people, fewer businesses, etc. When viewed through this lens, their actions, though by definition counter productive, make sense.
And now for the master stroke of the CAVE people: make it look to the public like they are lifting the moratorium, when they are actually downzoning large parts of the city. Under the guise of lifting the Opportunity Zone moratorium and updating “use table standards,” the city will effectively downzone thousands of properties (not just in the Opportunity Zone), limiting office uses to 25 percent of floor area in the BR, BMS, and TB business zones, and limiting small office uses in residential zones. This will make any existing building in an affected business zone with more than 25 percent office space a “non-conforming use,” meaning that changes or expansions to this use would require city approval through a non-conforming use review. And what do you think the chances of getting approved would be?
This proposal by the city council runs counter to its stated positions on the environment, not to mention its own Boulder Valley Comprehensive Plan policies supporting creation of 15-minute walkable neighborhoods and other policies favoring mixed-use planning, smart growth, and pedestrian uses.
If you are so inclined, you can share your opinion with the city council at email@example.com, or if you are really motivated, you can attend the council’s public hearing at 6 p.m. on Sept. 3 at 1777 Broadway.
Originally posted by Jay Kalinski is broker/owner of Re/Max of Boulder.
At this time last year, our market was experiencing all-time highs for average home prices and all-time lows for housing inventory. Many of the market indicators we track were pointing to continued strong demand and price appreciation, especially with the continued influx of people into Boulder and Broomfield counties. And yet, with home price appreciation outstripping wage gains for the better part of a decade, in the back of everyone’s minds was the question: “How long can this go on?” We may now be starting to get our answer.
The big picture
In 2018 last summer, the Federal Housing Finance Agency measured the average appreciation nationally at 6.89 percent which slowed this year to 5.05 percent. Then, FHFA ranked Colorado as having the fourth-highest one-year appreciation in the country, at 10.63 percent. Boulder County ranked 68th among metropolitan areas in the country with 8.25 percent appreciation. This year, Colorado has dropped to 28th, with 4.78 percent appreciation, while Boulder fell to number 91 with 6.14 percent appreciation So, Colorado and Boulder County are cooling compared to the rest of the country, but, as a bright spot, Boulder County’s appreciation since 1991 still leads the entire nation at 417.28 percent.
There are 10 statistics we track to gauge the state of the residential real estate market, and studying the movement of these indicators can give you a good sense of the direction of the market. For most of this decade, those indicators have generally pointed toward a rising market, marked by tight inventory, brisk appreciation, quick sales, and low months of inventory (the time it would take to sell all existing homes if no new homes entered the market). At the close of the second quarter of 2019, we are seeing a strong shift for both the single-family homes and attached dwellings (see charts).
As you can see, nearly every indicator we track is pointing to a softening, shifting market, aside from interest rates. And while Months of Inventory still indicates a seller’s market, the trajectory is moving toward a balanced market (between five and seven months of inventory).
And now for the good news
If you are an aspiring buyer in Boulder County, your timing is excellent: inventory is up, so you have more homes to choose from; prices are flat or falling, so you may be able to get a (relative) bargain; and interest rates have dropped once again, so you can get more house for the money.
If you are a homeowner or thinking of selling, the news is not all bad: you’ve rode an impressive wave of appreciation for the better part of a decade; and even when Boulder’s market stalls, it typically does not lose much value (even in the great recession, home prices only dropped about 5 percent).
Remember, don’t panic. Boulder is still the best place in the country to invest in real estate.
Originally posted by Jay Kalinski is broker/owner of Re/Max of Boulder.