BizWest May 6, 2021

What if this were another housing bubble?

The average single-family home in the city of Boulder is now selling for more than $1,500,000, which is 24% higher than a year ago.  Likewise, the average single-family home in Boulder County almost crossed the $1 million mark at the end of March ($989,990).

The sales-price-to-list-price ratio for single-family homes in Boulder County is above 100%.  Indeed, in each of our weekly sales meetings, we hear agents describe a veritable frenzy of buyers offering often between 20% and 30% above asking price for “average” homes in our market and making breathtaking concessions to sellers (e.g., completely waiving their right to conduct an inspection, agreeing to cover any appraisal gap, etc.).  I have heard of buyers offering $350,000 over a home’s asking price, waiving every conceivable contract right, and still not getting the house.

And so, it is fair to ask whether our current market is like Shakespeare’s Hamlet: “Though this be madness, yet there is method in’t,” or is it simply madness and this is another real estate bubble?

To answer that question, let us consider what the circumstances would look like if this truly were another bubble.

1. Irrational Exuberance?  

If we were in a bubble, we would expect to see both a high level of optimism and excitement among buyers for the housing market (the “exuberance” part) and a lack of fundamental value in that market (the “irrational” piece).  It appears that we have more than satisfied the exuberance side of the equation.  However, it seems that this exuberance is not irrational for several key reasons.

First, the Boulder Valley is perhaps the most desirable place in the country to live, frequently topping “best place to live” rankings from organizations such as U.S. News & World Report and National Geographic.  We offer majestic natural beauty (e.g., the Flatirons) with more than 100,000 acres of open space and 155 miles of maintained trails for outdoor enthusiasts.  Moreover, Boulder has an outsized economic engine (nearly 100,000 jobs for 107,000 residents), world-class cuisine (I can’t wait to dine at Frasca after my second vaccine shot),  and excellent schools at all levels.  Taken together, these and other factors give the Boulder Valley something uniquely attractive that is likely to endure and hard to replicate.

Second, the COVID-19 pandemic has added fuel to the above desirability fire. It has sped a transition to remote work for many people, allowing them (especially knowledge workers) to keep their jobs and move to higher quality of life locations.  It has also caused many city dwellers to seek less concentrated areas with more land, and Boulder County certainly offers that.  In fact, the average price of a home in the suburban plains has jumped almost 50% from last year.

And third — and most importantly — home values in our area will continue to be supported by the fact that, under current zoning regulations, we are nearly out of land upon which to build.  As a matter of basic economics, when the supply of a desired good becomes scarce, its value increases.  According to Freddie Mac, in terms of housing, Colorado is the second most undersupplied state in the country, and Boulder County is the epicenter of that lack of supply.  The latest ranking by SmartAsset lists the Boulder market as the third best in the country for home price growth and stability.

2. Unqualified Buyers & Rampant Delinquencies?

The Great Recession was caused in part by unscrupulous banks and lenders making “subprime mortgage” loans to customers who were grossly underqualified.  It was the era of “stated income” and “no doc” mortgages.  Buyers with very poor credit were able to get adjustable mortgages that they had no hopes of repaying if rates increased, which, of course, they did.  Delinquency rates went through the roof and the fallout cascaded throughout the economy.

When we look at the market now, virtually none of that is present.  As you can see in the chart below, mortgages are being given almost exclusively to those with excellent (760+) credit.

And, because mortgages are so much harder to obtain, mortgage delinquencies are correspondingly very low.  Colorado has the second lowest rate of “non-current” loans in the country at a mere 3.2%.

Thus, two of the biggest factors that caused the Great Recession are virtually nonexistent today.

So, does the madness have method to it?

In the final analysis, the factors that one would expect to see if we truly were in a housing bubble are simply not there.  Yes, we have exuberance, but it is a well-founded exuberance fanned by a global pandemic and shifting work arrangements.  This is not to say that a market cool-off at some point is out of the picture as we reach the limit of buyers’ patience and financial abilities.  However, in the medium-to-long term the foundations of our housing market are quite strong and the only plausible way to bring a measure of affordability to our area is to open more land to residential development (e.g., Area 3 by the Boulder Reservoir) — and it is not clear that Boulder will have the appetite for that.

The harsh reality for buyers is that yes, this market is infuriating, but if you want to own a home in the Boulder Valley, it’s better to suffer through now and complete a purchase as it does not appear that prices will be coming back down in the foreseeable future.

Jay Kalinski is owner of ReMax of Boulder and ReMax Elevate.

ArticlesBizWest October 1, 2020

What will Boulder Valley real estate look like in the fall?

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.

ArticlesRE/MAX of Boulder October 24, 2018

7 Fall Fix-Ups to Prep Your Home for Winter

Cooler temperatures and mountain snow are reminders that it’s time to prepare your home for winter. Here are steps to take to get ready for falling leaves and freezing temperatures, as recommended by House Beautiful.

1. Prepare your gutters

Clean and well-functioning gutters are a must for winter. Now is the time to clear gutters of leaves and debris and replace damaged sections.

2. Ensure against drafts

Windows are a major source of heat loss in the home. One simple solution is to eliminate drafts with weather stripping. To check for drafts, close the door or window on a strip of paper, and then slide the paper. If it slides easily, it’s time to replace your weather stripping.

3. Disconnect outdoor faucets

Take action sooner rather than later to avoid frozen and bursting pipes in your home. Drain and disconnect your hoses from outdoor faucets before the first freeze.

4. Protect outdoor furniture

Outdoor furniture lasts longer and looks better if it is protected from winter snow and freezing temperatures. Either store the furniture inside for the winter or cover it with a waterproof furniture cover.

5. Repair driveway and sidewalk cracks 

When water freezes in small cracks, the small cracks become big cracks. It’s easy to prevent by filling those small cracks with concrete crack sealer. Your drive and walkways will look much better over the years – and will be safer – if you take this preventive step.

6. Fertilize your lawn

As your grass prepares for winter, it needs to be fertilized to prevent stress and damage through cold temperatures. When days shorten, turf grass shifts food reserves from leaves to roots. Fertilizing grass in the fall feeds the roots and paves the way for a healthy green lawn when spring comes.

7. Check your snow blower

Go ahead and dig your snow blower out of the garage now. Check the oil, tires, and shear pins and crank it up now, before the snow flies. That way, you’ll be ready for that first snowy morning.

For more helpful tips, read the full article at


Originally posted here by Tom Kalinski Founder RE/MAX of Boulder on Friday, October 19th, 2018 at 8:45am.

ArticlesRE/MAX of Boulder June 30, 2018

Boulder Housing Sales Seem Unstoppable

Boulder County housing sales in May rolled strong once again, demonstrated by sharp growth in the single-family home market and solid performance for attached dwellings.

“Gains in single-family home sales topped 40 percent – a really strong increase that was backed by inventory growth,” says Ken Hotard, senior vice president of public affairs for the Boulder Area Realtor® Association.

In fact, all categories of single-family homes surged, according to May 2018 statistics. Sales of single-family homes grew 41.2 percent in May 2018 compared to April, with 487 homes sold vs. 345. Year-to-date single-family home sales increased 5.6 percent year-to-date through May 2018 compared to the prior year – 1,708 vs. 1,618. And inventory countywide increased 19.1 percent month-over-month with 918 units for sale in May vs. 770 the prior month.

Condominium and townhome sales grew a solid 14.3 percent in May compared to April, represented by 144 units sold vs. 126. Year to date, growth was 23 percent – 594 units vs. 481. Inventory increased 27 percent in May compared to April, putting 208 dwellings in the May marketplace compared to 163 in April.

Hotard says prices moderated slightly in May. Single-family average and median sales prices dropped compared to the previous month. “The median in April was over $1 million, now it’s down to $985,000; and townhome/condos were in the $500,000’s last month and are now in the $450,000’s,” he adds.

The steadily increasing housing market is a sign of strong fundamentals – demand is strong, inventory tight and jobs plentiful. Currently, Boulder is the third largest job center in the state. “But with housing prices too high for the average worker and no new building in sight, we can expect to see jobs that would have located in Boulder County opt instead to land somewhere along I-25,” explains Hotard.

Looking forward, he says June data seems to be tracking solidly along with May.

“We should see a shift in the market as we get to the end of July. I expect it to slow down a bit, but we can expect much of the same.”

He adds that the number of days a home is on the market is short. “Any buyer in this market has to walk into house-hunting ready to buy with a knowledgeable realtor and financing lined up.”


Originally posted here by Tom Kalinski Founder RE/MAX of Boulder on Wednesday, June 27th, 2018 at 11:03am.