The danger of Boulder’s CAVE people thinking

Let’s face it, what happens in Boulder affects the rest of Boulder Valley in terms of housing, transportation, economics and myriad other dimensions.  If you want to know where your neighborhood is headed, it’s informative to know what Boulder is doing, even if you live in say, Erie.  And, if you even casually follow Boulder politics these days, you might be perplexed and concerned by the (seemingly) increasingly bizarre actions coming from Boulder’s City Council.

For a council that purports to support the environment, public safety, and inclusivity, its recent actions don’t seem to match its rhetoric.  In my opinion, however, its actions make sense when you understand the true underlying motivations and desires — and to do that, you have to understand Boulder’s CAVE people.

Who are Boulder’s CAVE people and what do they want?

Simply put, I call these people “Citizens Against Virtually Everything” (CAVE), and they seem to have the ear of the majority of the current council.  It appears that the plurality of Boulder’s CAVE people arrived in Boulder in the 1960s and ‘70s as students, hippies, ski bums, etc.  They decided to stay, bought homes here, and have become relatively well off as Boulder’s home price appreciation outstripped virtually everywhere else in the country.  At the same time, they seem not to like the multiple dimensions of growth Boulder has enjoyed over the last several decades; indeed, their strongest desire is apparently to see Boulder return to as it was “back then,” with fewer people, fewer businesses, less crowding, etc.  Their apparent goals, then, are to slow, stop, or reverse growth of all kinds in Boulder.  Their tactics appear to be to (disingenuously?) cloak themselves in the rhetoric of environmentalism, populism, and liberalism in order to achieve these goals.

Recent examples of CAVE people tactics and their effects:

1. South Boulder Flood Mitigation Plan.  The 2013 flood brought the issue of flood mitigation to the front of everyone’s minds in Boulder Valley, but the study of how to best deal with this issue in South Boulder goes back well before then.  After nearly a decade of study, and more than $2 million in fees and environmental studies, and extensive public engagement, the City Council had a few feasible flood mitigation plans, one of which (500-Year Variant 2), had the support of the University of Colorado (the property owner), the city’s Water Resources Advisory Board, and general public.  One would think, then, that it would be an easy decision for the City Council to support.  One, however, would be wrong.

Recently, the Boulder City Council voted to proceed with a different flood mitigation plan, one that is opposed by CU, disregards expert testimony, the preferences of the city’s Water Resources Advisory Board, and general public sentiment. 

Why would the council disregard science, experts, reason, common sense and nearby residents?  Using the lens of CAVE people logic, it may be because they believe that taking a position in opposition to all of these things will greatly slow the process of CU developing that land, which fits the goals of “slow, stop, reverse.”

2. Sales Tax Revenue. Cities like Boulder depend on sales tax revenue as an important component of their budgets.  Earlier this year, Boulder reported a $4 million budget shortfall, attributable primarily to flattening sales tax in the city — at a time when nearby cities are enjoying double digit growth in their sales tax revenues.  Members of the City Council held a study session on the topic on July 10 in which some members declared that they apparently want fewer visitors to Boulder (both tourists and locals from neighboring cities).  They expressed these opinions even with the knowledge that locals already visit downtown Boulder an average of seven times per month, but tourists spend several times what locals do per visit.

Why, in a city that prides itself on being welcoming and at a time when sales tax revenues are falling, would members of council declare an apparent desire for fewer tourist (and accompanying tax dollars)?

3.  Increased housing density. Council members often voice their support for efforts to provide inclusive housing, reduce Boulder’s carbon footprint, and improve our city’s environmental sustainability; however, when it comes to increased density — the thing that would arguably go the farthest toward achieving those aspirations — the council’s words do not match their deeds.  Boulder’s draconian housing restrictions, including the 1 percent cap on annual residential growth (which we’ve never actually hit), blanket height restrictions, severe occupancy limits, among other measures, has forced our workforce to largely live outside the city.  This, in turn, causes the more than 60,000 daily commutes into and out of Boulder. By simply ameliorating some of these harsh policies, and allowing a modicum of sustainable and smart development, Boulder could include more of its workforce within city limits and could considerably lessen its environmental impact.

Why, then, has the city actively resisted efforts that would address these critical housing and environmental issues?  One possibility — CAVE people logic: if it is extremely difficult to add housing density, not only will it slow population growth, it will force workers into longer commutes and growing frustration.  Over time, businesses will relocate to areas more accessible to their workforce, and there will be fewer people, fewer jobs, less congestion… like it was “back then.”

What’s to come?

Rather than building a bridge to the future, Boulder’s CAVE people seem intent on digging a trench to the past.  In fact, their efforts seem to be achieving results — not only did Boulder run a budget deficit, but its population actually decreased between 2016 and 2017.  There is no stasis for cities — they are either growing or dying.  It seems the CAVE people are succeeding at pushing their agenda of “slow, stop, reverse,” through council.  And if they win, all of us who are truly for the environment, public safety, and inclusivity will lose.

 

Jay Kalinski is broker/owner of Re/Max of Boulder.

Originally posted by BizWest on Wednesday, June 1st, 2018. Original found here.

Posted on September 2, 2018 at 6:11 pm
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Boulder Valley housing holds strong amidst July pullback

Boulder-area housing continues to reach new heights, shrugging off a pullback in July sales.

“Prices in Boulder Valley are at an all-time high in both single-family and attached homes. Also inventory challenges are ongoing. Despite both of those realities, housing demand is absolutely holding,” says Ken Hotard, senior vice president of public affairs for the Boulder Area REALTOR® Association.

The City of Boulder July average sales price reached more than $1.3 million – a 15.4 percent increase for the year. Median price hit $984,648. While Boulder’s prices are the highest, every area in Boulder County saw an increase in average sales price ranging from 3.5 percent in Superior to 17.7 percent in Niwot year-to-date.

However, July sales slowed from the previous month, following the typical late summer pattern of a month-over-month slowdown. Sales declined for single-family and attached homes in July compared to June, 2018. Single-family home sales in the Boulder-area markets dropped 16 percent—418 vs. 498 units—while condominium and townhome sales fell 32.8 percent—127 units vs. 189.

Hotard says this year’s July slowdown is a little more pronounced than last year.

Even so, year-to-date single-family home sales were virtually unchanged with a 1.0 percent increase compared to the prior year with 2,666 homes sold compared to 2,639. Attached home sales over the same period improved 5.8 percent; 914 vs. 864 units sold.

Inventory held its own. There was essentially no change in single-family home inventory levels, which rose .8 percent across Boulder County in July compared to June, 2018 with 1,013 vs. 1,004 homes available for sale. Condo/townhome inventory grew 1.3 percent in July compared to the previous month with 241 units for sale vs. 238.

Hotard notes there is potentially downward pressure on the market with interest rates trending upward and prices rising faster than wages in the area.

“But with demand as it is, we’re just going to keep moving forward,” he says.

Hotard adds that real estate is a “dynamic industry and Realtors are responding to the challenges by continuing to advise their clients on successful strategies for selling and purchasing homes.”

 

Posted by Tom Kalinski Founder RE/MAX of Boulder on Monday, August 27th, 2018 at 2:45pm.

 

Posted on August 28, 2018 at 4:28 pm
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Boulder valley real estate: Parsing fact from ‘fake news’

Boulder County Single-Family Listings 2012-2018

In this day and age, one could be forgiven for wondering if facts no longer matter or actions no longer have consequences. Whether one watches the national news or a local city council study session where members declare that they want fewer visitors (both tourists and locals from neighboring cities), it is clear we are living in strange times.

Despite all of the uncertainty, there are still a few facts left out there (at least where real estate is concerned), and from them we can draw some reasonable inferences.

The Facts:

1. Home prices throughout Boulder Valley are reaching all-time highs.

At the top of the list, the average single family home in:

  • Boulder now costs over $1,250,000
  • The suburban plains now costs almost $850,000
  • Louisville and the suburban mountains now cost over $750,000
  • Boulder County now costs $767,000

Likewise, the average attached home in:

  • Boulder now costs over $540,000
  • Louisville now costs over $400,000
  • Longmont now costs over $350,000
  • There are no places left in Boulder County or Broomfield where the average condo is less than $340,000.

2. Local housing inventory is at historic lows

The inventory of homes throughout Boulder County is at or near historic lows..

At the end of June, there were 858 single family homes on the market in Boulder County.  To add some perspective, the inventory of homes on the market at the end of June 2006 was 2,763, more than three times as many homes as there are now.  There are many reasons for this, including the fact that people are choosing to stay in place longer, increasing prices/lack of affordable places to move to, strong anti-growth policies, etc. Looking at the economic, political and structural factors at play, it appears that this scarce inventory is going to be the new normal. 

3. Despite the high prices and low inventory, demand remains high

We gauge the strength of demand for homes using several indicators, including months’ of inventory, the average time a home spends on the market, and the number of expired listings (homes that failed to sell on the market). 

Economists say that a balanced housing market has about six months’ of inventory, with more inventory being a buyer’s market and less being a seller’s market.  At the end of June, Boulder County had about 3.3 months’ of inventory, compared to 3.8 at this time last year. In the first half of 2016, the average home spent 65 days on the market (from listing to closing).  So far this year, that average is 57 days, 12.3 percent faster. Last year at this time, there were 33 expired listings, compared to only 26 this year, which is a drop of 21 percent.

Taken together, these factors demonstrate that demand is getting stronger, even in the face of rising prices and declining choices. And when you consider net migration to our area and plentiful jobs, it also appears that demand will keep increasing and homes will continue to appreciate until . . . when?

What is it that will cool our market and when will it happen?

There are several issues that have the potential to slow our market.  First, interest rates continue to rise and as they do they will drain buyers’ purchasing power.  Second, as prices have risen faster than wages over the last decade, there may come a point where home prices have to stall in order to allow buyers’ savings to catch up.  Third, a macro-level event, such as a recession, international war, etc., could cool the entire economy and affect our market.

The set of variables is too complex to predict accurately what the precise cause(s) will be or when it will come, but it will come.  The good news (if you own real estate here) is that there is no better place to invest in real estate than here — even in a downturn.

 

Jay Kalinski is broker/owner of Re/Max of Boulder.

Originally posted by BizWest on Wednesday, June 1st, 2018. Original found here.

Posted on July 1, 2018 at 12:02 pm
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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.”

 

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

Posted on June 30, 2018 at 11:51 am
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Boulder Economic Summit 2018: Skilled Workers Essential to Boulder’s Future, Housing a Key Issue

Boulder County excels at attracting talented and skilled workers. But change is in the air, says futurist Josh Davies, CEO at The Center for Work Ethic Development and keynote speaker at the recent Boulder Economic Summit 2018: The Workforce of the Future.

Statistics presented by futurist Davies suggest that if the last decade rocked with rapid change on the job-front, hang on to your Smartphone – the future promises to be a rocket-ride.

And, the future starts now.

Today, Boulder County employers are going head-to-head with the rest of the world. Local businesses compete globally for highly skilled workers integral to business success, yet these workers are too few in number to fill the demand. If corrective steps aren’t taken, the worker shortage will continue and potentially worsen, predict speakers at the Summit.  Success is critical, since Boulder County’s thriving economy, vitality and quality of life depends on local businesses continuing to engage world-class, highly skilled people.

Hosted by the Boulder Economic Council (BEC) and the Boulder Chamber at CU-Boulder, the Boulder Economic Summit brought experts and hundreds of community leaders together to evaluate Boulder’s competitiveness in the global demand for talent. In breakout sessions and roundtable discussions, the group explored how education and workforce development must evolve to keep up with the impacts of automation, immigration, globalization and other forces affecting future jobs.

There Will Be Robots. Lots of Robots.

People, get ready. Futurist Davies says the robots are coming and in more ways than ever expected.

The growth will be explosive: 1.7 new industrial robots will be in use by 2020, with robots performing tasks in homes and offices – not just in manufacturing, says Davies.

In his talk, 2030: The Workplace Revolution, Davies highlighted how technology will change our jobs in the coming decade and the pressing need for skill development and preparation.

With advances in technology and creative disruption in industries, employment has shifted, explains Davies, adding that 85 percent of jobs in 2030 haven’t been created yet. By then, computers will function at the speed of the human brain. He warns that increased automation and artificial intelligence will significantly alter employment needs and businesses should be prepared.

Low-skilled and entry-level and other jobs that perform repetitive tasks will no longer be available to human workers – computers and robots will fill that need. While companies do not like to replace people with robots, if robots cost 15-20 percent less, humans will lose out.

Davies predicts retail jobs will be replaced by robots at a very high rate, even though it is the leading profession in most states. Sixteen million retail workers will need to be retrained for new jobs.

His strategies for the future are to recognize that whether tasks are cognitive or non-cognitive, repetitive tasks can be automated. To succeed, workers need to develop non-cognitive skills: problem-solving, critical thinking and empathy.

Acquiring New Skills Critical to Success

Andi Rugg, executive director of Skillful Colorado, says one-third of the American workforce will need new skills to find work by 2030.

In her talk, Understanding the Skills Gap, Rugg emphasizes that training and retraining are the path to success, not only for the coming decade, but for today. There are 6.3 million unfilled jobs in the U.S. today because there’s currently not enough talent to bridge the gap between employer requirements and the workforce.

Rugg stresses that hiring needs to become skills-based, since we are in a skills-based economy. Her statistics are hard hitting:

  • Jobs requiring college degrees exceed the number of workers who have them.
  • Seventy percent of job ads for administrative assistants ask for a college degree, but only 20 percent of administrative assistants have a college degree.
  • Only 3 in 10 adults in the U.S. have a bachelor’s degree – demand for bachelor’s degree is outstripping supply of workers who have them.
  • Only 35 percent of Boulder County’s skilled workers have a degree and Colorado ranks No. 48in the nation for the number of people of color with a degree.
  • Employers need to be more agile in hiring and realize that skills can bridge the gap.
  • Employers need to focus on skills to address inequities in the labor market.
  • Employers should also offer upskilling and lifelong learning for employees.
  • Skills-matching improves employee retention and engagement as well as reduces the time to hire and ultimately reduces turnover costs for the employer.

Housing and Transportation Keys to the Solution

In a roundtable discussion led by RE/MAX of Boulder Broker/Owner Jay Kalinski, the team tackled one of Boulder County’s looming challenges in attracting workers to Boulder County – affordable housing and transportation options that enable commuting. The group developed possible solutions to ease transportation and affordable housing issues.

Photo caption for photo above: Jay Kalinski, RE/MAX of Boulder Broker/Owner (left} leads a roundtable discussion to develop transportation and affordable housing solutions.

Learn more about the discussion in Jay Kalinski’s article in BizWest, “Where will Boulder’s workforce of the future live?” at: https://bizwest.com/2018/06/01/where-will-boulders-workforce-of-the-future-live/?member=guest

Community Collaboration

In breakout sessions and the closing plenary, discussions revolved around ways the community can address workforce and economic development by bringing together private sector businesses and industry with educational institutions and organizations, government, and nonprofits in collaboration.

Through this joint effort, our community can prepare students with the workforce skills needed in the future that cannot be automated; develop business-relevant class content; roll out real-life technical projects in classrooms; re-train workers; and offer apprenticeships, internships, and work-based learning alongside education or as standalone, all of which can help workers gain skills.

Learn more by reading the Boulder Economic Council and Boulder Chamber’s recently published “Boulder Innovation Venture Report” at: https://bouldereconomiccouncil.org/whats_new_with_the_bec/boulder-innovation-venture-report/

Posted by Tom Kalinski Founder RE/MAX of Boulder on Wednesday, June 20th, 2018 at 11:25am.
Posted on June 21, 2018 at 5:38 pm
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Where will Boulder’s workforce of the future live?

The Boulder Economic Summit was held on May 22 and the focus was on the workforce of the future. The Boulder Economic Council rightly identified this as a key to Boulder County’s continued vitality and prosperity.  There were vibrant discussions about the growing importance of skills to both employers and employees, shifting employment patterns, how businesses can embrace Millennials, and more.

From a real estate perspective, the most thought provoking session was the roundtable discussion on “Addressing Housing and Transportation,” in which participants were asked to discuss what their businesses are experiencing in terms of housing and mobility needs, what they are doing to address them, and what possible solutions they see.  From this discussion, it became evident that the majority of many businesses’ employees live outside the city, that many of those employees would like to live in Boulder, and that there are myriad housing and transportation challenges facing businesses and employees.

Many of the proposed solutions will sound familiar: some additional housing, including ADUs (“granny flats”) throughout the city and multi-family housing in the light industrial areas along the east Arapahoe corridor; adding additional lanes to some of the major arteries to/from Boulder, especially along Arapahoe/Highway 7 and the Diagonal; more and “better placed” park-n-ride lots; more parking spaces throughout the city; more and better alternative transportation options, and possibly some shared shuttle services among Boulder businesses. 

Many participants expressed the opinion that they believe some of these solutions are viable, but they acknowledged that most of them would require the willingness and coordination of city and county governments.  The scope of these issues is supported by the estimated 50,000 — 60,000 people who commute into Boulder for work each day, half of whom purportedly want to live in the city, and the fact that currently there are no single family homes in Boulder on the market for less than $575,000 (and that only gets you 966 square feet).

The bottom line takeaway from this discussion was that if Boulder cannot find better ways to address its housing and transportation issues, it risks losing its economic vigor as more and more businesses will choose to relocate to more hospitable areas.  More than one employer at the roundtable lamented that if they cannot solve some of these issues, they will likely have to move their business elsewhere. 

Let’s face it, Boulder does not make it easy on businesses or their employees. Among other things, businesses in Boulder have to contend with sky-high affordable housing linkage fees on commercial development (which will ultimately be borne by tenants and consumers), complex and changing zoning and use regulations, rapidly growing commercial property taxes, and a dearth of parking spaces.  Employees face a severe lack of affordable housing to purchase, expensive rent or long — and increasingly frustrating — commutes, and difficulty finding parking (and not enough public and alternative transportation options).

There is always room for hope in Boulder, one of the brainiest (and best) cities in America, and an excellent example is the city council’s recent openness to allowing additional ADUs.  It’s not a panacea, but it’s a start.

Envisioning our workforce of the future is a great and useful undertaking, but if Boulder cannot (or will not) address its mounting housing and transportation issues, the workforce of the future will be happily employed… elsewhere.

 

Jay Kalinski is broker/owner of Re/Max of Boulder.

Originally posted by BizWest on Wednesday, June 1st, 2018. Original found here.

Posted on June 2, 2018 at 9:05 am
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Boulder’s average single-family home price surpasses $1.2M

This 4,987-square-foot home on Boulder Creek was featured in Bizwest’s Distinctive Homes of the Boulder Valley in April 2016. According to Zillow.com it sold in May 2017 for $3,495,000.

 

At the close of 2017, many were speculating that Boulder had finally reached a price ceiling at the limits of people’s purchasing power. The speculation continued that prices in Boulder would level off for some significant period of time as the city waited for buyers to accumulate more savings, wages to rise, etc. After all, approximately 40 percent of the homes sold in Boulder were over $1 million last year, so surely the pool of buyers able to buy a million dollar home must be depleted, right? The first quarter of 2018 has largely disproven that theory.

The average single family home price in Boulder reached $1,207,403 by the end of March, which represents a whopping 21 percent increase over the same period last year. Anecdotally in my real estate sales practice this year, I have seen multiple homes listed over $1.3 million ultimately sell for at least $200,000 over asking price. On the seller side, it is a cause for celebration, as the next chapter of their lives will be unexpectedly more comfortable. On the buyer side, it can be incredibly frustrating and demoralizing to save for a major purchase, believe you are well-positioned to make your dream come true, only to have the finish line moved forward on you. When you include the fact that about one quarter of the city’s recent home purchases have been cash transactions — and mortgage interest rates are a full point higher than last year — you begin to understand the size of the challenge facing buyers.

Looking back to 2008, you can see that home prices have almost doubled in the last 10 years (see City of Boulder chart).

Looking back even further to 1978 (see Appreciation chart), one can see that this appreciation trend is not an anomaly in Boulder. In fact, according to the Federal Housing Finance Agency, Boulder County has appreciated more than anywhere else in the country going back to 1991.

I have used earlier versions of the chart [to the right] in previous articles to try to assess when our current appreciation cycle would level off. Back then, I noted that the pattern going back to 1978 would have predicted that our appreciation cycle would have ended in mid-2017. I further stated, however, that there were factors present today that were not issues previously, the most prominent of which being that Boulder has almost reached full build-out under current zoning regulations.  That is, we are much closer to running out of land now, which will continue to put upward pressure on existing homes.

 

What does all of this mean?

Crossing the $1.2 million threshold means that Boulder is becoming disconnected from the surrounding cities. Some call it becoming a “resort market” like Aspen, others compare it to Silicon Valley (Nerdwallet published a study in support of this assertion, wherein in Boulder was listed in the top five least affordable housing markets, along with San Francisco, Silicon Valley, Honolulu and San Diego). However you characterize the situation, it is becoming clear that this is not an aberration and the challenges facing buyers will likely continue to mount as summer approaches.

 

Jay Kalinski is broker/owner of Re/Max of Boulder.

Originally posted by BizWest on Wednesday, May 2nd, 2018. Original found here.

Posted on May 3, 2018 at 3:52 pm
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