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The end may be here (but don’t panic)
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.
Where have all the buyers gone?
A well-functioning market consists of two sides: suppliers who offer a particular good for sale and consumers who purchase those goods. In the Boulder Valley residential real estate market since 2012, there have been more consumers looking to buy homes than there were sellers offering homes for sale, which has led to a long appreciation period for homes. Now, however, it appears that the number of buyers is dropping as is their willingness to pay ever-increasing prices.
Spotting the trend
First, how do we know that there are fewer buyers in the market? The most direct measure of buyer activity that my company tracks (courtesy of Broker Associate Mike Malec) is the number of showings per available listing. From examining the data, it is fairly easy to see that this year’s showing activity is markedly below the recent boom years, but is still above the levels present during the recession.
Second, to further substantiate this decline in buyer activity, we can look at more indirect measures, such as average sales prices, available inventory of homes on the market, and average time a home will be on the market before sale. Each of these markers indicates a decline in buyer activity. Through May of this year, the average price of a single-family home in Boulder has fallen 0.6 percent, while the average attached unit has fallen 4 percent, compared to the same timeframe last year. This indicates that there are fewer buyers competing for available homes to the point where home appreciation rates have stalled. At the same time, the amount of homes available on the market has increased nearly 20 percent for single-family homes and almost 50 percent for attached ones, while the average time on the market for single family homes has gone up 5 percent and nearly 20 percent for attached ones. These statistics indicate that those buyers in the market are becoming choosier and are able to take their time making decisions.
Based on the above discussion, it seems that there are fewer buyers in the market and that those who are in the market are more cautious, but why?
Economic Conditions?
It does not appear that our local economic conditions explain the drop in buyer activity. According to the State Demographer’s office, people are continuing to move into Boulder and Broomfield counties, albeit at a slower rate than previous years (though the city of Boulder has seen its population declining in the last two years). And local unemployment levels continue to be historically low.
Economic conditions at the national level are softening, to the point where the Fed is discussing interest rate cuts, so these conditions may play some role. But, interest rates are actually about half a percent lower than they were at this time last year, which would appear to weaken that argument.
Could it be the weather?
Another possible explanation I’ve heard is that our unusually cold and snow winter could have suppressed buyer demand as people were less willing to trudge through the snow to go see houses. While this is plausible, all else being equal, we would have expected to see that pent up demand being released as the weather improves, but we just have not seen that play out in the data yet.
The takeaway
Whatever the cause of the decline in buyer activity may be, local real estate legend Larry Kendall of the Group Inc. Real Estate in Fort Collins always says that buyers are the smartest people in the market, so they may be acting as the proverbial canary in a coal mine, meaning that they could be a leading indicator that our market is shifting from a seller’s market to either a balanced or buyer’s market. If you are a seller, be wary of pricing above the market in these shifting conditions.
Originally posted by Jay Kalinski is broker/owner of Re/Max of Boulder.
Home Sales Slow in December, Show Slight Decline for Year End
Boulder County home sales declined for December, but overall 2018 sales held somewhat steady with a slight decrease.
“December was not a fabulous month for home sales, particularly for attached dwellings,” says Ken Hotard, senior vice president of public affairs for the Boulder Area Realtor® Association.
Sales of condominiums and townhomes in the Boulder-area dropped 42.9 percent in December compared to November – 72 units sold vs. 126. For the year, attached dwelling sales improved .02 percent with 1,525 units sold vs. 1,522.
Single-family home sales dropped 2.6 percent with 302 sales vs. 310 for December compared to November. Year-over-year, single-family home sales dropped 2.3 percent – 4,533 sales vs. 4,640.
Hotard points out the total decline for all Boulder County dwellings sold for the year – attached and single-family – was only 1.8 percent. That compares to a 3.1 percent national decline reported by the National Association of Realtors.
“Our Boulder County market continues to perform well. Job growth is good, demand is strong, and the area is desirable,” says Hotard, adding that inventory is an ongoing challenge.
Inventory of single-family homes dropped 24 percent in December compared to November—declining to 624 units from 821, while multi-family unit inventory decreased 22.4 percent—204 units versus 63—over the same period.
So where do we go from here?
Hotard says many reports indicate the U.S. is entering a home sales slump, but he expects the Boulder County markets to continue to buck the national trend.
“It’s possible well see a year-over-year decline similar to this year, but I don’t expect it to be more significant, if our markets decline at all,” he says.
In Hotard’s assessment, strong fundamentals in Boulder County are not waning: Employers continue to bring new jobs and prices are holding or improving.
But inventory continues to take a hit. “We need to see inventory numbers improve as we head into March, April, May and June,” Hotard adds.
“It’s going to be ‘steady as she goes’ in 2019, as long as we don’t have any major national or international events.”
Originally posted by Tom Kalinski Founder RE/MAX of Boulder on Monday, February 11th, 2019 at 1:34pm.
4 Key Home Buying Trends to Watch in 2019
As we look ahead to coming trends in 2019 real estate, home buyers and sellers nationwide will face changes in the marketplace, according to the economic research team at realtor.com. From housing inventory to generational shifts, here are four top trends to look for in 2019.
1. Inventory will grow, especially for luxury homes
Inventory has been tight nationwide, hitting its lowest level in recorded history in the winter of 2017, says realtor.com. Supply finally began catching up with demand in 2018. That inventory growth will continue in 2019, but at rate of less than 7 percent. While sellers will have more competition, it will still be a good market.
“More inventory for sellers means it’s not going to be as easy as it has been in past years—it means they will have to think about the competition,” says Danielle Hale, realtor.com chief economist.
“It’s still going to be a very good market for sellers, but if they’ve had their expectations set by listening to stories of how quickly their neighbor’s home sold in 2017 or in 2018, they may have to adjust their expectations,” she adds.
In markets with strong economies and high-paying jobs, most of the expected inventory growth will come from listings of luxury homes.
2. Affording a home will be challenging
Interest rates and home prices are expected to continue to increase. Hale says homebuyers will continue to feel a “pinch” from affordability, as costs will still be a pain point. She predicts mortgage rates will reach around 5.5 percent by the end of 2019, which translates into the typical mortgage payment increasing by about 8 percent. Incomes are growing about 3 percent on average. These factors are hardest on first-time home buyers, who tend to borrow most heavily.
3. Millennials will dominate
Millennials are now the biggest generation of home buyers. Some are first-time home buyers, while others are moving up from starter homes. The millennial group accounts for 45 percent of mortgages compared with baby boomers and Gen Xers at 17 and 37 percent respectively, reports realtor.com. And many millennials still have student debt, which adds to the challenge of affording a home.
4. The new tax law’s effect is still unknown
For many tax filers, the effect of the new tax law won’t be known until their April tax filing results in a bigger tax bill or a bigger refund.
Renters are likely to have lower tax bills, but the new increased standard deduction reduces the appeal of the homeowner’s mortgage-interest deduction. The new tax law may dissuade people from taking out large mortgages which will affect higher cost homes. Add these factors to the challenge of affording a home and homeownership for some may be harder to achieve or less appealing.
The net effect of the coming 2019 trends is that even with these challenges, sellers are in a good position and homeowners will continue to enjoy positive financial gains from their home.
For more information, read the full report at https://www.realtor.com/news/trends/real-estate-trends-expect-2019/
Originally posted here by Tom Kalinski Founder RE/MAX of Boulder on Thursday, January 10th, 2019 at 10:05am.
November Sales Head in Opposite Directions
A tale of two markets emerged in November, as Boulder County’s single-family home sales skidded to a stop, while townhomes and condos took a significant leap forward.
Single-family home sales in the Boulder-area markets dropped 14.4 percent in November compared to October —310 vs. 362 homes—while condominium and townhome sales rose 14.5 percent—126 units vs. 110.
Yet when data for 2018’s first 11 months is considered, the two markets tracked closely together, and both appear to be slowing, according to Ken Hotard, senior vice president of public affairs for the Boulder Area Realtor® Association.
“This is the first month single-family home sales fell below last year, and condos and townhomes are only slightly ahead,” Hotard explains.
Year-to-date through November, sales of single-family homes decreased 1.4 percent compared to the prior year with 4,205 homes sold vs. 4,266. Attached home sales over the same period improved 3.3 percent – 1,445 vs. 1,399 units sold.
Inventory decreased in both housing categories, though more significantly for single-family homes, which dropped 13.1 percent in November compared to October with 821 vs. 945 Boulder County homes for sale. Condo/townhome inventory fell 6.1 percent in November compared to the previous month with 263 units for sale vs. 280.
“My guess is the growth of the townhome/condo market is due to a larger inventory and more affordable pricing,” says Hotard. “Interest rates are making people jumpy, but the reality is that mortgage rates are still historically low. The more complete view is the inventory and pricing dynamics of the Boulder-area markets.”
He notes that single-family home sales could recover in December, but it’s not likely.
“We have the ongoing headwinds of low inventory and rising prices. When we look back, we’ll see 2018 as market slowdown for housing in our market areas,” Hotard predicts.
Despite the slow-down in housing, Colorado’s economy continues to show strength, wage growth is increasing, and gross domestic product is up, according to recent news reports.
“What the Boulder-area needs is more housing that is desirable and more affordable for people,” adds Hotard.
Despite Monthly Swings, Boulder County Home Sales Hold a Strong Course
If there is one constant in Boulder Valley, it’s a strong real estate market. October’s sales statistics show 2018 is on track to finish strong. This is despite that month-to-month, those statistics sometimes show significant fluctuation.
Take September and October 2018. When compared to October, September’s data is like Colorado weather: If you don’t like the statistics one month, wait a month, they are likely to change.
September’s single-family sales dropped 20 percent, then recovered to gain 8.7 percent in October with 362 homes sold vs. September’s 333. Despite the short-term fluctuation, year-to-date sales are holding steady through October, reaching just one unit short of the same volume as last year – 3,880 vs. 3,881.
“It’s hard to characterize our market here in Boulder County. Given all of the factors, it can be difficult to decipher trends as opposed to an event,” says Ken Hotard, senior vice president of public affairs for the Boulder Area Realtor® Association.
“While the swings add volatility to the market, the market exhibits good health with strong demand, and prices and sales holding steady,” he says, adding that a strong economy and job growth continue to be drivers.
Condo/townhomes in Boulder County saw a month-over-month sales decrease of 5.2 percent, with 110 units sold in October compared to 116 in September. Year-to-date attached dwelling sales rose 4 percent through October – 1,317 vs. 1,266.
October’s inventory for attached dwellings also increased 7.3 percent over September with 280 units available in October compared to 261 the prior month. Single-family home inventory declined 10 percent, with 945 homes available for sale in October compared to 1,050 in September 2018.
Hotard projects November and December sales will be “anybody’s guess depending on the weather. But all things being equal, I don’t expect much change through the end of the year.”
The next big change he expects will be in early 2019. “I think we’ll see a big increase in inventory and sales in February and March. I think people will look at taking the gains we have seen in this market, providing inventory and set the market up for pretty strong increases in the big home selling months.”
Originally posted here by Tom Kalinski Founder RE/MAX of Boulder on Tuesday, November 27th, 2018 at 9:40am.
Real Estate Conference Set to Explore Boulder Valley Challenges and Trends
The eleventh annual Boulder Valley Real Estate Conference offers a packed day Thursday, November 15, exploring trends, commercial impacts, and inventory shortages in Boulder County commercial and residential real estate.
Organized by BizWest with presenting sponsor RE/MAX of Boulder, the event delivers an intensive schedule of national keynote speakers and panels made up of local real estate experts and development officials.
More than 500 real estate professionals and anyone interested in the local real estate market are expected to attend. Attendees get insights into residential and commercial real estate activity and coming opportunities in Boulder and Broomfield counties.
The conference kicks off with local real estate expert Todd Gullette, RE/MAX of Boulder Managing Broker, discussing the latest sales and price statistics and implications for residential real estate across Boulder Valley. The commercial forecast follows, with Angela Topel, Gibbons-White Senior Broker, exploring major commercial developments, sales and vacancy statistics.
Future technology – now turned present – takes center stage when Jay Kalinski, Broker/Owner of RE/MAX of Boulder, moderates a panel of real estate banking and technology experts, exploring “The Impact of Blockchain” on residential real estate. Blockchain technologies enable a shared, nationwide database of houses on the market. The panel will look at how Blockchain platforms affect Boulder County’s housing market and how Realtors should respond.
“Big Tech Settles In” focuses on the local impact of the tech economy and examines the surging Boulder tech scene, including expansions by Google, Twitter, Microsoft and Uber.
Conference keynote address presents the outlook of Wells Fargo’s EVP of Housing Policy and Homeownership Growth Strategies, Brad Blackwell, and MetroStudy’s Senior Director West Region, John Covert.
Next up, “Breaking Ground” – back by popular demand – reveals commercial and residential developments in the Boulder Valley and beyond. A panel of city-employed development directors from Lafayette, Longmont, Louisville, Superior, Boulder, Erie and Broomfield provide a complete rundown of the region’s top projects.
“Wrestling with Supply” tackles the top challenge for Boulder-area residential real estate markets. Lack of housing inventory, issues with infill development, height limits, accessory-dwelling units and zoning conspire to cause a critical housing shortage. Moderated by Duane Duggan, RE/MAX of Boulder Realtor, the panel will discuss policy changes developers believe would address the problem.
“Icons of Real Estate” is back by popular demand. Featuring long-time successful real estate experts Tom Kalinski, Owner/Founder, RE/MAX of Boulder; Stephanie Iannone, Managing Broker, Housing Helpers; and Seth Chernoff, CEO, Chernoff Boulder Properties, audience members will ask questions to learn proven best practices and advice for success in commercial real estate.
The conference will be held from 9:00 am to 4:00 pm on Thursday, Nov. 15 at the Embassy Suites hotel, 2601 Canyon Blvd. in Boulder. Registration opens at 8:15 am. For details and to pre-register visit http://fallrealestateconference.com. Breakfast and lunch are included. The conference is open to anyone with an interest in Boulder Valley real estate. Conference attendees can earn six Van Education credits.
Conference details in this quick video: https://bit.ly/2PAsWQV
Originally posted here by Tom Kalinski Founder RE/MAX of Boulder on Tuesday, November 13th, 2018 at 3:40pm.
Boulder County Home Sales Soar into Late Summer
Home sales in Boulder-area single-family and attached housing markets rose in August along with the late summer heat index.
Single-family home sales increased 10 percent in August 2018 compared to July with 460 homes sold in Boulder-area markets vs. 418. Sales for condominiums and townhomes climbed 15 percent with 146 units sold vs. 127.
Meanwhile, Denver-metro home sales went in the opposite direction, slowing significantly over the same period, according to the Denver Post.
It’s testament to the state of Boulder Valley real estate market, according to Ken Hotard, senior vice president of public affairs for the Boulder Area Realtor® Association.
“We have our own little market here. While Denver dipped, Boulder Valley showed strong growth in sales, despite ongoing rising prices and inventory squeeze,” says Hotard.
Year-to-date sales also continue to climb steadily. Single-family home sales grew 1.7 percent through August 2018 compared to last year – 3,154 homes sold vs. 3,100. Attached homes followed a similar track, improving 1.6 percent year-to-date – 1,154 sold in 2018 compared with 1,135 in 2017.
Inventory dropped 2.0 percent for single-family homes – 993 units in August 2018 vs. July’s 1,013. But condo/townhomes available for sale grew 11.2 percent with 268 units available in August vs. 241 the previous month.
Hotard attributes the unceasing increase in real estate sales and prices to the area’s strong economy and continued job growth, along with a desirable quality of life. “Significant companies are hiring in Boulder, like Zayo, Google, Twitter – and the natural foods industry is strong,” he adds.
Interest rates are slowly pushing upward, which traditionally results in a slowdown in rising home prices and sales. But Boulder Valley’s housing market may not readily respond to interest rate increases.
“It’s unknown what the tipping point is for interest rates affecting our housing market. And with 35 percent of Boulder County homes bought with cash, rising interest rates may not have a significant effect locally,” says Hotard.
Looking ahead to the final quarter of the year, Hotard expects sales to continue to match those of last year, unless “something unusual happens.”
“We seem to be operating on an upward trend and it’s hard to see what would stop it. The real challenge for Boulder County is providing the housing and transportation infrastructure to support job growth.”
Originally posted here by Tom Kalinski Founder RE/MAX of Boulder on Tuesday, October 2nd, 2018 at 10:46am.
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.”
Originally posted here by Tom Kalinski Founder RE/MAX of Boulder on Monday, August 27th, 2018 at 2:45pm.
Boulder valley real estate: Parsing fact from ‘fake news’
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.
