January Home Sales Chill, Fundamentals Solid

Home sales for Boulder-area real estate got off to a slow start in 2019 despite fairly mild January weather, resulting in decreased sales compared with a year ago.

Single-family homes posted 184 sales, a decrease of 20.3 percent compared with 231 homes sold in the same month last year. Sales of condominiums and townhomes dropped 23.0 percent for the same period with 71 units sold vs. 92.

“The market saw a pretty significant slowdown that started mid-November and continued through January,” says Ken Hotard, senior vice president of public affairs for the Boulder Area Realtor® Association. “The fundamentals are still solid—inventory improved and interest rates aren’t going up quickly,” he says, noting that interest rates are historically low and affordable at around five percent or below for a 30-year fixed mortgage.

Month-over-month single-family home sales dropped 39 percent in January with 184 homes sold compared to 302 in December. Townhome/condo sales were a bit stronger, nearly matching December sales with a .013 percent decrease – 71 units sold vs. 72.

Inventory jumped 15.7 percent for single-family homes with 722 homes for sale in January compared with 624 in December. Attached dwellings showed even greater improvement, rising 18.1 percent—241 units vs. 204.

Hotard explains that for now the statistics represent a series of events. “Once we get enough data, we’ll start to see trends,” he says.

“There seems to be uncertainty in the market and buyers are thinking I can stay where I am and look for a better opportunity in the future,” says Hotard. “It’s a story that’s repeating itself in a number of markets across the country.”

Yet Boulder-area prices continue to rise or hold steady, job growth and the employment rate remain strong, and Boulder County is still a desirable place to live.

“Our strong fundamentals should attract buyers as we move through February.”

 

Originally posted by Tom Kalinski Founder RE/MAX of Boulder on Tuesday, March 14th, 2019.

Posted on March 14, 2019 at 7:00 pm
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Equity Rich Properties Dominate Boulder County Cities

More than 40 percent of homeowners in Boulder County are equity rich – that is the amount of loans secured by the property is 50 percent or less of the property’s estimated market value, according to ATTOM Data Solutions Q3 2018 U.S. Home Equity & Underwater Report.

Cities in Boulder County notch the upper end of the equity rich measure. Here are the statistics for Boulder County. Percentages within cities vary slightly by zip code:

Boulder – 55% equity rich

Louisville – 46% equity rich

Lafayette – 42% equity rich

Longmont – 41% equity rich

Statewide, Colorado homeowners aren’t far behind with more than 32 percent of Colorado properties equity rich.

Across the U.S., nearly 14.5 million properties are equity rich. That’s 25.7 percent of all mortgaged properties, up from 24.9 percent the previous quarter. Conversely, the share of seriously underwater properties dropped to 8.8 percent. ATTOM says properties categorized as seriously underwater have a combined estimated balance of loans at least 25 percent higher than the property’s estimated market value.

States with the highest share of equity rich properties are California, 42.5 percent; Hawaii, 39.4 percent; Washington, 35.3 percent; New York, 34.9 percent and Oregon, 33.6 percent. Colorado is close on Oregon’s heels with 32.3 percent equity rich properties.

“As homeowners stay put longer, they continue to build more equity in their homes despite the recent slowing in rates of home price appreciation,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “West coast markets along with New York have the highest share of equity rich homeowners while markets in the Mississippi Valley and Rust Belt continue to have stubbornly high rates of seriously underwater homeowners when it comes to home equity.”

The ATTOM Data Solutions U.S. Home Equity & Underwater report provides counts of properties based on several categories of equity at the state, metro, county and zip code level, along with the percentage of total properties with a mortgage that each equity category represents.

For the full report and to view statistics by zip code, visit: https://www.attomdata.com/news/market-trends/home-sales-prices/home-equity-underwater-report-q3-2018/

 

Posted by Tom Kalinski Founder RE/MAX of Boulder on Wednesday, February 20th, 2019 at 2:54pm.

Posted on February 20, 2019 at 5:00 pm
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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.

Posted on January 10, 2019 at 11:51 pm
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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.

 

Originally posted here by Tom Kalinski Founder RE/MAX of Boulder on Thursday, January 3rd, 2019 at 10:13am.

Posted on January 3, 2019 at 11:13 pm
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Three Colorado Cities Claim Smokin’ Hot Zip Codes

Colorado Springs’ 80922 zip code is the No. 2 spot hottest zip code in the country – moving up from No. 7 in 2017, according to analysis of 32,000 zip codes by realtor.com®.

The annual analysis of zip codes looks at how long it takes homes to sell and how frequently properties in each zip code are viewed to determine which zip codes are most popular and fastest moving.

Greeley’s 80631 and Broomfield’s 80021 zip codes also ranked in the top 50 hottest, coming in at Nos. 44 and 48 respectively.

High-income millennials helped fuel a 10 percent rise in how fast homes sold in popular areas in 2018. More and more millennials are getting older and buying homes, which realtor.com says is driving demand in smaller, more affordable suburban areas. These 25- to 34-year-olds are attracted to affordability, strong local economies, and outdoor and cultural amenities.

The number of households in Colorado Springs grew 21 percent from 2010-2018. Homes in El Paso County sell in 15 days with a median list price of $297,811 – an increase of 9.7 percent in the last year. Located 60 miles south of Denver, Colorado Springs offers lifestyle features millennials want – outdoor activities, popular local breweries, and more affordable housing than Denver.

Here are the top ten hottest zip codes in the U.S.

Homes in the top 10 hottest markets sell in 20 days on average, 46 days faster than the rest of the country, 25 days faster than their respective metro areas, and 18 days faster than their respective counties.

In eight out of the top 10 ZIPs, millennial median household income is 1.3 times higher than the national median, $78,000 versus $60,000, respectively. Mortgage originations in nine of the top 10 counties are millennial-dominated with 34 percent of mortgage originations.

For the full report visit https://www.realtor.com/research/hottest-zip-codes-2018/

 

Originally posted here by Tom Kalinski Founder RE/MAX of Boulder on Wednesday, October 24th, 2018 at 2:19pm.

Posted on October 25, 2018 at 7:07 pm
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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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What Not to Do Once Your Mortgage Is Approved

The real estate market in Boulder County is red hot, which makes maintaining your mortgage approval a must if you’re shopping for a home.

“It can be a lot of work to get your mortgage approved. Once it is approved, it is important not to make any major financial changes until you sign your final disclosure and the loan is closed,” says Jessica Shanahan, loan officer with Premier Lending.

To keep your mortgage approval, you need to know the financial moves not to make.

Your mortgage approval is primarily based on documenting your income and assets, your equity stake or down payment, your credit history and the cash you’ll have left over after the deal is done, according to Tuttle’s Real Estate Update.

After your mortgage is approved, don’t change any one of those qualifiers without first consulting your loan officer or you could lose your mortgage.

Here’s Real Estate Update’s list of what not to do:

Avoid Big Purchases

Don’t buy a new car or another large possession, or change the lease on your current car. It could show up on your credit report or bank statement. The new loan or purchase amount could tilt the debt-to-income ratio the lender used to approve your home loan, and your mortgage could vaporize.

Don’t Get New Credit

Don’t sign up for any new credit cards or other lines of credit, even for a zero interest rate. Resist all of those credit card offers that flow in after you get your mortgage approval.

Don’t Miss a Bill Payment or Pay Late

Pay your bills on time without fail, even if you dispute the charge. If you stop paying a bill, it can end up on your credit report and cause a problem with your mortgage.

Don’t Change Jobs

Now isn’t the time to start a new job or lose the job you have. It is okay to take a second job, as long as you keep the job you have. However, if you should be so fortunate as to get a promotion and raise, your mortgage shouldn’t be jeopardized.

Don’t Spend Your Cash

Don’t use your cash reserves, transfer large sums between bank accounts, or make undocumented transactions in your back account – either deposits or withdrawals. This activity can cause your mortgage approval to be reversed.

Just remember to control items that affect your financial picture, and barring any uncontrollable life events, your mortgage should be fine.

For more information see: https://bit.ly/2JzU2lx

Originally posted here by Tom Kalinski Founder RE/MAX of Boulder on Friday, April 13th, 2018 at 12:09pm.
Posted on April 17, 2018 at 5:29 pm
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Boulder Valley 2018 real estate predictions

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

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

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

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

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

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

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

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

2. Inventory will increase in 2018.

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

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

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

3. Interest rates will rise modestly.

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

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

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

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

 

 

Jay’s monthly article via Boulder Valley 2018 real estate predictions – BizWest

Posted on January 13, 2018 at 2:26 pm
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