In 2020, hopes were high for a much brighter 2021. But from the continuing impacts of COVID to the devastating loss of 10 of our cherished community members in a horrific act of senseless violence, 2021 has offered little respite from the trials and tribulations of 2020. And yet our resilient community will continue to endure and overcome. People still need a place to live, and owning one’s home continues to play an integral part in the fulfillment of the American Dream. What follows is an overview of our current market conditions, followed by frank advice to buyers looking to buy a home this year, speaking from experience in the trenches, in hopes that it will help you own your piece of the ever-more-elusive American Dream.
The current landscape
If you are in the market to buy a home, you have likely come to realize that inventory is extremely scarce and the competition is simply brutal at almost all price ranges. On the supply side, our stock of available homes for sale in the Boulder Valley is the lowest it has been since tracking began. At the time of this writing, only 400 single-family homes were for sale in all of Boulder County — and of those only 148 (or 37%) were not already under contract (for a population of about 330,000 people!).
On the other side of the equation, the demand is far surpassing the supply of available homes. There are numerous reasons for this, but some of the most prominent are (1) that rates are still near historic lows (often below the traditional rate of inflation) so more people can afford more home than ever before; (2) a far larger percentage of the population is able to work remotely, with people no longer needing to live near their office, and what better place to live than Boulder?; and (3) people are expecting to spend more time at home, and the Boulder Valley offers larger homes with more land than many more urban areas.
The result of this severe mismatch between supply and demand has resulted in many properties receiving multiple offers. In fact, we are routinely seeing well-priced, desirable homes selling 10-to-20% (or more) above their asking prices. Surprisingly, we are observing this phenomenon not just in the “affordable” sub-$500,000 market, but also for homes priced well into the millions of dollars. As one might imagine, this is presenting an enormous challenge for would-be buyers who are dealing with the serious fatigue of writing strong, often above-asking offers on home after home only to lose out to someone willing to pay even more. This is also creating a challenge for appraisers who are asked to justify homes selling for tens (or hundreds) of thousands of dollars above previous sales.
If you are a buyer in this situation, it might be tempting to hit the pause button and wait for prices to fall before resuming your search. In some parts of the country, that could very well be sound advice. In the Boulder Valley, however, I would caution you against giving into that temptation if you are serious about owning a home here. Why? Because unlike other parts of the country, prices are unlikely to “come back down,” but rather are likely to continue to appreciate into the foreseeable future. Why? Many, many reasons. First, the Boulder Valley continues to enjoy one of the highest qualities of life anywhere in the world and people continue to want to live here. Second, we have far more jobs — in more diverse industries — than other comparably-sized cities, which continue to draw people to our area. Third, Boulder County is edging ever closer to build-out, the point at which no more homes will be able to be built here (absent regulatory changes). The inability to build more homes makes the ones already here all the more valuable. Truthfully, there are many more reasons, but the foregoing are sufficient to likely ensure continued appreciation of our housing stock.
As a prospective buyer, then, what are you to do? Don’t give up. Here are a couple of things you can do. First, you can adjust your price search, starting on lower-priced homes knowing that they will be bid higher. You may not get every feature you want, but you will be a homeowner enjoying appreciation and equity-building. Second, you can look for ways to sweeten your offer. There are many ways to do this, such as waiving certain contract rights, increasing your earnest money or down payment, or finding a way to make an all-cash offer (if you don’t have a rich uncle, there are loan companies, including some innovative startups, that specialize in this). The best way to navigate this is to work with a qualified Realtor who can advise you on your particular situation. Good luck!
Oh, and if you are a homeowner reading this and considering selling, this is definitely the year to do it!
Jay Kalinski is the owner of ReMax of Boulder and ReMax Elevate.
2020 was a chaotic rollercoaster for the Boulder Valley real estate market. Luckily, home values weathered the storm better than anyone could have hoped, and we are now primed for potentially the most real estate sales volume we have ever seen.
Buyer Demand. Our company has tracked buyer demand on a daily basis for many years, and it is higher than it has ever been for this time of year. This demand is especially strong for single-family homes. It appears that the trend of buyers desiring larger living spaces and more land will continue into 2021, as the pandemic lingers on and the work from home movement has finally crossed the chasm into mainstream acceptance. This latter work from home development is particularly salient for Boulder Valley, where our 300-plus days of sunshine per year and world-class quality of life are attracting those who can now work from anywhere. At each of our weekly sales meetings this year (attended by more than 100 of the best agents anywhere), we hear story after story of multiple offers on listings, prices getting bid up by tens of thousands of dollars, and buyers who are getting frustrated with all of the stiff competition. It seems that the pool of eager buyers is very deep this year.
Interest Rates. Adding fuel to the buyer demand fire is the fact that interest rates are forecast to stay at once-in-a-lifetime low rates for the foreseeable future. Our most veteran agents tell stories of helping people buy homes in the 1980s with mortgage rates above 18% — that is like financing a home purchase with a credit card. Now, buyers can expect to obtain loan rates at-or-below 3%, which is as close to free money (when average inflation is considered) as we are likely to ever see in America.
So, what could possibly derail this buyer juggernaut? Well, here are a couple of the most likely possibilities.
Lack of Inventory. In 2020, despite high buyer demand, many would-be sellers opted to stay put in their current homes. It is part of the human condition to become more conservative in the face of uncertainty, and COVID-19 presented humanity with one of the biggest uncertainties of the past 100 years. Thus, it is not surprising that we finished 2020 with only 313 single-family homes for sale in all of Boulder County, down 37% compared to the end of 2019 (498 homes). For added context, consider that at the end of 2002, we had more than 1,800 homes on the market.
It remains an open question as to whether sellers will get the message that 2021 will be an excellent time to sell a home — and an even bigger question regarding whether sellers will act on this message. If the answer to both questions is “yes,” then we really could have the highest dollar volume of home sales ever in Boulder Valley this year. This is a big “if,” however, because of…
COVID-19. At the time of this writing, more than 25 million Americans have contracted COVID-19 and more than 400,000 of them have died. This has — and will — greatly affect home sales in ways predictable and unforeseeable. Thankfully, there are multiple effective vaccines currently being distributed and administered. There remain, however, several unknowns on this front: Will too many people refuse to get vaccinated and thus thwart herd immunity? How quickly will enough of the population be vaccinated to provide such herd immunity and restore more certainty for people’s decisions? Will the current vaccines be efficacious against new (and perhaps more virulent) strains of the virus that are emerging?
A lot of things vis-à-vis COVID-19 will have to break in our favor this year to give enough sellers the confidence to move ahead with their home sale decisions, which is the only way we will even come close to meeting the apparently insatiable buyer demand. If we are lucky, this could be a year for the record books (in a good way).
Regardless of how things go with our fight against COVID-19, 2021 promises to be an excellent time to sell a home if you’re considering doing so… and a very challenging time to be a buyer.
May we all be lucky in 2021.
Jay Kalinski is the owner of ReMax of Boulder and ReMax Elevate.
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?
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.
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.
Boulder leads the nation for the most positive economic outlook, followed by two other Colorado cities in the top 10 — No. 3 Fort Collins and No. 9 Denver. According to the recent survey by Indeed.com, a positive economic outlook is driven largely by where you live more than by a national or political view of a national economy.
Colorado is the only state with three cities in Indeed’s top 10. Smaller mountain-state metro area residents performed well when surveyed about the economy and their personal outlook. Tech hubs also fared well, such as the San Francisco Bay Area, Austin, and Raleigh.
The following 10 U.S. cities have the highest economic confidence, according to Indeed.com:
- Boulder, CO
- Provo-Orem, UT
- Fort Collins, CO
- San Jose-Sunnyvale-Santa Clara, CA
- Boise, ID
- Ann Arbor, MI
- San Francisco-Oakland-Hayward, CA
- Austin, Round Rock, TX
- Denver-Aurora-Lakewood, CO
- Raleigh, NC
For the 2,000 American adults nationwide surveyed on politics and attitudes about the economy, local economic conditions such as lower unemployment, faster job growth, and a more educated workforce correlate with local economic confidence.
Nine percent describe their regional economic conditions as excellent and 51 percent say their economies are good. To analyze the local influence on economic perspective, Indeed combined answers to survey questions with data on local job markets. Five factors were found to drive local economic confidence:
- Personal finances – 81 percent of respondents rate their personal financial situation as excellent or good and say the same about local economic conditions.
- National economic view – 83 percent who rate national economics as excellent or good say the same about local economic conditions. The survey found that views of the national economic situation are also strongly influenced by politics, with 73 percent of Republicans and 43 percent of Democrats rating national economic conditions excellent or good.
- Local unemployment rate – Respondents in areas with lower unemployment rates have a more positive economic outlook. The outlook is likely driven by the view that a lower unemployment rate results in more job opportunities and bargaining power for workers, which should translate into faster wage growth.
- Higher local job growth – Job growth where you live means expanding opportunities and rising home prices. The majority of homeowners like this combined dynamic.
- Highly educated populations – For those who live in areas where a larger percentage of adults have a college degree – such as the Denver-metro area – there is a correlation with higher earnings and more spending power.
People are more optimistic when they live in places that are doing well economically. That holds true for those who live in Colorado where unemployment rates continue to be among the lowest in the nation and job growth remains strong.
Yahoo Finance article: https://finance.yahoo.com/news/10-u-s-cities-highest-economic-confidence-170140863.html
Indeed’s full report at: https://www.hiringlab.org/2018/11/27/local-economic-confidence/
Boulder stands tall when compared with much larger metropolitan areas that excel in innovation and entrepreneurship.
A report produced by the Boulder Economic Council compares Boulder with leading innovation centers including Silicon Valley, San Francisco, Austin, Boston, Seattle, Portland, Denver and Raleigh. Though these metropolitan areas have a much larger population than Boulder, they were selected as peer communities following input from local focus groups and ranking reviews published by Inc., Forbes, and others.
To get a meaningful comparison, data was normalized for population size and other measures in analysis by CU-Boulder’s Leeds School of Business Research Division.
And the news is good, according to findings published in the Boulder Innovation Venture Report. Boulder compares favorably in key success metrics from education and jobs to quality of life. The area is challenged, however, by a lack of affordable housing to supply its workforce with a place to live.
The Boulder metro area ranks first among the peer communities for the percentage of population 25 and up who hold a bachelor’s degree or higher. Over 60 percent of residents have a bachelor’s degree, which is among the highest in the United States.
In the jobs ranking, the City of Boulder has about 100,000 jobs, a number two or three times larger than almost any other U.S. city comparable in population size. Among those jobs, Boulder has the second highest concentration of science, technology, engineering and math (STEM) occupations among all the peer regions.
Boulder has the second-highest per capita venture capital investment in comparison to the peer communities.
In fact, Boulder is ranked number one nationally in the “Bloomberg Brain Concentration Index,” which tracks business formation as well as employment and education in the sciences, technology, engineering and mathematics.
Drilling down into the creative services industry – advertising agencies and web and app developers – outdoor recreation and food manufacturing, Boulder’s concentration of local businesses was significantly higher than peer communities.
Even in coffee shops the Boulder area percolates, achieving a tie with the Seattle-Tacoma-Bellevue metro for the highest concentration of coffee shops among peer communities. Boulder outranked all the peer cities on restaurants per 1,000 residents.
While any amount of time stuck in traffic is too much, Boulder drivers spend less than all but one of the peer communities with 10 percent of total driving time in congestion. Boston drivers spend the most time driving in congestion.
The challenge for Boulder is housing affordability, according to the report. Measured by median metro area home values, Boulder has the third highest housing costs among its peer communities, behind the San Jose and San Francisco regions and just ahead of Seattle and Boston. But the city is not alone – its peer communities face the same challenge. All but one of the metro areas studied for this report ranked among the 25 most expensive housing markets in the U.S.
For the full Boulder Innovation Venture Report, visit: http://issuu.com/boulderchamber/docs/innovation_venture_report_v26?e=33607933/61913820
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.
Labor statistics are officially confirming what we all know – Colorado’s population is on the rise, with newcomers lured by a strong job market.
By the end of 2017, Colorado had a record year with its fastest rate of growth in almost 20 years, according to the Colorado Department of Labor and Statistics.
Coloradans participating in the labor force increased 141,700 for the year, adding 5,100 nonfarm payroll jobs from November to December for a total of 2,671,500 jobs.
The increase was noticeable compared to the previous month when employers added 1,800 jobs. In fact, November’s gain was higher than the state’s 12-month average gain of 3,817 jobs, and higher than the previous four months average gain of 4,800, according to CDLE data.
By sector, most of November’s added jobs are private sector payroll jobs, which increased 4,300 and government increased 800. Average hourly earnings also rose, going from $26.93 to $28.09.
Even so, the state’s unemployment rate increased two-tenths of a percentage point from November to December to 3.1 percent. The rise in the unemployment rate correlated with an increase in the number of people actively participating in the labor force, which grew 14,800 over the month.
Colorado’s unemployment rate is still lower than the nation’s December rate of 4.1 percent, which declined from 4.7 percent from December 2016 to December 2017.
The biggest private sector job gains in November 2017 were in construction and education and health services, while over the course of the year, the largest private sector job gains were in professional and business services, leisure and hospitality, and construction.
The jobs added resulted in a 2 percent job growth rate, with Colorado outpacing the U.S. growth rate of 1.4 percent, as it has for the past seven years.
Colorado Department of Labor measures the unemployment rate, labor force, labor force participation, total employment and the number of unemployed is based on a survey of households. The total employment estimate derived from this survey is intended to measure the number of people employed.
All Colorado estimates from the establishment and household surveys, including greater geographic detail, are available at: http://www.colmigateway.com.
Estimates for all states and the nation are available at: http://www.bls.gov