The year 2019 was another very good year for residential real estate in the Boulder Valley, but unlike the previous five-plus years, it was marked by slowing appreciation, slightly rising inventory (finally), and longer average time on the market.
In Boulder County, median and average sales prices of single-family homes increased by a very modest 1 percent, while attached dwelling (condos and townhomes) appreciation was essentially flat. In the city of Boulder, the average single-family home sales price increased a modest 2.6 percent to an immodest $1,246,250, while attached dwellings increased 2.4 percent to $538,360.
Single-family listing inventory in Boulder County reached a peak of 1,058 homes and attached dwellings topped out at 370 units on the market, both reaching their peak in June, and both above the peak inventory of the last several years. To put this in perspective, however, the inventory of single-family homes in 2006 (just before the Great Recession) reached a peak of 2,763, more than two-and-one-half times the peak of 2019. That is, we still have far less inventory available than we used to.
The average number of days homes stayed on the market before closing reached 61 days, an increase over last year by 5.2 percent for single-family homes and 15.1 percent for attached units. The average months of inventory (the time it would take for all existing homes to sell if no additional homes came on the market) rose to 1.8 months, an increase of 6 percent for single-family homes and 28.6 percent for attached units. By traditional standards, this would still qualify as a seller’s market (when months’ of inventory is in the 5-6 percent range, it is considered a balanced market, and we are still a long way from that). Charts on top show a snapshot of the Boulder County 10 vital statistics we track to gauge the market.
So, what is going on? Why do the months’ of inventory indicate that we’re in a strong seller’s market when many of the other metrics are pointing toward a more balanced market? And what can this tell us about 2020?
Explaining the months of inventory question
There appear to be a couple of key factors keeping our months of inventory much lower than historically. First, the nation as a whole — and Boulder County especially — have been building far fewer new homes that we were building pre-Great Recession. This graph from census.gov illustrates the situation well:
In Boulder County, we are getting close to full buildout under our current zoning and land use regulations, meaning that unless they are amended, we will run out of available lots on which to build new housing. (In practicality, this means that neighboring counties will become our bedroom communities, as Boulder still has the lion’s share of jobs in our area and people will be forced to commute farther and farther.)
Thus, with people continuing to move into the area at a strong pace while building is lagging behind, demand will structurally continue to outpace supply.
Second, people are staying in their homes longer than they used to. In 2010, homeowners nationwide stayed in their homes an average of eight years before selling. By 2019, that figure had increased to 13 years. With people selling less frequently, inventory goes down and, with strong demand like we have in Boulder, months of inventory stays low, too.
In Boulder, this issue is exacerbated by the fact that a lot of our homeowners are older (the National Association of Realtors reports that homeowners 73 years and older stay in their homes for an average of 17 years) and many of these Boulderites want to continue to age in place. Moreover, the Boulder Valley does not have a lot of options for the elderly looking to downsize and stay in their current community.
Accordingly, housing turnover is lower than it used to be, and this trend is likely to be even stronger in Boulder, further suppressing inventory.
For 2020, it appears that our available housing inventory will continue to be reined in by the structural impediments of inability to build sufficient new housing and current homeowners staying in place. That will put upward pressure on prices. Continued migration into our area fueled by our (currently) robust economy will keep demand high and put additional upward pressure on prices. Additionally, our return to very low interest rates will allow more potential buyers to qualify for our expensive property than would have otherwise been the case.
On the other side of the equation, home prices have risen so high (especially in the city of Boulder) that, even with low interest rates, the pool of buyers able to buy in our area will be relatively small. Moreover, the political uncertainty of election years can cause people to take fewer risks (such as buying a home). The fact that this promises to be an especially colorful election cycle will likely be a drag on demand as we get closer to November.
Based on the foregoing, if I had to make a prediction, I would suspect that the first part of the year will have very strong activity, with prices rising and multiple offer situations being not uncommon. Then, I suspect that the market may cool as we get closer to the election, which may be an especially good time to buy for those with intestinal fortitude.
Originally posted by Jay Kalinski
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.
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.
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.
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.”
The usual story of ever-rising Boulder rents took a new turn this month. Data for August 2018 shows Boulder rents fell slightly by 0.1 percent last month and by 0.1 percent year-over-year, according to the latest report from rental site Apartment List.
That translates into median apartment rent of $1,150 for a one-bedroom and $1,410 for two-bedrooms. But even with the minor dip, Boulder’s median two-bedroom rent is above the national average of $1,180.
Nationwide rental rates went up about 1.5 percent, which the report found is down from a high of 3.6 percent in 2015.
Compared to the state and nation, Boulder’s rental price growth is below average. The city lags the state average of 0.4 percent rent growth year-over-year.
Rent also decreased in Colorado’s City of Aurora with a reduction of 0.8 percent year-over-year. A two-bedroom apartment in Aurora rents for $1,560.
But statewide, rental prices continue to trend upward. Colorado’s rental prices rose 0.4 percent over the past year. Eight of Colorado’s ten largest cities show rising rents.
Loveland, Thornton, and Westminster all have year-over-year growth above the state average with rent increases of 2.8 percent, 2.6 percent, and 1.9 percent, respectively.
Thornton is the most expensive of all Colorado’s major cities with a median two-bedroom rent of $1,860.
Many cities nationwide saw increases, including Phoenix, Atlanta, and San Francisco, rising 2.5, 1.5 and 1.1 percent, respectively.
Orlando has the fastest rent growth in the nation with an increase of 5.3 percent over last year. Second in the nation is Riverside, CA with 4.1 percent year-over-year growth, followed in third place by Anaheim at 3.6 percent.
The state of Nevada leads the country for the fastest rent growth at 3 percent, followed by Arizona at 2.2 percent.
Apartment List determines rent standings using reliable median rent statistics from the Census Bureau and extrapolates forward to the current month using a growth rate calculated from Apartment List listing data.
You can read the full report at https://www.apartmentlist.com/co/boulder#rent-report, see the national rental statistics at https://www.apartmentlist.com/rentonomics/national-rent-data/. If you want to know where rents are growing fastest, visit https://www.apartmentlist.com/rentonomics/rents-growing-fastest/.
Nine Colorado cities rank in the top 50 best cities for first-time home buyers, according to recent analysis by WalletHub, a personal finance website. Four of those made the top 20 – Centennial, Thornton, Arvada and Greeley, coming in at Nos. 3, 6, 17, and 20, respectively.
With home prices rising in Colorado and across the nation, buying a first home is challenging. Potential buyers need to develop a realistic perspective on market prices, their financing options, and neighborhoods that have a good reputation and appeal to their lifestyle.
To help potential buyers target possible locations, WalletHub compared 300 cities of varying sizes across 27 key indicators of market attractiveness, affordability, and quality of life. Data includes important factors like cost of living, real-estate taxes, and property-crime rate.
Here are the rankings of the Colorado cities reported:
25. Fort Collins
27. Colorado Springs
Among those cities, Colorado Springs has the fourth-lowest real estate tax rate in the nation.
First-time home buyers are often in the millennial generation. As it turns out, Colorado is the ninth-best state for millennials, according to a separate WalletHub report.
Millennials – those born between 1981 and 1997 – make up over 35% of the workforce. While often thought of as “kids,” the oldest are 37 years old.
In addition to a total score of 9, Colorado ranks high for quality of life (7), economic health (3) and civic engagement (10). No. 1 ranked District of Columbia also ranked first in the nation for quality of life and civic engagement.
Colorado was evaluated along with all 50 states and the District of Columbia across 30 key metrics, ranging from share of millennials to millennial unemployment rate to millennial voter-turnout rate.
Here’s a look at the top 10 states for millennials:
For more information, see the full reports at https://wallethub.com/edu/best-and-worst-cities-for-first-time-home-buyers/5564/#methodology and https://wallethub.com/edu/best-states-for-millennials/33371/ .
Posted by Tom Kalinski Founder RE/MAX of Boulder on Friday, August 24th, 2018 at 10:36am.
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.
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.
It’s beginning to look a lot like this year’s Boulder County real estate sales performance will outperform last year’s robust close. Year-over-year sales data for 2017 shows slight improvements compared to 2016, even with inventory at persistently low levels.
“It just proves that demand is strong and consistent,” says Ken Hotard, senior vice president of public affairs for the Boulder Area Realtor® Association.
Single-family home sales in the Boulder area improved 2.1 percent year-to-date through November 2017 compared to the prior year – 4,224 homes sold vs. 4,138.
And the sale of 1,377 condominiums and townhomes through November represented a 5.5 percent gain compared to the prior year’s 1,305 units sold.
“We saw year-over-year sales improvements, but the pull-back in November compared to October was more than average,” says Hotard.
He’s referring to the 7.9 percent drop in single-family home sales in November compared to October — 359 vs. 390 homes sold. Attached dwellings sold decreased 2.4 percent month-over-month with 123 units sold vs. 126.
Since the weather was excellent for house hunting, the pullback is likely indicative of more than the typical seasonal slowdown.
“Inventory is probably the culprit in the November pullback this year, which resulted in not only fewer sales, but also a softening of prices,” he says. When it comes to low inventory, there is “no end is in sight for the foreseeable future.”
Hotard believes price-softening is confined to higher end homes where inventories are larger and homes take twice as many days on the market before selling. “Lower priced homes are not affected,” he adds.
While buyer demand is strong, low inventory can’t supply that demand. November’s inventory is telling: Single-family homes for sale in the Boulder-area dropped 22.8 percent in November compared to October with 777 homes for sale vs. 1,006. Condos and townhomes felt the pinch slightly harder with a 24.7 percent drop for the month of November – 146 units vs. 194.
Mortgage interest deductions may diminish in importance as a result of the doubling of the standard deduction as part of recent tax reform legislation. The National Association of Realtors predicts only a small percent of homeowners will take advantage of the mortgage interest deduction in years to come because of that change.
*Photo courtesy of Edwin Andrade on Unsplash.com