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Real estate in the time of COVID-19
At the start of the year, I read an article about the 10 biggest threats to the global economy in 2020, written by a prestigious international organization. “Global pandemic” did not make the list, which goes to show how generally lousy we humans are at accurately predicting the future. As such, any predictions that I (or anyone else) could give you about how this pandemic will unfold, in terms of its impact on the local real estate market, would likely fare no better than random chance. Similarly, with the situation evolving so rapidly, any advice or best practices I could offer today may become obsolete in short order.
So, rather than peddle advice and predictions, let’s pause and take stock.
Nationally:
Back in 2008, the financial crisis was sparked in the real estate sector and led to a crisis that nearly collapsed the banking system. We see from history that recessions that begin in the housing sector tend to be worse and last longer than recessions ignited by other factors. Today, the recession we are likely heading into has a very different background — our economy and housing market were far stronger and more resilient, thanks in part to the measures put in place after that recession (tighter lending restrictions, more stringent liquidity requirements for banks, etc.). In fact, we were enjoying the longest economic expansion since WWII.
According to National Association of Realtors chief economist Dr. Lawrence Yun, “Conditions today are very different than the last boom/bust cycle. In 2004, we had a huge oversupply of new homes. In 2019, we still had a huge undersupply of new homes. In fact, we haven’t been building enough new homes to keep up with demand in over a decade. During the last downturn, there was the subprime factor and the variable interest rate. Now there are fewer variable rate mortgages and virtually no sub-prime mortgages.”
Colorado and Boulder County outperform the nation:
Colorado is well-positioned as a top economy nationally. Real GDP growth in Colorado ranked seventh in the nation year-over-year, and the state’s five-year average ranks fifth, according to economist Rich Wobbekind with CU-Boulder’s Leeds School of Business. Wobbekind says that Boulder County’s economy has been outgrowing the state economy, and is uniquely able to weather a recession. Boulder County’s economic vitality is fueled by a highly educated workforce and diverse ecosystem of industries including government research facilities, aerospace, biotechnology, cleantech, and information technology — industries that endure in the long term.
Boulder ranks number one in the nation for home value stability and growth for the fifth consecutive year, according to SmartAsset. As discussed in our recently published real estate report, based on our extensive data and market analysis, we have had a healthy housing market through 2019. Even through the grim days of the Great Recession, home prices in Boulder County declined only by 5 percent and recovered quickly post-recession. If you held onto your home for at least six years, there is no period when you would have lost money on your investment here.
Summing up:
While past performance is no guarantee of future results, the real estate market in our area has a history of weathering recent recessions better than other places and recovering more quickly after the storm has passed. Given everything that is going on, I still believe that owning property in Boulder Valley is and will continue to be an excellent investment.
Be well and do what you can to flatten the curve. Stay home.
Kalinski: How buying and selling a home will change in the Roaring 20s
As we enter a new decade, the massive wave of technological advancements fueled by entrepreneurial tech companies has reshaped consumers’ expectations. Companies such as Uber and Amazon have both dramatically shortened the time that people expect to wait for gratification and raised consumers’ expectations with regard to the ease and smoothness of the experience. That is, consumers now expect to press a button and have whatever it is that they want delivered to them in a matter of a couple days (Amazon shipments), hours, or even minutes (Uber rides); moreover, they want to be able to track their shipment’s progress through a simple, pleasing interface on their phones.
While consumers now expect smooth, pleasant and near instant gratification in most aspects of their lives, the real estate home sale process still typically takes 30 to 45 days and — due to its complexity, legal ramifications, and the fact that it is an ongoing negotiation between multiple parties — it is usually neither frictionless nor “fun.” This growing friction between consumers’ expectations and the longer duration and complexity of completing a real estate transaction has made the industry ripe for innovation. What follows are the likely developments that will make real estate transactions faster and easier over the coming decade.
1. The home search-to-closing customer journey. The days of agents-as-gatekeepers of real estate listings are gone. These days, most buyers start their search online and look at up to hundreds of homes to educate themselves. When they get serious, though, about 90 percent of buyers (and sellers) choose to use an agent to help them with the home buying/selling process.
Why is that? It’s because Realtors realized that they needed to change their value proposition to buyers and sellers in order to stay relevant and, well, valuable. One of the challenges for buyers and sellers is that, with the exponential growth of information available on the internet, the amount of “noise” has grown exponentially as well, but the valuable information (the “signal”) has become harder to find. Today’s Realtors have things that are in short supply online: hyperlocal and market knowledge, a network of trusted vendors and professionals, expert negotiation skills, a refined process to make the home buying/selling experience less painful, etc. These skilled Realtors who have adapted to consumers’ shifting expectations provide their clients with better technology, a smoother process, and expert advice. Those agents who fail to adapt will eventually exit the business.
Other innovators, such as so-called iBuyers, will make you an offer, often within a day, to buy your home for cash quickly. This convenience, however, comes at a cost, as many iBuyers will likely cost you two-to-five times more out-of-your-pocket than using a Realtor would.
2. The loan experience. Typically, the longest (and perhaps most annoying) part of a real estate transaction is the loan process. Many lenders can take 30 days or more to complete their due diligence, including their assessment of your loan-worthiness and an appraisal of the home, before approving a home purchase loan. Anyone who has been through this process knows how frustrating and slow it can be.
Fortunately, at least for many people, this process may get a lot shorter and easier. Lenders are using artificial intelligence (AI) to conduct automated appraisals on properties and help with assessing buyer’s applications. For “in the box” situations, with well-qualified “W2 employees” buying homes that the AI algorithms can value with a high degree of confidence, the underwriting process can be dramatically shortened without the need for a physical appraisal. This is already a reality — last fall, we represented buyer clients whose lender did not require an appraisal on the home they were buying and gave them very fast loan approval.
3. The title and closing process. Almost everything can seemingly be accomplished these days online from the comfort of your home. However, at least in Colorado, you still need to physically go to the title company and hand-sign a stack of documents in front of its notary public (how barbaric, right?). Well, this isn’t actually the title company’s fault, as many lenders — and state law — still require physical notarization of certain documents.
The good news is that this may change in 2020, if the Colorado legislature passes a bill similar to Senate Bill 18-109, which would allow optional remote notarization of documents. If such a bill were to become law, then notarizations could be done using audio-video recording of the document signing (kind of like signing over Skype or FaceTime, but with more layers of security). Thus, you would be able to close on the purchase/sale of your home from anywhere in the world, so long as you have a good internet connection.
Conclusion. The players in the real estate industry have (finally) recognized that consumers’ expectations and demands have shifted and are innovating quickly to make the home buying and selling process faster, easier, and more enjoyable (or, at least, less painful). Within the next few years, many people will be able to buy/sell a home in half the time or less than it takes on average today, and with a lot less disruption to their lives.
Originally posted by Jay Kalinski is broker/owner of Re/Max of Boulder.
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.
RE/MAX Elevate Calls Louisville Home
Why Louisville and why now?
Those are the questions RE/MAX Elevate, the sister franchise of RE/MAX of Boulder, had to answer when deciding whether to put roots down there with its first office. And the answers came easy. Louisville is to many the unofficial “Capital” of East Boulder County. Business booms there, school are great, families love it, and it’s been recognized numerous times in the national media as one of the safest and best places to live in the nation (Money Magazine’s “Best Places to Live” in 2009, 2011, 2013, 2015, and 2017, one of the “20 Safest Places to Live in Colorado” by Elite Personal Finance, and among the “10 Best Towns for Families in the U.S.” by Family Circle Magazine). Louisville is a great little city. In fact, 78 percent of respondents to a citizen survey rated Louisville as an “excellent” place to live.
So it was with much excitement that RE/MAX Elevate planted its flag at 724 Main Street and had its grand opening on May 1. The public was invited to enjoy a ribbon cutting ceremony with Shelley Angell, executive director of the Louisville Chamber of Commerce, live music by Louisville musician Johnny O., wine and sangria tasting with local Decadent Saint winery thanks to Premier Lending LLC, small bites by local Wildcraft Kitchen, desserts from Bittersweet Café & Confections, and flower arrangements donated by Red Door Flowers. RE/MAX Elevate thanks the sponsors and vendors who made it such a special day in Louisville.
It is with much excitement that RE/MAX Elevate planted its flag at 724 Main Street in Louisville and had its grand opening on May 1. (Photo: Jonathan Castner)
RE/MAX Elevate Broker/Owner Jay Kalinski. “It’s an ideal place to live and do business with a great quality of life. We Heart Louisville. That’s the sentiment you’ll see on t-shirts and stickers for RE/MAX Elevate.”
Jay says that for those who want a little more space to live in, along with the beauty and amenities of Boulder County, Louisville is a remarkably attractive choice.
Lest our readers think this is a case of a national “chain” without ties to the community setting up shop in a hot market, a brief history lesson is helpful.
RE/MAX of Boulder was founded 42 years ago in Boulder by Tom Kalinski. At the time it opened for business, it was only the third RE/MAX franchise in the United States. RE/MAX of Boulder has been the No. 1 company in Boulder Valley home sales for more than 30 of its 42 years and the No. 1 single RE/MAX office in the U.S. 8 times. The company has more than 100 award-winning Realtors who are among the best in the nation, averaging more than 15 years of experience. They are seasoned experts with the utmost dedication to clients, going far beyond the extra mile to help them navigate an often challenging market. Jay became Co-Owner of RE/MAX of Boulder in 2012 and helped further expand the company to where it is today, serving as Broker/Owner for several years.
While Jay remains co-owner of RE/MAX of Boulder, he has turned Broker duties back over to Tom, so he can focus on expanding RE/MAX Elevate. Jay is a Boulder native, CU-Boulder alumnus, and Tom’s son. Jay, a lawyer and military veteran, says, “We’re thrilled to introduce RE/MAX Elevate to Louisville, where many of our founding real estate agents – and their families – live, work, and go to school, and where our clients are selling or searching for homes. We are rooted in the community.”
Jay has been a licensed broker for 10 years and a licensed attorney for 14 years having worked at several prominent law firms and serving 4 ½ years on active duty as an Air Force JAG officer. “We are committed to the city of Louisville, East Boulder County, Broomfield, and beyond,” Jay says. “And as a small local veteran-owned business, we are excited to be actively involved in the local entrepreneurial community and with nonprofits and community organizations and to support the vitality and wellbeing of the community.”
Manager Tammy Milano with Broker/Owner Jay Kalinski
Realtors in both offices have donated gift baskets from Louisville businesses for a free drawing, which kicked off during the grand opening party. Drop by any day during business hours in May to enter. Tickets will be drawn and winners announced during the Taste of Louisville on June 1. And to celebrate the opening of the new office, RE/MAX Elevate is sponsoring the Louisville Public Library’s Summer Reading Program. RE/MAX Elevate along with RE/MAX of Boulder are giving back to the community by co-sponsoring the Louisville Downtown Street Faire on Friday nights thoughout the summer.
Jenni Hlawatsch, owner of The Singing Cook, the business next door to RE/MAX Elevate where she continues to be a neighbor, is looking ahead as she welcomes the new office. She says, “While I’ll miss my Book Cellar neighbors, I look forward to the new business relationship with Jay and the RE/MAX Elevate team who are eager to support and get involved in all the goings on in downtown Louisville.”
“We’re delighted to welcome RE/MAX Elevate to downtown Louisville,” says Louisville Mayor Bob Muckle. “Their contributions to the local economy and strong tradition of community involvement will be a win for us all.”
RE/MAX Elevate is a member of the Louisville Chamber of Commerce and the Louisville Downtown Business Association.
RE/MAX Elevate, 724 Main St., Louisville; 303.974.5005; elevatedrealestate.com. Hours are: M-F 10:00 AM – 5:00 PM; Sa/Sun 11:00 AM-4:00 PM
By Darren Thornberry, At Home
Photos by Jonathan Castner and Flatirons Pro Media
Originally Posted by RE/MAX of Boulder
Re/Max of Boulder owner to launch new Louisville office
LOUISVILLE — Jay Kalinski, owner of Re/Max of Boulder, is opening a new real estate agency in Louisville under the Re/Max Elevate banner.
The Re/Max Elevate office, set to celebrate a grand opening May 1, is at 724 Main St.
Kalinski said agents had been clamoring for an office in eastern Boulder County because many live in that area and many have clients looking for homes in places such as Louisville, Lafayette, Firestone and Frederick.
“Over time, more and more of our agents have been working outside of the city of Boulder and outside of Boulder County,” Kalinski said,
And while the company considered opening the office in other nearby towns, “Louisville seemed to be a consensus choice,” he said.
The Re/Max Elevate office, technically a separate franchise from Re/Max of Boulder Inc., will launch with 15 agents. A handful are transferring from the Boulder offices, but most are newly recruited agents.
Kalinski said the office may be able to support as many 20 or 25 agents. For comparison, Re/Max of Boulder has about 115 agents.
Kalinski said the Louisville office will likely not be the last new location for his team.
“We’re in growth mode and looking to expand,” he said.
The decision on where to target for the company’s next office will — like the Louisville decision — be driven by input from agents and clients, he said.
Originally posted by Lucas High
