Thursday, October 13, 2011
The economic climate these days is reflective of a yo-yo. One day it’s up, the next it’s down. I believe we would all be a little happier if it would stay about the same from one day to the next; preferably up.
The Boulder County real estate market has remained relatively stable the past few years. According to IRES, the Northern Colorado Multiple Listing Service, in 2009 there were 3,665 single family/attached unit sales in Boulder County. There were 3,660 sales in 2010. Through September of this year that number is tracking about 6.5% behind last year, which would equate out to around 3,425 sales for 2011.
Home mortgage interest rates have dropped to the lowest level in decades, which has impacted the refinance market, but not so much the resale market of homes. As is characteristic of this time of year, the inventory of available properties continues to drop. This pattern will sustain itself into the spring of 2012.
If you are a home seller, where do you go from here in a real estate market that will naturally continue to soften? Where there are fewer prospective buyers, but also fewer options for the buyers who are actively in the market. There’s an old saying in real estate: “Price overcomes all objections.” That statement holds most true in a declining real estate market – a buyer’s market.
The Boulder County real estate market has struggled to right itself since 2005, when the local market peaked. There were 5,795 single family/attached unit sales that year. That’s a huge difference from where we are today. Admittedly, the Boulder County real estate market hasn’t felt the significant negative impact in housing values that other parts of the country have experienced, but it still has been affected by the economic environment.
The Absorption Rate for Boulder County (single family homes) at the end of September was 7.7 months or 233 days. If you are attempting to sell a home priced at over one million dollars, the Absorption Rate averages 24.8 months or 756 days. That’s a long time to wait for a buyer.
As we wind our way through fall toward winter, there doesn’t appear to be a white knight perched on the horizon that is going to magically lift us out of this somewhat stagnant real estate market. Jobs are the white knight. They are at the core of the economy. As jobs are created, the economy shifts in a positive direction, which benefits the housing industry.
So, if you are a home seller looking for that one buyer, you need to be the best value not only on your block, in your neighborhood or in your community; you have to be the best value out there from the perspective of that one buyer. Buyers have other options to choose from and they are willing to wait for the right opportunity.
Real estate is a little different from many other types of business. It is a business of negotiation pitting buyers against sellers; each wanting to garner the “best deal”. That is where the Boulder County real estate market is today. Buyers have the upper hand. They call the shots. Sellers who aren’t willing to play in what seems like a “zero sum game” can be left standing on the sidelines; hoping for another prospective buyer to come their way.