Tuesday, June 12, 2012

Boulder County Economic Snapshot

Economic Snapshot
A look at the current real estate market; provided by RE/MAX ALLIANCE


            The term “global economy” has become part of the daily jargon as it relates to the ups and downs of the world’s various stock markets and the financial entities attempting to create some semblance of order to the world’s economy. Uncertainty appears to be the norm these days as Wall Street traders grapple with a market vacillating between bears and bulls, impacted by the doings across the pond and along the Pacific Rim.
            Locally, the Boulder Valley real estate market continues to show signs of stability as sales activity has improved thus far this year when compared to the last few years. Through May/2012, single family home sales throughout Boulder County are UP 25% compared to through May/2011 (1157 vs. 923); attached unit sales are UP 23% (422 vs. 343) for the same time periods; and the overall market is UP 24.72%. The market is still down slightly over 30% when compared to 2005, the benchmark year when sales activity peaked.
            Through May/2012, the Absorption Rate for Boulder County single family homes stands at 7.2 months (219 days). The Absorption Rate is the length of time it would take for the market to sell the entire existing inventory, assuming no new listings came on the market and the rate of sales activity remained the same. The Absorption Rate at the end of 2011 stood at 5.2 months (156 days); 2010 was 6.3 months (189 days). The Absorption Rate characteristically trends downward over the course of the year as sales activity increases during the spring and summer months. Look for that to also happen this year.
            Homes on the lower pricing end of the market ($150,000 to $500,000) always have the lowest Absorption Rate, since that is where the majority of listings and buyers can be found. Through May/2012, the Absorption Rate for this price range stands at 5.2 months (159 days). Surprisingly, the price range showing the most improvement in May/2012 versus April/2012 in days on the market was $700,000 to $1,000,000. That’s a good indication home buyers are moving-up the food chain into more expensive properties. Homes priced over a million dollars still haven’t felt that push yet.
            Looking forward, it appears the Boulder Valley market will continue on a similar plain. The available inventory of resale homes will remain low. An interesting fact, in May/2012 the number of sold properties were nearly identical to the number of new listings, which means available inventory isn’t increasing. Home mortgage interest rates continue to hover below the four percent mark for the traditional thirty-year fixed rate loan. There are no indications the powers to be in Washington are going to do anything soon to upset the financial apple cart.
            New home construction by production builders is reaching a point where “in-fill” lots are being built out, which means development of approved parcels will be their next path. Earth movers will once again be churning-up virgin land, and planning departments will dust off the cobwebs and begin sitting down with developers.
            That light at the end of the tunnel, which for years was simply another train coming our way, now appears to be a gift of sunshine for the Boulder Valley real estate market. The market is still a few years away from mirroring 2005, but at least it is moving in a positive direction.

Tuesday, April 10, 2012

Economic Snapshot
A look at the current real estate market; provided by RE/MAX ALLIANCE


            With the advent of spring, there appears to be a ray of sunshine for the Boulder County real estate market. Through March/2012 single family homes sales are UP approximately 11% year-to-date versus 2011; attached unit sales are UP approximately 7% year-to-date versus 2011; the overall market being UP approximately 10% year-to-date versus 2011. Assuming the local real estate market keeps a similar pace over the balance of the year, there will be approximately 4,000 single family homes (73%) and attached units (27%) sold in 2012. This would be somewhat comparable to sales activity for 2008 (4,270 sales), but still considerably below 2005 figures (5,795 sales) when activity peaked. 
            Below are some sold numbers for single-family homes for various geographic areas throughout the Boulder Valley. Information is courtesy of IRES (the Northern Colorado MLS).

                                                           2011 Sales                2012 Sales
                                                          1st Quarter               1st Quarter          
                         Area                        Single Family          Single Family       % Change
              Boulder                                        92                             138                  +50%           
              Erie                                              46                             50                    +9% 
              Superior                                       15                             19                    +27%                       
              Louisville                                     35                             28                    -20%
              Lafayette                                     36                             43                    +19%           
              Longmont                                    140                           172                  +23%           
              Suburban Plains                           99                             89                    -10%
              Suburban Mountains                   31                             34                    +10%           
                                                                   ===                          ===                 ====
                  TOTAL                                  494                           573                  +16%

            In the April/2012 issue of RISMedia’s Real Estate Newsletter, they listed outside influences that may have an impact on real estate.
1.      The Election: Will economic conditions improve as the President seeks to remain in office or will there be upsets with a change in leadership?
2.      The Job Market: The overall employment picture is improving, but the pace and direction it takes is critical to the housing market.
3.      The Weather: Did the calm winter rob sales from the spring and summer and frontload stats for 2012?
4.      The Banks: Credit standards have strangled many would-be homebuyers. If and how much the criteria loosens this year will have a direct impact on housing.
5.      The Investors: Many feel investors will play a big role this year. Their impact on decreasing excess inventory could provide an unanticipated boost to home values.
6.      The Renters: A big benefactor of the housing decline, the rental market has been booming. However, recent stats show that rising rents combined with low home prices has now made owning a home more affordable than renting one.

Thursday, April 5, 2012

Boulder County Economic Snapshot

Economic Snapshot
A look at the current real estate market; provided by RE/MAX ALLIANCE


            As is characteristic of this time of year, the inventory level of available homes starts to expand. For Boulder County, active listings are up 18% through February/2012 compared to the end of 2011. Sales of single family homes and attached units are up 4% for the first two months of this year compared to the first two months of 2011.
            After four years of a declining real estate market (2006 to 2009) and the past three years having reached a plateau in sales activity (2009 to 2011), there appears to be a renewed buyer interest in the Boulder County real estate market. This can be attributed to a variety of reasons.

·         Home Values Have Stabilized: Through February/2011 the median sold price for a single family home in Boulder County was $365,000 and an attached unit was $198,202. Through February/2012 those values were $370,000 for a single family home and $195,000 for an attached unit.
·         Home Mortgage Interest Rates: Who would have thought mortgage interest rates would hold at historic lows for as long as they have. The traditional thirty-year fixed rate loan continues to hover around 4%. Adjustable rate mortgages (those dastardly fiends that caused many people to lose their homes) can be had for fewer than 3% with the first five years fixed.  Interest only loans (also a bane of the past) are still available, but not as attractive as they once were.
·         Real Estate Is A Bottom Up Business: When a real estate market begins to churn in a positive direction it always starts at the bottom. Less expensive properties fuel the fire. This activity creates the opportunity for the domino effect to surface. Low end sellers buy more expensive homes causing a chain of sales to occur. Lack of available inventory can hamper this cycle as sellers wishing to move-up can’t find what they want.
·         New Construction:  In the movie Field of Dreams, the voice in the cornfield whispers: “Build it and they will come.” That is true of new construction. Activity begets activity. The sound of boom boxes and hammers pounding is like a moth drawn to a light, they attract buyers. Production builders have seen the light with new homes being constructed in pocket areas across Boulder County this late winter/early spring.  
·         Short Sales and Bank Foreclosures: These continue to play an active part of the real estate market as banks and the Federal Government continue to work their way through this process. When this mess is finally put to bed, we would hope the financial institutions and the government have learned their lesson and we won’t find ourselves treading down this path again – ever. 
·         Unemployment Rate: Jobs fuel the economy. The current unemployment rate for Colorado is running around 7.9%. At the beginning of 2011 it was at 8.9%. When the Boulder County real estate market peaked in 2005 the Colorado unemployment rate stood at 5.2%.

            There are a lot of positives in the Boulder County real estate market as we head into the spring. It continues to be a buyer’s market, especially in homes priced above a million dollars, but we are gradually moving toward a more balanced marketplace, which is good for both buyers and sellers.