Tuesday, June 12, 2012
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.