Economic
Snapshot
A look at the
current real estate market; provided by RE/MAX ALLIANCE
June/2012
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.
