Boulder County economic update

Economic Snapshot

A look at the current real estate market, provided by RE/MAX ALLIANCE

July/2014

              Thus far this year home values continue to rise across the Boulder Valley as demand exceeds supply. New construction throughout the eastern portion of Boulder County has augmented a portion of the increased buyer demand, but resale listing inventory has plateaued, with monthly home sales somewhat mirroring monthly listings entering the market.

              In late June/2013 there were 1,353 active single family home listings in Boulder County. At the end of June/2014 that number stood at 1,284. Sales of single family homes through June/1014 are down 10.40% compared to through June/2013 (1,543 vs. 1,722). Attached unit sales for the same time periods are comparable (645 vs. 648).  

              Below is a brief overview of sales values by locale for single family homes from IRES (the Northern Colorado MLS). 

              

                                           2013 (Thru June)          2014 (Thru June)       

                Area                 Average Sales Value      Average Sales Value    % Change

              Boulder                         $749,116                     $804,668                     +7.41%

              Superior                        $469,584                     $504,825                     +7.50%

              Louisville                      $504,165                     $519,973                     +3.13%

              Lafayette                      $423,943                     $429,902                     +1.40%

              Longmont                     $280,923                     $304,563                     +8.41%

              Suburban Plains            $571,726                     $588,583                     +2.94%

              Suburban Mountains    $427,505                     $510,580                     +19.43%

              Broomfield                   $391,432                     $410,368                     +4.83%

                                                   =======                    =======                    =======

                 Average …               $476,568                     $499,963                     +4.90%       

              For Boulder County, this summer housing season is similar to last year’s. Here are some comparisons.

·            The Absorption Rate (the time it takes for the market to fully turn) for single family homes in June/2013 was 144 days; June/2014 was 150 days.

·            The thirty-year fixed rate mortgage could be had for 4.07% in June/2013; 4.16% in June/2014 … zero discount points on those rates. Thirty years ago (June/1984) the rate was 14.42%, with 2.5% in discount points. Each point lowers the interest rate by one-eighth to one one-quarter of the  interest rate. Zero discount points would have equated out to a rate of around 15% in June/1984.

·            As noted above, the level of available inventory for the two years is very similar. Inventory normally peaks around mid-summer and then begins to slowly drift lower as summer turns to fall and winter makes its presence known. 2013 ended the year with 679 active single family home listings in Boulder County.

·            Through June/2013 there were exactly 100 single family home sales in Boulder County for $1,000,000 (one million) and up. Through June/2014 that number stood at 110 single family homes.

              

Real Estate Market Update for the Boulder County Area.

Economic Snapshot

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

April/2014

            “Go west, young man” was a popular phrase in the 1800’s advocating the westward expansion of the country.  The phrase symbolized the idea that agriculture could solve many of the nation’s problems of poverty and unemployment characteristic of the big cities of the East.

            In the Boulder Valley, since the early 1970’s, there has been an on-going expansion of the bedroom communities east of Boulder. It started with new home construction in Louisville and Lafayette, then progressed to Superior, and now has found its momentum in Erie. Retail and commercial development followed in the footsteps of new home construction – you need to have rooftops to support business development.

            The most apt phrase today would be “Go east, home buyers!” There are several reasons for this: (1) New construction, at reasonable prices, continues to populate the landscape. (2) Resale homes, although at a low level (364 active single family home listings, with 150 of those under contract. 68 active attached unit listings, with 36 of those under contract.), are a good value. (3) Open space and recreational facilities have been a key component of growth throughout these communities, with quality of life being a major focus. Biking and jogging trails stretch from one community to the next. For young families, these are fantastic areas to raise children. Did I mention the awesome mountain views?  

With all this talk about going east, 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).

                                                           2013 Sales                2014 Sales

                                                          1^st Quarter               1^st Quarter          

                         Area                        Single Family          Single Family       % Change

              Boulder                                        143                           117                  -18.19%       

              Erie                                              70                             106                  +51.42%

              Superior                                       23                             18                    -21.74%                   

              Louisville                                     30                             27                    -10.00%

              Lafayette                                     51                             50                    -1.97%         

              Longmont                                    235                           181                  -22.98%       

              Suburban Plains                           96                             93                    -3.13%

              Suburban Mountains                   42                             43                    +2.38%        

                                                                   ===                          ===                 ====

                  TOTAL                                  690                           635                  -7.98%

            As various communities reach a build-out stage, the natural tendency of home builders is to search for virgin ground. Over the course of the past forty plus years that ground has been found east of Boulder. These small bedroom communities have grown over time and created their own identities. If you’re considering a move, take the time to “Go east!” and you’ll find a multitude of housing and family/retirement oriented opportunities.

Boulder Valley Real Estate Snaphot

Economic Snapshot

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

April/2013

            One of the issues the area real estate market faced as the year began was available inventory of homes for sale across the Boulder Valley. 2012 ended with 814 single family active listings in Boulder County. That was down 27% from the end of 2011 (1121 active single family listings).

The decline in inventory was driven by sales activity. When comparing 2012 to 2011, single family home sales were up 24.44% (3258 vs. 2618) for Boulder County. Attached unit sales were up 20.80% (1144 vs. 947) for the same time periods. Collectively, those two market segments were up 23.47%.

Through March/2013 the Boulder County real estate market continues to sustain itself. Single family home sales are up 14.61% compared to through March/2012 (604 vs. 527). Attached unit sales are up 20.41% for the same time periods (230 vs. 191).

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).

                                                           2012 Sales                2013 Sales

                                                          1^st Quarter               1^st Quarter          

                         Area                        Single Family          Single Family       % Change

              Boulder                                        138                           143                  +3.62%        

              Erie                                              50                             70                    +40.0%

              Superior                                       19                             23                    +21.05%                  

              Louisville                                     28                             30                    +7.14%

              Lafayette                                     43                             51                    +18.60%      

              Longmont                                    172                           235                  +36.62%      

              Suburban Plains                           89                             96                    +7.86%

              Suburban Mountains                   34                             42                    +23.52%      

                                                                   ===                          ===                 ====

                  TOTAL                                  573                           690                  +20.41%

            This is the scenario that currently exists across the Boulder Valley, Metro Denver, and Northern Colorado – fewer listings and more sales. Combined with low mortgage interest rates the result is a perfect storm, if you’re a seller.

            Normally, scarcity creates demand, which in turn adds value to whatever is in short supply. Looking at the areas noted above and average sales value; here is what has happened to the average sales value for single family homes when comparing end-of-year 2012 to through March/2013: Boulder (+2.62%): Louisville (+1.56%); Lafayette (+12.61%); Longmont (+9.66%); Superior (+.96%); Erie (+9.50%); Suburban Plains (+5.45%); and Suburban Mountains (+3.40%). Collectively, these market areas are +5.14%.

            Look for the Boulder Valley spring real estate market to continue to flourish. Available inventory will creep-up, but will continue to be swept-up by prospective buyers waiting in the wings. Mortgage interest rates have trickled-up over the past few weeks, but there are no signs on the horizon they will shift noticeably either up or down for the balance of 2013. 

Boulder Valley Real Estate Economic Snapshot

Economic Snapshot

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

February/2013

            The Boulder County real estate market continued its active pace in January/2013 as single family homes and attached unit sales outpaced January/2012 sales. Single family home sales were UP 20% (166 vs. 138). Attached unit sales were UP 29% (62 vs. 48). The collective market was UP nearly 23%. Sales figures for January/2013 approached January/2007 sales numbers.

            The inventory of available single family homes increased 5.77% at the close of January/2013 compared to the end of 2012 (861 vs. 814). Inventory levels will continue to grow as winter melds into spring and the real estate market gains momentum. Available inventory will be the key to how active the Boulder County real estate market is in 2013. 2012 ended the year with nearly 27% FEWER active single family homes on the market compared to the end of 2011 (814 vs. 1121). When you take 2010 into consideration, there were 40% fewer single family homes available at the end of 2012 (814 vs. 1353). The past two years have seen buyer activity increase swallowing-up available inventory. Expect this pattern to continue throughout 2013.

            On the financing side, the Federal Reserve has indicated they are going to keep lending rates at historic lows through the balance of 2013 and into 2014. The Fed’s goal is to get the national economy stabilized and then growing at a reasonable rate. National unemployment rates have dipped to slightly under 8%. Colorado’s unemployment rate has pretty much mirrored the national rate for the past five years.

When the Boulder County real estate market was HOT back in 2004 through 2007, the Colorado unemployment rate had dipped below 4%. The national rate dropped to around 4.5% at that time. In its August/2012 economic forecast, the Congressional Budget Office (CBO) estimated the unemployment rate would be 5.9% by 2017. Getting from there to below 4% again would require a Herculean effort on the part of the local, national and global economy.

But that’s the future. We have to deal with the realities of today. Here are some thoughts to chew-on in looking at the Boulder Valley real estate market.

1.    It’s a seller’s market, especially at the entry-level. Single family homes in Boulder County priced from $150,000 (yes, there are still a few out there at that price level) to $600,000 had an Absorption Rate of 114 days in January/2013. (That number will decline as the year progresses.) In January/2012 the Absorption Rate for the same price range was 236 days.

2.    If an entry-level property is priced competitively and in reasonable condition, multiple offers are now the norm. Short sale properties, especially, invite multiple offers.

3.    The upper end of the market (homes over one million) is showing some resiliency. In January/2013 there were nine million dollar plus homes sold in Boulder County. In January/2012 that number was seven.

4.    As buyer demand increases, home values follow suit. We’re seeing the trickle-up effect as mid-range and upper end homes are experiencing a positive movement in values.

In the Boulder Valley, spring and early summer are characteristically the busiest time of the year with home closings peaking in the March through August period.

2012 Boulder County Real Estate Update

Economic Snapshot

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

January/2013

            In taking literary license with Charles Dickens’ opening line in A Tale of Two Cities, the 2012 Boulder County real estate market wasn’t the best of times or the worst of times, but it did experience a marked improvement over the past several years.

Single family home sales were UP 24.10% in 2012 when compared to 2011 (3,249 vs. 2,618). Attached unit sales were UP 20.48% for the same time periods (1,141 vs. 947). The collective market was UP 23.14% (4,390 vs. 3,565). This was the best year since 2007 for Boulder County sales activity, but it was still down 24.25% from 2005 when the market peaked (4,390 vs. 5,795).

The Absorption Rate (the length of time it would take for the market to fully turn) for single family homes ended the year at 91 days for Boulder County. 2011 ended the year at 156 days; 2010 at 189 days. Homes sold twice as fast in 2012 than they did in 2010. This was spurred my low mortgage interest rates and diminishing inventory.

For Boulder County, the year ended with 814 active listings. This was down 27.39% when compared to the end of 2011 (814 vs. 1,121) and down 39.84% when compared to the end of 2012 (814 vs. 1,353).

Below is an overview of sales activity for the past two years for single family homes in the various Boulder Valley areas, courtesy of IRES – the Northern Colorado MLS.   

   

                        2011       2012           %                 2011                  2012                 %

     Area           Solds      Solds      Change     Average Price   Average Price   Change

Boulder           614         786         +28.01%         $664,423          $668,423         +0.60%                 

Louisville        201         241         +19.90%         $412,121          $431,017         +4.58%        

Lafayette         251         302         +20.31%         $372,445          $385,179         +3.41% 

Superior           109         157         +44.03%         $423,885          $425,426         +0.36%

Longmont       831         995         +19.73%         $244,825          $258,856         +5.73%     

Sub. Plains      411         537         +30.65%        $552,552          $552,612         N/C          

Sub. Mtns.       253         296         +16.99%         $396,421          $422,299         +6.52%        

Broomfield      351         373         +6.26%           $354,650          $357,449         +0.79% 

                        ===        ===        ======          =======         ======           ======

   Totals …      3021    3687         +22.04%        $425,616          $440,742         +3.55%    

            2013 promises to be a year of continued change. Here are some thoughts relative to what the Boulder County market may experience.

• Lack of available inventory will further foster a seller’s market, with both the resale market and new construction benefitting.
• Land sales, once a dormant part of the real estate landscape, will experience a rebirth as production and custom builders seek out new opportunities.
• Home mortgage interest rates should continue to hover below 4.0% for the traditional thirty-year fixed rate mortgage as the economic impacts of the decisions surrounding the fiscal cliff become more apparent.
• Rental rates will continue to increase as the availability of rental units shrinks.    

Boulder County Economic Snapshot

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.

Boulder Valley Economic Snapshot

October/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.

Economic Snapshot for Boulder Valley Real Estate

Economic Snapshot July/2011 During the past few years there has been a great deal of discussion and debate in the economic arena about the national real estate market. Most of it hasn’t been pleasant. When something positive surfaces i.e. sales are improving, home values have stabilized, etc. it can be viewed from the perspective that the real estate market is beginning to shift. The days of doom and gloom are behind us and sunny days are the new norm. Real estate markets have traditionally followed that scenario. They bottom-out at some point and then begin the arduous task of righting themselves and slowly (very slowly) gaining momentum. Buyers are once again actively engaged in the process. Sellers are once more receiving reasonable value for their homes. Realtors, mortgage lenders, appraisers, home inspectors and insurance companies feel the impact of the change. New home construction gears-up. The sound of hammers, saws and “boom boxes” once again fill the air. The real estate market we have been experiencing for the past five or six years is slightly different. At times it offers the promise of a renewed enthusiasm. At others not so much. If you follow the stock market, it’s a roller coaster. One day it’s up based on some newly published economic index. The next day it’s down based on some foreign country threatening to default on their loans. The housing market can feel much the same. According to MetroList (MLS), real estate contracts for the Denver Metro area written in June/2011 are up 22.5% compared to June/2010. That’s a positive. Available homes for sale in June/2011 are down 15.7% compared to June/2010. That’s a positive. More sales; less inventory; scarcity creates demand. The hope is the Denver Metro/Boulder Valley real estate market will sustain itself through the balance of the summer and into the fall. That home buyers and investors will see this as an opportune time to buy. Sellers will view this as a favorable time to move-up, move-down or move-on. Below is a brief overview of the housing market in our area by locale for single family homes from IRES (the Northern Colorado MLS). 2010 2011 (Thru June) Area Average Sales Price Average Sales Price %Change Boulder $649,726 $672,072 +3.44% Superior $426,358 $419,758 -1.55% Louisville $440,176 $398,612 -9.45% Lafayette $357,129 $362,301 +1.45% Longmont $256,222 $246,738 -3.70% Suburban Plains $549,136 $532,562 -3.02% Suburban Mountains $412,176 $387,946 -5.88% Broomfield $379,432 $338,805 -10.71% Average … $433,246 $426,783 -1.49%

Boulder County February 2011 Economic Snapshot

Economic Snapshot

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



February/2011



Before a declining real estate market can recover it must reach a plateau. It must halt its negative momentum and begin the arduous process of turning itself around. This can often take an inordinate amount of time, because it is contingent on a number of factors. There needs to exist favorable mortgage interest rates, motivated and somewhat plentiful buyers, reasonably priced properties and acceptable levels of available inventory. There must be a timely transition from a buyer’s market to a more balanced buyer/seller market.

The Boulder Valley real estate market has struggled for the past five years as the national economy drifted into a chaotic state. For Boulder County, overall sales activity for single family and attached units dropped 42% during this five-year period; an average of 8.40% per year. A buyer’s market prevailed.

The Chinese calendar for 2010 was known as the “year of the tiger”; for Boulder County 2010 may be remembered as the “year of the plateau”. Real estate sales last year for Boulder County were comparable to 2009; less than a one percent difference.

2011, the “year of the rabbit” in the Chinese calendar, has gotten off to a quick start. Boulder County single family and attached unit sales for January/2011 are UP nearly 19% over January/2010. That’s without any government assisted first-time homebuyer program being available. Hopefully, this isn’t a tortoise and the hare tale, where the hare takes a nap midway through the course its running or the real estate market slumps in the second half of the year.

Here are some things to digest as we venture down this precarious real estate path the rest of 2011.

1. Mortgage Interest Rates: Back in the late 1980’s and early 1990’s, home buyers would have literally killed to get a thirty-year fixed rate loan for 4.75%. It would have felt like they were stealing money from the banks. They would have been lined-up for blocks; drooling on themselves. In today’s economic climate 4.75% doesn’t generate the same level of enthusiasm. It’s nice, but it doesn’t get home buyers salivating. Mortgage interest rates have risen slightly over the course of the past few months. If the housing market rights itself, look for interest rates to continue this pattern.

2. Available Inventory: That black cloud perched on the horizon is composed of bank foreclosures, short sales and HUD properties. It’s unclear how many of those little devils are out there. They keep popping their heads-up. In the past couple of years many of them have been purchased by savvy investors, first-time homebuyers or, on a more limited basis, buyers looking to take advantage of a price sensitive marketplace and make a move-up. Lack of inventory creates motivation in the mind of buyers. Unfortunately, high inventory levels of available properties have been the norm the past few years. BUT, that may be changing. New residential listing inventory for the Northern Colorado real estate market for January/2011 is down 20% compared to January/2010. Is there a pattern developing here i.e. more sales and fewer listings?

3. Residential Home Values: Finally, for a plateau to exist there needs to be stabilization in market values. For Northern Colorado, the median priced residential property sold in January/2011 for $225,000; for January/2010 that number was $212,000; for January/2005, the year when Northern Colorado sales activity peaked, it was $227,000.



Market data statistics are from IRES the Northern Colorado MLS.