Economic
Snapshot
A look at the
current real estate market; provided by RE/MAX ALLIANCE
June/2011
In
some obscure way, a healthy real estate market mirrors life; it seeks
balance. It trends toward a market where
there are a practical number of homes for sale, an adequate number of home
buyers, reasonable mortgage interest rates, and an acceptable level of
appreciation in home values. When all of
these elements are in alignment, tranquility exists. When they aren’t? Then some degree of confusion and uncertainty
prevails.
The
Boulder Valley real estate market has not
experienced a “balanced housing environment” for the past few years. Inventory levels of available properties have
declined as many homeowners have decided to either stay where they are and not
sell their home or they have rented their home and moved on; themselves often
renting somewhere else. Homebuyers have
become less visible these days. Through
May/2011, Boulder County single family
home sales are down 18% and attached unit sales are down 34% when compared to
the same time frame for 2010. The
overall market is down 23%.
In today’s real estate market, there are certain
considerations at play. (1) Buyers are bargain hunters. They want the maximum return on the dollars
they are investing in a home. They don’t
want to lose money. They believe in the
old adage, “Buy low, sell high.”, but
they aren’t always confident what low is or what high might be. (2) Price
overcomes all objections. There’s a
price where everything will sell, even if the seller needs to bring funds to
closing. That’s one of the issues facing the housing industry today; it’s an
upside down world. Many homes are worth
less than what is owed on them. The
solutions to that dilemma are to stay the course and hope housing values
improve, let the bank have the property or belly-up to the bar at closing with
cash in hand, if you’re the seller.
(3) He/She who has the gold makes the rules. Mortgage companies and banks are the pathway
to the great American dream; home ownership.
Unfortunately, that pathway is strewn with stringent governmental and
banking regulations, conservative underwriters and appraisers, and difficult
qualifying requirements. Mortgage rates
have continued to hover in the 4.5% to 5.0% range for the traditional
thirty-year fixed rate loan. (4) Seller’s are unrealistic regarding pricing. Real estate markets are like sifting sand;
they change quickly. New neighborhood
sales reflect on neighborhood values.
What sold down the street three or six months ago may not be an accurate
representation of what a seller’s home may be worth today. (5) Consumer
awareness is at an all-time high. Home
buyers have immediate access to a plethora of housing information on the
Internet. Some of it isn’t always accurate,
but it’s there. More consumers today
begin their search for a home, car, appliances, etc. on-line than ever
before. They do their homework. When they show-up to purchase, they are
educated about the nature of the marketplace.
On the bright side, homes are
continuing to sell. Median home values
for the Northern Colorado housing market have remained relatively stable for
the past few years, only off seven (7) percent when compared to 2005 [slightly
over one (1) percent per year on average].
Much better than what has happened in some of the bell weather states
where double digit depreciation has been the norm.
