Economic Snapshot Boulder County - October 2013
In January of 2012, the real estate landscape across the Denver Metro, Northern Colorado, and Boulder Valley began to change. Like an enormous grizzly bear awakened from a six year slumber, real estate once again forged its way into the conscious awareness of home buyers and sellers. Words like scarcity and demand became part of the everyday jargon when people texted each other at work or mingled at a neighborhood party.
Fostered in 2012 my historic low mortgage interest rates, the real estate market shifted into high gear with the resale market and new home construction attempting to keep pace with pent-up demand. Multiple offers became somewhat of the norm and homes were going under contract before For Sale signs could be planted in yards. Some market areas and price ranges sold better than others, but overall it was a wellspring of activity.
The first quarter of 2013 began with great promise as the Boulder County real estate market continued to thrive. Single family home sales were up 16.69% when compared to the first quarter of 2012. Attached unit sales were up 23.03% for the same time periods. But then, home mortgage interest rates, those little devils that play havoc with our finances, just had to get involved. They couldn’t reside quietly on the sidelines for, say, another decade and let us get our net worth numbers back to where they were around 2005. The traditional thirty-year fixed rate loan inched up from the mid-3% range to the mid-4% range and settled there. It wasn’t a giant leap, but it did cause some buyers to pause and consider their options.
The impact was somewhat noticeable as sales slowed, but still held their own against 2012 sales figures. New inventory that was selling at foundation often became spec inventory as borderline buyers couldn’t qualify. The real estate market had quietly retreated toward a more balanced market. Buyers could take a little more time to make a decision and sellers needed to be more aware of market conditions from a pricing perspective. Lenders continued to be prudent of a buyer’s ability to qualify and appraisers became a transaction’s best friend when the appraisal met or exceeded the contract price – with no conditions.
As we roll into the balance of the year, it has still been a good year for the Boulder County real estate market. Single family homes are selling at a pace above 2012 figures (up 8.94% through October/2013 versus October/2012). We’re still a ways away from the sales numbers posted in 2005, when the market peaked, but there are some things to be thankful for in this rejuvenated real estate market.
First, home values have increased with some price ranges and market areas having surpassed 2005 values. Second, bank foreclosures and short sales don’t dominate the market like they did from 2006 to 2011. Don’t you wish we’d all purchased a house or two back then at the deflated prices? Third, there’s a renewed enthusiasm in the real estate market. Sellers are able to sell without taking it in the proverbial shorts. Buyers are able to buy without feeling they are on a real estate juggernaut potentially headed for a deep and dark canyon.
Life moves on and so does real estate. There will be good times and not so good times on the horizon for both, but overall the Boulder Valley is a great place to call home!
Available inventory dropped 20% during October. Solds are approaching 2007 numbers. Still a ways from 2005 figures. Even more striking pay attention to the Absorption rates of homes up to 2.5 Million. In the last 6 months we have seen the high end Buyer come off the fence and enter the market. Based on traditional market trending sales volume/demand should increase for another two years and then peak. Pricing is a lagging indicator, and as result we should see upward pressure on pricing for another 3 to 4 years.
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