DON'T PANIC! Boulder Homes Sales Are Heating Up
After a long break from blogging, I decided to jump back in after reading an article in today's Daily Camera about a sluggish start to 2019 for Boulder home sales. There are many factors that contributed to slow sales in January, but only a few of them are expected to continue for the rest of the year. This is why I wrote "DON'T PANIC" in large friendly letters in my title. That, and to attract Douglas Adams fans.
The article points to a 23% decline in the number closings and a 2.7% decrease in median sales prices of single-family homes in Boulder County in January compared to the first month of last year. That's a pretty good definition of sluggish, but to understand January's numbers, we have to look back to late November and December for context because most transactions take 30-45 days to close.
From Thanksgiving through year-end is always a slow time for Colorado real estate. Added to this normal seasonal slow-down was a distracting election, deadly wildfires raging in Southern California, and a volatile stock market. Then, for Christmas, we got the longest government shutdown in US history. Oh, and did I mention that mortgage interest rates were hovering just below 5%, the highest rates in years? It's easy to see why home shoppers didn't want to pull the trigger.
Average 30-year mortgage rates 2/11/18-2/11/19. Source: Zillow
Fast forward to now, it's almost mid-month of the shortest month of the year. New listings are coming on the market fast, but they are also going under contract quickly. Interest rates have fallen back into the low 4% range. This snapshot of recent activity in the Boulder MLS shows that more homes went under contract than came on the market.
Snapshot of MLS activity for past three days in Boulder zip codes 80025, 80301-80305, 80310. Source: IRESis.com
Back in December, my fellow Realtors and I were asking, is this a normal seasonal slowdown or a sign of things to come in 2019? Last month, I would have said that we were in for a significant market shift toward a buyer's market. This month, I'm thinking the shift might be more subtle. And the most important thing for buyers and sellers isn't necessarily the number of home sales (which impacts those of us who work on commission), but the sales prices.
The small drop in median home sales price cited in the Daily Camera article doesn't concern me much because it was based on a statistically small number. Boulder's home values have appreciated reliably in the past and there's no reason to expect that to change this year. The fundamentals that drive appreciation here -- a strong local economy combined with low supply and strong demand -- have not changed.
I do predict a gradual flattening out of the appreciation curve where we will start to return to a more normal 3%-6% annual increase in value, instead of the unsustainable rate of 12%-20% of previous years.
Homes that present well and are priced right, especially in more attainable price ranges, will continue to receive multiple offers. But listings that are dated, located on busy streets or have less desirable characteristics might sit longer on the market than in the past.
On the buyer's side, I'm already seeing less of a sense of desperation in offers. Rather than giving up rights to object for things like inspection and appraisal, buyers can retain these important contingencies and truly do their due diligence.
All that said, each situation is unique, and in this rapidly shifting market, it's important to have the help of a real estate broker who is keeping up with day-to-day changes and who understands your personal needs.
The article points to a 23% decline in the number closings and a 2.7% decrease in median sales prices of single-family homes in Boulder County in January compared to the first month of last year. That's a pretty good definition of sluggish, but to understand January's numbers, we have to look back to late November and December for context because most transactions take 30-45 days to close.
From Thanksgiving through year-end is always a slow time for Colorado real estate. Added to this normal seasonal slow-down was a distracting election, deadly wildfires raging in Southern California, and a volatile stock market. Then, for Christmas, we got the longest government shutdown in US history. Oh, and did I mention that mortgage interest rates were hovering just below 5%, the highest rates in years? It's easy to see why home shoppers didn't want to pull the trigger.
Fast forward to now, it's almost mid-month of the shortest month of the year. New listings are coming on the market fast, but they are also going under contract quickly. Interest rates have fallen back into the low 4% range. This snapshot of recent activity in the Boulder MLS shows that more homes went under contract than came on the market.
Back in December, my fellow Realtors and I were asking, is this a normal seasonal slowdown or a sign of things to come in 2019? Last month, I would have said that we were in for a significant market shift toward a buyer's market. This month, I'm thinking the shift might be more subtle. And the most important thing for buyers and sellers isn't necessarily the number of home sales (which impacts those of us who work on commission), but the sales prices.
The small drop in median home sales price cited in the Daily Camera article doesn't concern me much because it was based on a statistically small number. Boulder's home values have appreciated reliably in the past and there's no reason to expect that to change this year. The fundamentals that drive appreciation here -- a strong local economy combined with low supply and strong demand -- have not changed.
I do predict a gradual flattening out of the appreciation curve where we will start to return to a more normal 3%-6% annual increase in value, instead of the unsustainable rate of 12%-20% of previous years.
Homes that present well and are priced right, especially in more attainable price ranges, will continue to receive multiple offers. But listings that are dated, located on busy streets or have less desirable characteristics might sit longer on the market than in the past.
On the buyer's side, I'm already seeing less of a sense of desperation in offers. Rather than giving up rights to object for things like inspection and appraisal, buyers can retain these important contingencies and truly do their due diligence.
All that said, each situation is unique, and in this rapidly shifting market, it's important to have the help of a real estate broker who is keeping up with day-to-day changes and who understands your personal needs.
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