I write a monthly column for the Boulder Area Realtor Association which accompanies the statistics for the month. While it is written for an audience of fellow Realtors, I thought I might share it here as well.
For 26 months I have been finding different ways to tell the same story. The story has been one of fewer sales. Month after month, last years numbers better than this years. Like a giant staircase heading down into a medieval dungeon. Until now! October was the first month in over two years where Boulder County had more closings in our market area than the same month the previous year. And it wasn’t just by a few. Sales were up 11%!
Okay, the streak has been broken, but is this just a temporary reprieve before resuming the downward march? I don’t know for sure, but here are my thoughts. Remembering a year ago, it’s not hard to imagine why sales in October 2008 were not that hard to beat. If you recall, we were in the midst of a financial hurricane. The stock market was falling by hundreds of points a day, banks were failing and being bailed out, jobs were being lost by the bushel (more on this later), and we Americans began to super-glue our wallets shut. October 2008 was the first month of real estate sales that began to feel the effect of the economic crisis that has played havoc since then. When you compare that uncertainty to now maybe not much has changed on the macro level, but I think as a collective whole we have become a whole lot more comfortable with it. After living through report after report saying that the “sky is falling, the sky is falling” we eventually figure out that the sky isn’t actually falling and for many, it might just be a good time to pry open that wallet.
There are a few core reasons why people buy or sell real estate and those reasons are tied to change. Some reasons are urgent and can’t wait for a better time in the market. Some reasons are more discretionary and tend to simmer until it feels like the right time. Some people are just in the right place at the right time. There are many reasons that turn the wheels of a market but none are as strong or as broad as job creation. During an economic downturn, the power behind the real estate market is hampered by job losses. As jobs are lost, general confidence of coworkers, neighbors, and relatives (who still have jobs) decreases.
Lately, we have been getting the news that technically the recession is over. The GDP has risen. While we are far from being “out of the woods”, it seems we may be bouncing off of the bottom. In my opinion, it will be a modest recovery until the economy begins to create jobs in a big way. But from what I have been seeing personally, people who have been putting off a decision are starting to think hard about taking advantage of the current market. We should be see our trend of higher sales on a monthly basis continue at least through spring. We may have turned the corner, albeit slowly.