Real estate sales in Boulder County were again less than stellar during August. The statisics show that sales were down by roughly 20% when compared to last August. The market softened in early summer and it has yet to recover. Sales are still taking place but the activity has decreased.
Thus far, 2010 has been a very interesting year. The year started with a bang as the homebuyer tax stimulus, low interest rates and the first signs of economic recovery brought buyers out of a prolonged hibernation. Starting in January, year-over-year sales showed strong increases. Through April, cumulative sales had surpassed 2009’s numbers by 34%. Then the market developed a leak (metaphorically). As the last chimes sounded at midnight on April 30th so to did the fuel which was feeding the market. As the tax credit expired on April 30th 26.4% of all homes on the market in Boulder County were under contract. A robust number representing strong market activity.
Since May 1 we have noticed two major trends. The first was that activity dropped right away, the deadline was hard and eligible buyers, move-up and first time were both apparently a big part of the market. The number of contracts written dropped 44% in one week. From record highs to below average in one fell swoop. The other trend was a trailing trend; the number of closings. While April was the high point for contracts written, June was the apex of closings for 2010. As the reports of sales (closings) continued to give good news the actual activity in the market had slowed considerably. During July the number of closings dropped considerably. Down 35% from last month and 40% from July of 2009. Our early year-over-year gains seem to be fading as the increase is only 8% through July.
Values have been holding fairly strong given fewer sales. According to FHFA.gov Boulder County had an annual appreciation rate of -1.92% ending June 2010. This ranked us in the top quartile nationally. The greater Denver market is considered one of the stronger real estate markets in the country. I guess it is all relative and we have much to be thankful for.
Here are the positives I see in the market.
Interest rates are at all time lows. 4.5% is an amazing rate for the long term. These low fixed rates allow you to lock in affordability for 30 years. Some are deciding not to buy because they will need to sell their home for less then they think it’s worth. Yes, that is a possibility. But right now you can also buy your next house on sale and at an interest rate that compounds the good deal.
Boulder County is a dynamic area. Our employment rate is very strong and looking forward we are going to add population by adding jobs in the renewable energy and technology sector. Combine increased population with almost no builder inventory and you have a very responsive supply/demand equation. We are already seeing incoming relocations and as they increase with the economy our supply of homes on the market will decrease. This will eventually lead to an increase in prices.
Distressed sales (foreclosures and short sales) are less than 10% of our market. Many markets around the country have a majority of their sales in the distressed category. This unnatural supply, not to mention the lack of move-up buyers, causes negative price pressure. In Boulder County distressed sales are not a big part of the market. This will allow for a quick recovery.
There are some good values in the market right now and when you combine that with the low interest rates this is one of the best times ever to buy real estate. It goes against the popular media but you will thank yourself in the future. Let me know how I can be of service.
(The hawk has nothing to do with the post, I was out looking at the fire area from a lookout east of Boulder today and was lucky enough to take this shot. I thought I would share it.)