I’ve just published The Kearney Report for the First Quarter 2015. To download and view the entire report in PDF click here The Kearney Report 1st quarter 2015
Real Estate Market Update
The broad trends we have been seeing in the market over the past three years have accelerated. Declining inventory and increasing prices, are now making it very difficult for buyers and move-up sellers. The trends that make it so great to be a seller have not only continued in 2015 thus far, they have accelerated.
At the end of March in 2010 there were 1,724 single family homes on the market that didn’t already have an offer on them. At the same time in 2013 there were 818 homes available. This year there were just 413 homes in all of Boulder County on which a buyer could make an offer. If a home is properly priced and marketed, it is very typical for it to go under contract within a very short time frame.
Multiple offers have been very common. Of the 884 sales in the quarter, 32% sold for greater than full price and 19% sold for exactly asking price. The average premium paid for those homes that did sell above the list price was 3.6%. The largest premium paid was 19% over the list price. On average, homes in Boulder County appreciated around 8% last year. This year we seem to be on a similar track. In some areas we are seeing year-over-year gains of around 20%!
Buyers, who are still enjoying low interest rates, are rushing to get something purchased before the rates rise (it seems like we have been waiting for quite some time). This pressure, added to the fact that there are not many houses to see make it easy to get caught up in the competition of multiple offers. Buyers are worried about being priced out of the market as prices and interest rates rise.
Even though we have seen a 9% drop in the number of new listings, total sales for the quarter increased by 24%. Just like a person climbing Mt. Everest dips into their fat reserves in order to keep expending energy, our housing market has sold up the existing inventory in order to sustain sales. The good news is that we have a strong and desirable real estate market, the bad news is that there have not been enough sellers to meet demand.
Some possible reasons that homeowners are not becoming sellers:
- The Catch-22 scenario – A potential seller refuses to list their home for sale until there are other homes on the market that they are interested in buying. But of course others don’t come on the market because they too are waiting for a few reasonable options to stay on the market long enough. It’s an intellectual spiral.
- Baby boomers are staying in their homes longer than in the past. Possible reasons: a) Overall better health. b) Their homes have appreciated and they are bumping up against the capital gains limits.
- Homeowners have locked in low rates/payments. While we haven’t yet seen a big gain in interest rates, many homeowners are tickled with their current situation and are happy improving their home rather than moving to a new one. This is especially true for those who purchased between 2008 and 2011 before home appreciation ramped up again.
Here is our advice for buyers and sellers in the current market.
Buyers – It takes alertness, patience and persistence to find a home right now. Competition is fierce and you must be ready to see new listings within the first few days on the market. We, as your Realtor can help you keep abreast of the market by sending you instant updates when listings hit the MLS and then quickly analyze the value of each house as you consider a competitive offer. In addition to making offers above full price, many buyers have waived contingencies to make their offers attractive to sellers.
Sellers – It’s a great time to be a seller! A property that is competitively priced, shows well and is marketed professionally often receives very strong offers and in many cases multiple offers. As listing agents, we have been helping our clients set pricing strategies, set advantageous listing and marketing schedules and hopefully sort through the merits of multiple offers. The difficulties for sellers are in selling one home and buying another. This can be more easily done by getting a temporary rental or arranging bridge financing to allow for a purchase before the sale.
As you browse through the rest of the report you will find, for comparison purposes, a number of market measures displayed for each of the submarkets in our area. Enjoy the report.