This infographic was created by the good people at ActiveRain which is an online social space for Realtors. It is the result of a survey of real estate agents from around the country. The consensus for 2012 are that; the number of transactions will increase, real estate values will be flat, home starts (new construction) will increase slightly, and that local economies will start to improve. Looking from the local perspective I can’t argue with any of these predictions.
As noted in the report, the Denver market is predicted to be one of the 10 best in the country so that is great news for Boulder County. We should continue to out perform the national market.
According to the survey, the biggest challenges facing the real estate market are:
Short sales and underwater mortgages.
Homebuyer inability to get a loan.
Foreclosures and the abundance of shadow inventory.
The only item that has real relevance to the Boulder market in any significant way is #2. It is still difficult to get a loan even with low interest rates.
Word is getting out through the media on why Colorado is a great place to buy real estate right now.
People want to live here!!
We have not had a real estate bust. (See the graph below)
Low foreclosure rate. We don’t need to wade through tons of short sales and REO sales in order to start moving forward.
Strong economy with a young motivated work force who want to stay in Colorado.
Low inventory – new building started slowing in 2003 not in 2007 or 2008. There is not a stockpile of homes to sell.
But don’t take it from me. Watch this video from Fox Business News
This chart shows median prices in Boulder Colorado from 2000 to 2011. Small corrections but no collapse. We have a strong market with very few distressed sales. We should be one of the first areas to see a full recovery. For more graphs for communities like Louisville, Superior and Erie see this post.
Last weeks headlines read “Colorado Foreclosures Down 28%”. Almost every buyer I work with has an interest in looking at foreclosures. Foreclosures are big news, but are they in Boulder Colorado and the surrounding county? After reading the article I decided to delve more deeply into the issue and give you an idea of how common bank owned homes are in our real estate market.
My first stop was to do a quick tour of my MLS system to see how many foreclosed properties are listed for sale in various areas.
Boulder – 10 Foreclosures of 664 total listing or 1.5%
Louisville – 3 Foreclosures of 82 total listing or 3.6%
Lafayette – 11 Foreclosures of 151 total listing or 7.2%
Longmont – 36 Foreclosures of 476 total listing or 7.5%
Superior – 4 Foreclosures of 49 total listing or 8.1%
Erie – 8 Foreclosures of 172 total listing or 4.6%
Broomfield – 16 Foreclosures of 376 total listing or 4.2%
Frederick/Firestone – 11 Foreclosures of 170 total listing or 6.4%
The highest percentage is in Superior at 8% and the lowest percentage of foreclosure listings is in the City of Boulder where just 1.5% of listings were bank owned.
I also looked at the % of homes that in the foreclosure process using Realist which is a public records tool available through my MLS system. Here are the percentage of homes in some stage of foreclosure (rolling 3 month average) for some selected zip codes.
80301 (Gunbarrel) – .43%
80302 (downtown Boulder)- .41%
80305 (Table Mesa) – .23%
80027 (Louisville/Superior) – .39%
80516 (Erie) – 1.14%
80530 (Frederick) – 2.81%
80501 (East Longmont) – 1.09%
80503 (West Longmont) – .6%
These are very low percentages across the board. The area with the fewest number of homes active in the foreclosure process was the Table Mesa area in South Boulder.
Here are some screen shots showing density of foreclosures in a few select neighborhoods.
The maps include properties in pre-foreclosure, bank owned, REO sales (not sure how far back) and Short Sales. I chose an area for each locale that had the most distressed properties. There is quite a difference between different areas. The map for Boulder is very similar to Louisville.
My conclusion is that if a buyer is looking at foreclosure properties exclusively they will not have very many properties from which to chose. We have been very lucky in that our values have held fairly steady and distressed sales are not a huge part of the market. If you would like a list of the foreclosures currently available in Boulder County, please let me know. I would be happy to assist you in your search. I am a HUD approved broker and can help you bid and purchase a HUD home as well.
Yesterday, I shared with you how different price ranges are currently selling in the Boulder County home market. Today we are going to look at the same indicators but today, we will use the data to find out which town has the strongest real estate market.
Under Contract Percentage:
This is simply the number of homes currently under contract divided by the number of homes on the market. The higher the number the stronger the market. The areas that have the highest percentage of homes under contract (Louisville and Superior) also happen to have the fewest homes on the market. Few homes on the market, steady demand = strong market.
Absorption rate compares the number of homes that sell during an average month (I use 12 months) to the number of homes currently on the market. For example if on average 10 homes sell per month and there are 120 homes on the market, the absorption rate would be 12 months. Another way of saying it would be, that it would take 1 year to sell all of the current inventory. A low number shows quick turnover and a strong market. During the late fall and winter when many would-be sellers remove their homes from the market the absorption rates are unusually low. Again, Superior and Louisville show the healthiest market and the mountains show the weakest market.
Boulder 6.9 months
Louisville 4.3 months
Lafayette 5.9 months
Longmont 6.1 months
Superior 4.2 months
Mountains 12.4 months
Plains 9.2 months
Average Negotiation Off Of List Price:
The areas that showed the strongest indicators in the statistics above also had the smallest average negotiation off of the list price.
Overall Ranking of Strength of Market:
When you average out these results and rank for total strength, here are the strongest real estate markets in Boulder County right now.
1. Louisville and Superior (tie)
5. Suburban Mountains and Suburban Plains (tie)
Of course more goes into it than just these three statistics. So when you are ready to buy or sell real estate in Boulder County call a professional real estate agent like me. Neil Kearney 303.818.4055
Right now the broad trends in the Boulder area real estate market are:
Sales at a consistent although not spectacular rate. (Down roughly 5% from last year)
Inventory decreasing (normal for this time of year)
Prices are fairly stable but with a nudge toward the negative.
Buyers market with the average negotiation in Boulder County over the last 12 months at 4.17% off of last list price.
Today, I am going to break the market down into smaller silo’s so that you can get a better idea of the market across the different price ranges. Tomorrow, I will do the same thing but instead of using prices I will use areas. Here it goes.
Under Contract Percentage:
This is simply the number of homes currently under contract divided by the number of homes on the market. The higher the number the stronger the market. Not surprisingly, the lower price ranges have quite a bit more activity than the higher price ranges. Usually, there is more stratification between the $750,000 range and the homes listed above $1,500,000 but right now that is not the case. There are currently 18 homes under contract that are listed above $1,000,000 in Boulder County.
$0 – $250k 20%
$250k – $500k 20%
$500k – $750k 14%
$750k – $1MM 7%
$1MM – 1.5MM 7%
Absorption rate compares the number of homes that sell during an average month (I use 12 months) to the number of homes currently on the market. For example if on average 10 homes sell per month and there are 120 homes on the market, the absorption rate would be 12 months. Another way of saying it would be, that it would take 1 year to sell all of the current inventory. A low number shows quick turnover and a strong market. During the late fall and winter when many would-be sellers remove their homes from the market the absorption rates are unusually low. Even so, by this measure in would take 31 months to clear all of the homes on the market in Boulder County that are listed above $1.5 million.
$0 – $250k 5.3 months
$250k – $500k 6.2 months
$500k – $750k 8.6 months
$750k – $1MM 13.6 months
$1MM – 1.5MM 15.4 months
>$1.5MM 31 months
Average Negotiation Off Of List Price:
It is very interesting to see how much negotiation is going on between buyers and sellers. A good rule of thumb over all of the years I have been selling homes in the Boulder area has been 3% off of list price. For the last year, the average has jumped to 4.17% over all price ranges and areas in Boulder County. From the figures below you can see that properties under $500,000 are still in the historical 3% range. Where we are seeing more negotiation is in the upper price ranges. You can relate the motivation of the seller to the previous table (absorption rate) and see that many sellers are valuing the opportunity to sell and are willing to stray off of their list price to get it done.
There are many tactical ideas about real estate negotiation but in my opinion not enough is said about the emotional relationship between a buyer, a seller and an agent. Buyers and sellers don’t often meet in person. This can be a very good thing in many ways because the agents take the direct confrontation out of the process. But the downside of this lack of interaction is that buyers and sellers don’t get a chance to make a personal connection. They don’t get a chance to like each other. Their first interaction is the offer for purchase and this can be a very explosive introduction. “Hello Mr. Seller, nice to meet you. You don’t know me but I like your house but I think you are stupid to ask that much. I only think your house is worth $xxx. Oh, and by the way I want to keep your refrigerator, your window coverings and your grandma’s chandelier.” This usually doesn’t inspire an invitation to dinner.
Stephen Covey’s idea of an emotional bank account in “The 7 Habits of Highly Effective People” can be easily translated to the parties in a real estate transaction. Watch the video to see what a buyer, seller and agent can do to make friends with the other sides of the transaction. In doing so, negotiations will go much more smoothly and buyers and sellers won’t mind sitting together at the closing table (this by the way is getting less common).
Advice for Home Buyers:
Don’t make an unreasonably low offer.
Don’t ask for personal items which have been excluded from the sale.
Don’t be unreasonable and uncaring toward the seller.
Do write a personal letter so that the sellers can get to know you as a person (family).
Do compliment them on their home.
The goal is for the seller to want you to live in their home.
Advice for Home Sellers:
Have the house in tip top showing condition.
Fill out all disclosures accurately and thoroughly. Don’t try to gloss over the details. Giving more detail will earn the Buyers trust and respect.
Respond to offers quickly.
Keep the communication lines open.
Advice for Realtors:
Treat the other Realtor with respect, courtesy and go in with a win-win attitude.
Remember that you are not the one who is buying or selling. So don’t make decisions for your client. Lay out the options and let them decide.