Real Estate on The Front Range

The activity in the market continues to surprise me.  I just did a quick preview of November sales and total sales in Boulder County are going to be way up for November compared to a year ago.  I see three major factors fueling the real estate market in the Boulder area:  higher consumer confidence, first-time homebuyer tax credit and low interest rates.

The unemployment rate in Boulder County is 6%, well below the national average.  It looks like many of those happily employed people are deciding to buy real estate while the conditions are just right.

On a related side note.  Segate, a large employer who has employees in Longmont Colorado had layoffs and mandatory 10% pay cuts about a year ago.  From what I have heard, the company has reinstated the original pay scale.  This type of action frees up the wallets of all of the employees who are no longer afraid for their jobs. 

The table below details the real estate market activity in Boulder Colorado.  I created this weekly activity index at the end of April and have been tracking and commenting on this and other market data on this blog since that time.  Basically what we have been seeing in the market is pretty steady activity.  We are down from the past few years but we are holding up okay.  Sales of all residential property in Boulder County is down roughly 23% through the end of September.  

What is interesting about this index is that you can easily compare the number of homes that go under contract to those that actually close.  I've found through my research that 24% of homes that go under contract don't make it to the closing table.  Another interesting statistic is the median price of the homes which have closed.  The median price of sales has consistently been under $300,000.  The average price of sales is also down so far this year.  There are two reasons causing the lower sales prices; low interest rates for loans less than $417,000 and the first time homebuyer credit.  

Activity in the market has been moderate.  The number of listings that are going under contract in Boulder County continue near the 100 unit mark.  There have been fewer sales lately, but that is to be expected given the time of year.  We are approximately one month away from the expiration of the First Time Homebuyer Tax Credit so it will be interesting what that does to the market going forward. 

The market is starting to lose a bit of the summer steam, but not as much as you may think.  This past week 87 properties went under contract in the county.  This is the low water mark since I started tracking this weekly data in April.  End of month closings were strong as usual.  There were fewer homes coming on the market (down 18 from last week) but more price reductions.  My thought is that the market will continue to perform fairly well through the end of October.  At that point a holiday slowdown is normal.

I have been doing this since late April and what I find interesting is the comparison between the number of properties that go under contract and the number that actually close.  The graph above shows that in most weeks (with the usual exception being around the end of each month) the number of properties that go under contract exceeds the number that close.  There is a lag of 30 to 45 days from contract to closing, but eventually the sales should be realized.  What the statistics above do not show are the number of properties that go under contract but fall out of contract along the way.  I am seeing it in my own business.  Buyers are very fickle and to keep a transaction together takes a great amount of work.