Boulder Condo – Affordable – Light – Well Located – SOLD

Boulder Condo – Affordable – Light – Well Located – SOLD

I have just listed a great little 2 bedroom, 1 bath condo in northeast Boulder.  It has 880 square feet and has just been updated with new paint, new countertops, a new microwave (to go along with the other appliances which are less than four years old), new light fixtures and new outlets and outlet covers. The condo has a detached one car garage, a large storage closet and a large deck.

The best part about this place is that it is listed for a great price.  The last one like this sold for $155,000 and we have priced this one to move at $139,900.  A great opportunity to own in Boulder for under $140,000.

Values in Boulder County Drop and Other Good News

Values in Boulder County Drop and Other Good News

The House Price Index report just released by FHFA.gov shows that home values in Boulder County decreased by 2.76% for the 1 year period ending March 31, 2011. This shows some deterioration in the general market conditions in Boulder since the House Price Index which reported on the period ending December 31, 2010. Real estate in Boulder County has been very resilient throughout the general housing downturn but it seems that some sellers are recognizing that a good price is the only way to reach buyers. FHFA ranks home appreciation in 309 market areas and Boulder is currently ranked 173rd. Last quarter we were ranked 87th. During the first quarter of 2011 FHFA reported a decrease in home values of 3.42% in Boulder County.

During the past year all homes in the United States depreciated 5.5%. Like Boulder this represented a step in the wrong direction in terms of appreciation. Values in Colorado dropped 6% and was ranked ahead of 16 other states (list includes Washington DC). According to the report, values in Boulder County have increased just .39% over the past five years.

Here are some positive things I see in the market going forward:

  • As I mentioned in a previous post affordability is way up. Salaries have risen, prices have dropped on an adjusted basis and the cost to borrow money is down.  This encourages buyers to make the move and encourages sellers to be realistic on the selling end in order to reap rewards on the buying end.
  • Real estate in cyclical – one of the key indicators of a turning market is the lack of rental vacancies.  It was reported this week that Boulder has the lowest vacancies in the state, just 1.6%.  This will drive rents up and provide stimulus for renters to buy.
  • We do not have an abundance of short sale or foreclosure inventory to work through.  Right now in all of Boulder County just 6.7% of homes currently on the market are listed as distressed sales.  This is very healthy and much better than the national average.  In the City of Boulder this drops to 1.9% or just 21 homes out of 1,111 on the market.
  • The market is still flowing.  Currently 16.5% of listed properties on the market in Boulder County are under contract.

The most important thing to know is that transactions are happening every day.  There are buyers looking at homes and all it takes is a seller who recognizes the market and can react to it by presenting their home as a good deal.  I can help.

Housing Affordability – More Important Than Price

Housing Affordability – More Important Than Price

If you bought a home in 2002 for $400,000 your payment was approximately $2,661 not counting taxes and insurance.   Interest rates were 7%.  Today, in Boulder County if that house appreciated at the average rate that same house can be purchased for $465,000.  Based on today’s interest rates of 4.75%, your new payment would be $2,453.  A savings of roughly 8% per month.

When buyers are considering a home purchase, purchase price is fairly arbitrary unless they are paying cash.  Purchase price is the answer to a series of questions about how much a buyer can afford on a monthly basis.  The general rule of thumb for payment  affordability is 33% of gross monthly income.  Say for example a family earns $6,000 per month.  Their total payments towards housing should be around $2,000.  This figure should include principal, interest, taxes, insurance and HOA fees if any.  Assuming no HOA fees and interest rates of 4.75% the qualifying purchase price will be around $335,000.

Let’s complicate things a bit by bringing inflation into the mix.  Since 2002, inflation has averaged 2.35% per year.  Since 2002 homes have appreciated in Boulder County on average 1.8% per year.  All things being equal homes today are a better value than they were 9 years ago.  But all things are not equal.  In 2002 interest rates were 7% and now they are 4.75%.  If you put these two factors together the home that sold in 2002 for $400,000 and now is worth $465,000 is 27% more affordable than it was in 2002! Buyers are getting much more bang for their buck now than they have for years.

This anomaly cannot last forever.  Values will rise and home affordability as measured by a percentage of take home pay will decrease.  Read this post for a related idea on why now is not only a great time to buy but a smart time to sell and buy.

Friday Photo – The Flatirons Among The Clouds

The Flatirons in Clouds
We have had an uncharacteristic few days, not much sunshine and lots of rain. This morning we woke to some nice sunshine. As I was driving in early to the office I decided to take a detour to take a few shots of The Flatirons at Chautauqua Park because the sunlight and clouds looked especially interesting. Here is one of the shots I took. Have a great weekend.

Real Estate Market Activity – The Tortoise and the Hare

Real Estate Market Activity – The Tortoise and the Hare

Through May 18th, real estate sales in Boulder County are down 23% from the same period one year ago. On the surface that sounds really discouraging. Not the news one wants to hear when looking for any sign of recovery. But I’m here to give some perspective and some optimism to the numbers.

During most years our sales activity resembles a bell curve. Our low activity months are December and January and our months with the most closings are May, June and July. It has been very consistent. The picture below shows sales by month 2004 through 2008. Notice the consistent pattern no matter the level of sales.

Last year (2010) our normal pattern was disrupted by the home buyer tax credit.  The tax credit gave buyers an incentive to purchase a home during the first four months of 2010.  The good news was that it worked.  The bad news was that instead of starting a cascading sales effect, the credit just seemed to hurry buyers through the buying process.  Once the tax credit expired our market slowed down considerably.  The result locally was that instead of a nice bell curve, our sales activity resembled a shark fin.

So far this year we seem to be back to the old pattern.  As I mentioned sales are down 23% so far this year, but here is the bright side.  I expect that from here on out through the end of the year we will be eating in to that comparative decrease.  Our slow start will resemble the tortoise in the fable “The Tortoise and the Hare”, slow and consistent.

Many of the leading economic indicators say that we are in a recovery period.  So far this has not caught on in the housing sector.  We have a lot of debris (foreclosures, negative equity, knee-jerk tight credit) remaining from the economic and housing collapse and I suspect it will just take time to work through those issues.  In Boulder County we have less to work through.  Fewer foreclosures, more stable housing values, a strong economy and an expanding job base.  People are still moving into our area and that will ultimately be the engine to our ultimate recovery (click here for a post on migration patterns and home values).

Every week I track housing activity in Boulder County.  I keep track of new listings, price reductions, contracts accepted and sales.  We are just now starting to see the activity for this year overtake last in a few categories.  If we were reading the story of the tortoise and the hare, this is the point where the hare is so far ahead that taking a nap seems like the best thing to do.  From here on out I expect the tortoise to be making up ground.  The chart below shows accepted contracts by year, 2011 in blue and 2010 in red.  Stay tuned and be sure to cheer the tortoise on.