Is Longmont the New Boulder?

by Neil Kearney | Jan 20, 2016 | Boulder County Housing Trends, Statistics | 2 comments

When people move to this area from other parts of the country rarely is their first thought Longmont. But over the past few years more and more people are seeing Longmont as a great option for buying real estate in Boulder County. The obvious appeal is the price of homes, (median prices for a single family home in Longmont were $307,000 last year while in Boulder it was $790,000) but more and more people are appreciating Longmont for it’s great downtown and its quality of life. People are recognizing Longmont as a great long term investment option. The graph below shows median prices of single family homes over time. Longmont is represented by the purple line at the bottom.

This graph could be read in two ways. You could see that it shows that Longmont has lagged other areas in terms of price appreciation over the last 18 years. The other way to look at it is that the houses in Longmont are now very affordable in comparison and that they are due to pop! Note that some of the descrepancy between Boulder and Longmonts prices is explained by the quality and size of the houses. Over the past 20 years houses in Boulder have been enlarged, re-built and remodeled much more than in Longmont.

Over the past year there were more sales in Longmont than in the larger Boulder. The graph below shows sales over the past four years. Since 2012 Longmont has gone from below 1200 sales to almost 1800 and Boulder has gone from around 1700 down to around 1300. There is more activity in the market in Longmont as people are able to sell and move up.

The third chart is an interesting one. It shows the percentage of sales that occurred in each price range. The top line shows that 90% of the sales in Longmont closed for $500,000 or less and that a majority of the sales were between $250,000 and $500,000. The middle line shows that 40% of the sales in the City of Boulder sold for $500,000 or less and that 16% sold for over $1,000,000. The bottom line shows the county wide averages. Clearly Longmont is more affordable. But as prices rise the lower price range will shrink and shift to the right. It’s already happening! In Q4 of 2008 69% of the sales in Longmont closed for $250,000 or below. That number is now 27%.

Longmont may not be a Boulder doppelganger but it is a great community with many housing options that are affordable to many more people. As we gain even more population over the years Longmont will become even more of a destination. I think it’s a strong investment.

Boulder County Real Estate Market Report 2015

by Neil Kearney | Jan 14, 2016 | Boulder County Housing Trends, Statistics

2015 Boulder County Real Estate Market Report

Overview

2015 was one of the most interesting years in the Boulder County real estate market since I have been tracking it. Although inventory of available homes was very low throughout the year, sales increased by about 8%. (See Figure A to see the trend) High buyer demand and low inventory caused intense competition for available homes and these factors conspired to cause prices to rise by an average of 11% throughout the county. (See Figure E) It was a great year to be a seller and a challenging and often frustrating year to be a buyer. Many buyers found that they had to make offers on many homes before they were successful.

Figure A Boulder County Real Estate Total Sales

Demographics

Over the past few years, our local real estate market has been one of the top markets in the nation. So what is causing us to have such a strong market? Let’s start with demographics. The population in the United States grew by 2,576,104[1], an increase of .79%. In 2014, Colorado’s population grew by 82,485, or 1.6%. This made it the eighth fastest growing state in the country in total population change and the fourth fastest in terms of percentage growth. Of the 82,485 increase, nearly 51,000 were people who moved in from another state.[2] The top four states where people are moving to Colorado from are; New York, California, Texas and Illinois.[3] People move to Colorado for the excellent lifestyle, outdoor recreation opportunities, the strong economy, including good employment opportunities and the climate. Each new household that is formed needs a place a live. Between 2008 and 2014, there were 113,230 more households formed than housing units. In 2008 there was a surplus of housing, but a few years ago the surplus was exhausted and with it, the vacancy rates for rentals and the inventory of homes on the resale market dropped. The market has responded with a slew of new rental communities throughout the front range, which has filled a need, but new construction of for sale homes and condos hasn’t met the demand. In an interesting side note, you may have noticed that there are many apartment complexes (for rent), but very few condo complexes (for sale) being built. This is largely due to the condo defect legislation which allows as few as two owners to bring a class action lawsuit against a condo developer. This law was passed in 2005 and the outcome has been that developers have avoided these types of projects. For them it just isn’t worth the risk. The current population of Colorado is estimated at 5,443,000. And it’s estimated to increase to 6 million by 2020 and to nearly 8 million by 2040.[4] All of those new residents will need housing.

Low Inventory

Throughout most of my career, it was typical that when a buyer would call asking to look at homes I would pick the best five and then take them out for an afternoon of showings. In the current market this scenario is virtually non-existent. Today it’s typical for a buyer to wait for weeks on end for a house to come on the market that meets their criteria. Then when something comes up, we hustle out to see the property along with a dozen other similarly hopeful, and motivated buyers. At the end of December there were 871 total homes, condos and townhomes on the market in Boulder County. After subtracting those that were already under contract, there were just 444 available homes to view. (See Figure F) This includes all areas and all price ranges! This is in a county with over 300,000 residents. As this is written in early January there are a total of 473 properties available in all of Boulder County. 19 are listed below $250,000, 115 are listed between $250 and $500k, 98 between $500 and $750k, 74 between $750 and $1 million and 167 listed above $1 million. In the City of Boulder, it is even more striking. There are currently 5 single family homes available to show in the City of Boulder under $750,000 and just 5 attached dwellings in Boulder listed below $500,000.[5] This is a yearly low and I expect it to improve, but still! Despite the lack of inventory in 2015, sales did increase. This means that the flow through the market, from listing, to contract, to sale, was very fast. Average days to offer decreased this past year from 38 days to 29 days. Figure B below shows the end of month inventory trend over time.

Figure B Boulder Real Estate Inventory

Home Price Appreciation

Strong price appreciation has been the direct outcome of the positive household creation and the lack of inventory. Strong demand and limited supply results in increased prices. According to FHFA.gov, home appreciation in Boulder County averaged 13.39% for the one-year period ending September 30^th 2015. (See Figure C) This ranked us 7^th in the nation. (Denver was ranked 4^th with 13.91%). Colorado, with 12.66% was the top state for appreciation (behind only Washington D.C.)

Figure C FHFA Appreciation

Interest Rates

For a number of years, we have all been expecting to see the inevitable rise of interest rates. But during 2015, year mortgage rates stayed within a tight range. As we began 2015 the 30 year fixed rate was 3.86%. As we begin 2016, the rate is at 3.96%. (See Figure D Undoubtedly, this has helped houses in this appreciating market remain somewhat affordable and has kept buyers in the buying mood. Figure D Historical Interest Rates

Multiple Offers

Rocket fuel for home prices are multiple offers situations. This is when more than one buyer wants the same house at the same moment. There isn’t a resource that shows the number of homes that received multiple offers but those homes that went for over full price are a good proxy. During the year, 43% of the homes that sold in the City of Boulder sold for over full price! Of those that sold for a premium, the average premium paid over full price was $24,557 or 4%. As inventory increases, buyers will have more options and will not need to compete with other buyers as much. But for now the market is running on premium rocket fuel.

The Shrinking of the lower price range

As the prices of entry level houses rise, it becomes more and more difficult for first time homebuyers to enter the market. This puts even more pressure on rentals. In the 4^th quarter of 2011 40% of the sales in Boulder County were for $250,000 or less. In 2013 this price range accounted for 33%, and in this most recent quarter, it was just 18%. (See Figure E) There are very few affordable options out there and this price range has been consistently shrinking.

Figure E County Sales by Price

The Future

So what does the future hold? It’s always a difficult question. But in the short term I don’t see a big change in the factors that have caused the extreme sellers market in our area. New residents are still flocking into the area, the economy is still creating jobs and on top of all that, people are staying in their homes longer than they were before. Real estate is cyclical; it will slow down. The question is, what will cause a trend change. As interest rates rise, affordability will become a factor. But that will most likely be a slow change. It might take a macro-economic or geopolitical event to turn the tide. But for now it’s full speed ahead into 2016.

Figure F – Median Price Trends Median Prices Boulder County Quick Summary

Total sales in Boulder County increased by approximately 8% in 2015.
Through the end of the third quarter, FHFA.gov showed homes in Boulder County appreciating by over 13% during the previous four quarters. This ranked 7^th
In 2015, 43% of all properties sold within the city limits of Boulder closed for a price higher than the list price. Another 22% sold at the asking price.
The average premium paid in Boulder for those homes that sold above list price was 4.42%.
It is predicted that Colorado’s population will grow by 45% over the next 25 years, to just under 8 million.

Now, more than ever you need a real estate advocate who has the experience and knowledge to lead you through this market. When you choose an agent from Kearney Realty Co. you choose an agent who works on your behalf with complete integrity. This past year, in a challenging market Neil helped more buyers and sellers than ever navigate this market successfully. This year, if you plan to buy or sell real estate go with a local, trustworthy, award winning Realtor.

[1] Worldometer.com

[2] Leeds Business School’s Colorado Business Economic Forecast 2016

[3] www.Census.gov

[4] Colorado State Demography Office

[5] Most Statistics in report are from IRES MLS

2015 Market Highlights

A

Total Sales Up 8%

A

Median Prices Up 11%

A

Average Days to Offer = 29

A

Record Low Inventory

View PDF of Neil's 2015 Year End Report

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Boulder County Home Appreciation Rises By 11% in 2015

by Neil Kearney | Jan 11, 2016 | Boulder County Housing Trends, Statistics

Boulder County Home Appreciation Ranks #7 In The Nation

Boulder County has been one of the hottest real estate markets in the country. In fact, through the third quarter Boulder County home appreciation, as measured by FHFA.gov ranked 7th highest in the nation at 13.39%. During the third quarter alone the appreciation was 5.26% which was #1 in the nation. The entire front range is red hot – Denver ranked #4 with 13.91%, Fort Collins ranked #9 with 12.87% and Greeley ranked #10 with 12.72% in annual appreciation through the end of September. And from what I have seen during the fourth quarter and here at the beginning of 2016 this trend should continue. The first chart presented shows Boulder County’s home appreciation along with that of the United States since 2010. The graph shows that Boulder County had smaller losses in 2010 and 2011 and now is having much larger gains that the country as a whole.

The last time our area was near the top of the nation in home appreciation was in 1999. We were then affected by the dot com bust. The chart below shows our national ranking over time.

The line chart below shows median price trends over the past seven years for different areas within the county. This data includes sales of both single family homes as well as condos and townhomes.

Boulder County home appreciation has been the direct outcome of the positive household creation and the lack of inventory. Strong demand and limited supply results in increased prices. Strong demand in our area is caused by a growing population and a very strong economy. The demand hasn’t been matched by an equally robust supply. In fact inventory of homes on the market is at a 20 year low. Therefore, there are many buyers competing for the few listings out there. This results in competing offers which further enhance price appreciation.

Choose Your Lender Wisely

by Neil Kearney | Dec 16, 2015 | For Buyers, General Real Estate Advice | 2 comments

At the beginning of October new guidelines took affect that changed the way that lenders interact with borrowers. The new TRID rules require earlier and supposedly easier to read disclosures to go to borrowers. Both at the beginning and the end of the process. These new disclosure requirements have lengthened the time it takes to close on a loan and now more than ever it’s important to choose your lender wisely.

In the past it was very common for lenders to swoop in to the closing at the last minute with documents and closing figures. Sometimes this happened the day of closing which left the buyer/borrow in limbo wondering how much money they really needed to bring to the closing. Many times buyers were forced to get a cashier’s check for an estimated amount plus a little extra to make sure and then get a refund from the title company. We’ll the good news is that these last minute shenanigans are no longer possible. It is now required that the buyer/borrower view and acknowledge the newly revised closing disclosure three business days in advance of the closing. This eliminates the last minute paperwork on the day of closing but it doesn’t seem to have eliminated the drama. It has just moved it up a few days.

As lenders are getting their act together and setting up systems around these new rules the disparity between good lenders and the not so good ones has become even more apparent. Here is my wishlist for a lender:

Do a thorough pre-qualification/pre-approval process so that there are no surprises later. This goes beyond checking boxes on a software program. This involves experience and knowledge that anticipates and handles potential stumbling blocks in advance. In my experience a brand new lender working as a part of a team in a bull-pen at a big national lender doesn’t excel here.
Communication throughout the process should be easy. Having one person who knows what is going on at all times has been the best scenario for me. Having a team or an office that is handling the loan leads to communication gaps that can last days.
Having someone who takes personal responsibility throughout the process allows things to get done when the chips are down. I have found that a local lender who is looking to build ongoing relationships with both the borrower and the agent will go the extra mile and get it done.
Having a lender who has a proven track record is, in my opinion more critical that saving an extra 1/8th of a % point on the rate. Many times the advertised rate doesn’t actually make it to the closing table and having a lender who will get the loan done on time is good insurance. Many buyers don’t realize that if their lender doesn’t perform it’s they who are on the hook. The penalties for not closing range from not closing to not closing AND losing their earnest money. The lender will not pay you back the lost $10,000 even though it was their fault.

I’m writing this because I have three bad experiences with out of state lenders this year that added stress to all involved and definitely put the buyers at financial risk. The first one was a big national company who advertises directly to the consumer on sports broadcasts. This lender seemed organized until a day before the appraisal deadline they asked me, the buyers agent for a list of local appraisers. The appraisal should have been ordered at least two weeks previously and they were just now realizing that they didn’t have one in the queue. It turns out that they needed my help because none of the local appraisers wanted to work with them. The appraisers that I talked to said that they were busy enough and didn’t think that this big out of state company would pay them if the property didn’t close. So in the end they found an appraisal company out of Minnesota, I’m in Colorado, to do the appraisal but that it wouldn’t be in until four days after our scheduled closing date! We were able to extend and close two weeks late but it certainly wasn’t convenient and the buyers almost lost a great price on their townhome.

The second and third instances were with the same bank. This out of state bank offered a great deal to physicians. But their processes were so bad that both closings were delayed and it took some major hand holding by myself and the buyers in order to get it closed. One was a week late and the other was three weeks late. In both instances the buyers were able to get an extension (vacant homes) but it cost them on a per-diem basis. The most frustrating thing about this bank was that there was no-body who took personal responsibility and their internal communication between departments was really bad. When the files went to underwriting they would disappear behind the dark side of the moon for days and or weeks with no news leaking. As we were working hard to finally get a closing disclosure signed the person who was working on it sent it to the title company and then left for the day. Of course there were a few mistakes but nobody to fix them. If it didn’t get taken care of that night it would mean that the closing would move from Friday to Monday and the buyer would incur an extra $600 in fees. Luckily at this point the lead lender was able to rouse some after hours people to make the changes and we closed.

If you’d like to avoid this type of drama use a good local lender. Yes, I have some recommendations. Just ask.

364 W. Sycamore Lane Louisville, CO 80027 SOLD

by Neil Kearney | Dec 9, 2015 | Listings

364 W Sycamore Lane

Louisville, CO 80027

$449,500

This is a super cute ranch style home that backs directly to open space and trails. The main floor is filled with light and takes advantage of the views to the south. The house is ready to go with nice wood floors on the main level, and new carpet throughout. All of the mechanical systems should be in good shape, new water heater and a/c unit within the past year. Basement level has a nice family room, a third bedroom, a full bath and a large study.