by neil kearney | Apr 13, 2009 | Boulder County Housing Trends, Statistics
Grand Escalante National Monument is a place in Southern Utah where all of the different layers of rock are exposed for all of those brave enough to go have a look. I for one love an adventure, and take any chance I can get to spend some time in that beautiful region. Since I cannot take the trip right now I thought I would do a little back country adventuring into the layers of Boulder real estate.
Desert Mesa at Sunset – March 2004
As I mentioned last week, the market for real estate priced below $500,000 in Boulder is actually quite healthy. It is the market over $1 million that is feeling the burn right about now. In order to throw a bit more light on the differences between the price ranges, I thought a comparison of under contract percentage and absorbtion rate would help clear up any question on where the strength in the market is right now.
The following statistics were taken from the IRES MLS system and reflect houses that use Boulder as a mailing city.
Under Contract Ratio:
|
U/C % |
| < $500,000 |
23% |
| $500,001 – $1,000,000 |
15% |
| $1,000,001 – $1,500,000 |
7% |
| > $1,500,000 |
5% |
Absorption Rate (Inventory): using the sales rate over the past 6 months
|
Inventory |
| < $500,000 |
11 months |
| $500,001 – $1,000,000 |
21 months |
| $1,000,001 – $1,500,000 |
31 months |
| > $1,500,000 |
68 months |
Let’s first look at the under contract ratio. This simply shows the activity in the market right now. It compares the number of properties on the market with the number of those properties that have a contract on them. According to Fannie Mae 15% is the lower end of a normal market. This means that all homes in Boulder below $1 million are part of a normal market. Sales are down and the number of homes on the market are down so this year’s normal market is not so robust as past years normal markets. Right now there are too few buyers for the homes listed above $1 million. Fewer than 7% of the homes in that range are under contract. Competition is feirce and if a seller is smart they need to price their home very well in order to get it sold.
The absorption rate has been rising over the past few months. This is in direct correlation to fewer sales. I usually use a 12 month average but today I thought it was more accurate to use the past six months of sales data to illustrate the point. Given the monthly sales rate over the past six months it would take 11 months to sell all of the homes in the strongest price range and 68 months (5.5 years) to sell all of the homes currently on the market listed over $1.5 million. As the spring sales begin to kick in these number will fall but they are still very high. Another indication that we are over supplied in the upper end of our market. If you are curious the absorption rate using 12 month sales data, the numbers are lower but the idea is the same. Here are the conservative numbers:
6.2 months; 11.5 months; 21.9 months; and 51.5 months (same categories and order as above.
by neil kearney | Apr 9, 2009 | Boulder County Housing Trends
An article titled “Sales Cut in Half” by John Aguilar appeared above the fold in today’s Boulder Daily Camera. It referenced the recent sales statistics of single family homes in the City of Boulder. The article has announced to the general public what I have been seeing for a few months, activity is 
down. This does not mean that the sky is falling or that we are following Detroit, Phoenix and Las Vegas into a real estate armageddon. What it means, is that we have been hit, like everyone, by a perfect storm that is not conducive for Boulder’s particular market.
Home sales depend upon buyers who are in a position to buy. This means they have a stable job, money for a down payment, good credit and verifiable reserves. During the past decade a buyer could fudge on 2 or 3 of these and still get away with it. This leinancy was a very strong grease to the wheels of the market. Now you need all four factors to buy a home. This has taken many people out of the market.
Boulder is a high priced area and many of the houses are only attainable by getting a large mortgage on the house. If a buyer doesn’t have a substantial down payment a jumbo mortgage must be obtained. Right now conventional interest rates are in the 4’s but jumbo loans are much higher. Higher jumbo rates combined with a decline in the stock market, increased unemployment and low consumer confidence has made demand for homes in the upper ranges lower than normal. Unfortunately, this lower demand comes at a time when we have an oversupply of homes over $1 million. This market is the one that is hurting right now in Boulder. Market below $500,000 is actually quite healthy.
All of this bad news has happened when our sales are traditionally low. As spring progresses and as the economy turns around sales will increase. Boulder has very few foreclosures and a very resilient set of sellers. Our market is not in a position to go down quickly. Last April there were 65 home sales in Boulder, so far this month there have been just 6 so far. However there are 65 homes currently under contract in the city. Not all will close this month, but clearly we will close more than the 35 that closed in March. I will be watching closely but not looking at each segment in the market is not getting the entire story.
by neil kearney | Apr 7, 2009 | Uncategorized
Living in a college town is great, and the annual Conference on World Affairs is the cherry on top of the sundae. Each year the Conference on World Affairs (CWA) brings together 100’s of participants, discussing 100’s of topics, in front of thousands of inquiring minds. 
Photo by Larry Howard
The format for most topics are a panel with a moderator. The topics run the gamut from comic books to the U.N. If you cannot find a topic that would be of interest, you are either not trying very hard or are quite set in your ways.
For a detailed video about the conference click here.
For the daily schedule click here
For a webcast click here
by neil kearney | Apr 6, 2009 | Boulder County Housing Trends, Statistics
The calendar has turned once again and the March sales statistics are now available for Boulder Colorado and the surrounding area. The numbers for the month are not impressive but I will try to bring a bit a insight to the situation.
- Sales of single family homes were down 42% for the month and down 35% YTD.
- Inventory is down substantially as well. Down to levels we have not seen since the early 2000’s.
- Median prices on a month-to-month comparison are down a bit as well. This decrease is due to the nature of the sales we are having. The lower end of the market (below $250,000 in Longmont, below $500,000 in Boulder, and below $400,000 in Louisville, Lafayette and Superior) is where the activity is happening. There are very few sales above $1 million.
The market is slower than normal for this time of year but as I mentioned above there are segments in the market where there is ample activity. If you have a high priced home the reality is that the market price is most likely below where you thought you could sell it a few years back. Homes that are offering true value are the only one’s that are selling in the higher price ranges.
Here are some graphs that show the long term trends.
If you are curious where your home falls in today’s market please give me a call or send me an email.
by neil kearney | Apr 2, 2009 | Boulder County Housing Trends, For Buyers, Real Estate 101
Interest rates are near historical lows and in many cases buyers are locking in rates that start with a 4. This is unheard of and represents one of the great buying opportunities in modern times. I just received a quote today for a 30 year conventional loan (below $417,000) with no discount points for 4.875%. This rate assumes at least a 10% down payment and a FICO score of at least 740. 
I remember my first sale back in 1992, the interest rate was 8% and everyone at that time was saying that it was a pretty good rate, not the best, but reasonable. During the last decade we have become spoiled. Rates have been mostly in the 6 – 7% range with a few quick dips into the 5’s.
Now I hear people wondering if they should wait for rates to drop further, maybe to 4%. Hello, how much further do you want them to go? I guess it is human nature to get greedy when you start taking something for granted. But I say wake up and lock-in right now! 4.875% could turn into 6% in a flash and then where would you be? I have always been pretty conservative with my planning and when I am ready to purchase or refinance I plan using today’s rates and lock-in today’s rates. Call me crazy but I don’t think you should gamble on something that can change your payment every month by a significant amount. Here is a continuum of principle and interest payments at different interest rates. This assumes a $400,000 loan.
- 4.875% = $2,116.83
- 5% = $2,147.29 ($1 a day savings)
- 5.25% = $2,208.81 ($1,103 saved a year)
- 5.5% = $2,271.16 ($1,851.96 saved per year)
- 5.75% = $2,334.29 ($2,609.52 saved per year, a nice vacation?)
- 6% = $2,398.20 ($3,376.44 saved per year, that is $16,882 over 5 years and $101,293 over 30 years.
The point is, that interest rates are fantastic! If you are happy with your house, you should look into refinancing. If you might consider a move during the next few years, think about it now. That new house will never be more affordable. Good decisions now will pay off for years to come.
