As opposed to some other investments, like stocks and more recently cryptocurrency, real estate is fairly stable in any short term period. Depending upon the supply and demand of the moment, prices can trend in one direction or the other, but you won’t wake up one morning and see a 15% drop in one day. The Boulder County real estate market has been especially resilient over the years and owning a home in this area has been a great investment in virtually any time frame over the past 30 years. That said, the Federal Reserve Bank has put a target on the overheated real estate market and in a few short months we are already seeing the effects locally.
Bidding wars are no longer common. Buyer’s are struggling to get comfortable with the new interest rates in the 6’s rather than the 3 and 4% range. Some buyers have exited the market entirely and others have had to reduce their price target. Sellers are needing to adjust to new reality of a softer market and I’m seeing larger negotiations upfront including giving credits so that buyers can lower their interest rates.
Sales of residential real estate in Boulder County is down 20% year-to-date and that is widening. Inventory is rising, but not as much as you think as we are seeing fewer new listings hit the market than in past years. Prices have gone flat and on average the sales prices are below the list price by a few percentage points. There are an increasing number of price reductions as homes sit on the market longer. New home builders are seeing buyers cancel because of the payment increases and they are staring to offer incentives and price reductions in order to sell their inventory. Overall, we are seeing a fairly rapid shift towards a balanced market.
Year-to-date sales are down 19.7%. During September, just 24% of the sales closed at a price above the list price, this is down from 70% in May and 76% in April. During September, the average sale closed for 1.11% below the list price. The average days-to-offer has increased from 13 days in April to 29 days in September. Historically, these are all solid numbers, but they do note the market shift since spring.
To hear more about the high points watch the video. To see the graphs and compare the details month-to-month and year-to-year take a look at the slideshow below.
