303.818.4055 Neil@KearneyRealty.com

Boulder City Council to Impose House Size Limits

by | Mar 20, 2008 | Boulder County Housing Trends, Boulder Real Estate

Boulder City Council To Impose House Size Limits

 

The Boulder City Council is expected to impose interim home size limits in the City of Boulder. The council will then take time to study and implement a permanent solution. The idea brought forth by council member Macon Cowles, is designed to prevent large houses being built without regard to lot size and neighborhood character.

 

 

Real estate in the City of Boulder is a limited resource. Land surrounding the city is not open to development for a number of different reasons including zoning and vast open space holdings. This has caused the land within the city to become very valuable and has limited many homeowners in their choices. Many homeowners have decided that the best use of their outdated homes for a personal use and investment purpose is to expand the current home (pop’s) or tear down and build a new home (scrape’s). This practice has increased the value of the housing stock of Boulder, produced some beautiful homes, increased prices and changed the “feel” of some neighborhoods.

 

 

The tool of limitation the City Council is using for their crusade is the Floor Area Ratio (FAR). This ratio measures the finished square footage of structures (including garages) on a lot and compares it to the size of the lot. Currently the FAR is .8. The interim solution is to limit the FAR to .35! What a huge jump! This breach of personal property rights is going to be a huge burden for homeowners who just want to improve their home, put in a garage etc. The council’s reasoning is that most existing houses fall under .35, so it must be acceptable for everyone.

 

 

Take for example a typical 7,500 square foot city lot. The current regulations would allow for 6,000 square feet if all other approvals (view corridors, set backs etc.) are met. Under the proposal the size of the structure including garage would be 2,625. This is not a lot of square feet given the prices paid for in town lots. If this proposal sticks, the prices for homes whose best use is to be totally remodeled or torn down would need to drop in order to make the math work for developers and homeowners alike. The prices for those large homes already built would fetch a premium.

 

 

I love Boulder and want it to retain its character but I urge the city council to be reasonable in their deliberations.

 

Boulder County – Home Inventory Improves

by | Feb 26, 2008 | Boulder County Housing Trends | 1 comment

Boulder County- Re-Sale Inventory Improves

 

I heard on the radio today that according to the National Association of Realtors there is currently a 10 month inventory of homes on the market. Much of the national reports are not ringing true locally so I decided to see how our local numbers were doing.

 

Across the board the inventory for resale homes and condos has decreased from the levels reported six months ago. We are headed in the right direction. Actually, we are doing quite well. Under contract ratio is up significantly from a month ago, showings are up and inventory is down. Here are the inventory details followed by a chart.

 

Single Family Homes:
Boulder 4.7 months
Louisville 3.7 months
Lafayette 5.7 months
Longmont 7.0 months
Superior 2.7 months
Suburban Plains 8.5 months
Suburban Mountains 10.4 months
Erie 7.1 months
Boulder County (all areas) 6.3 months

 

Attached Dwellings:
Boulder 6.6 months
Louisville 3.4 months
Lafayette 4.4 months
Longmont 10.5 months
Superior 4.2 months
Suburban Plains 7.10 months
Suburban Mountains (no inventory)
Erie 8.7 months
Boulder County (as a whole) 6.8 months

Inventory is found in the following manner: I=Active listings/(sold listings in past year/12)

 

What’s Hot in Boulder County Real Estate

by | Feb 6, 2008 | Boulder County Housing Trends

What’s Hot in Boulder County Real Estate

 

I often am questioned (this time by my wife) about what areas are selling better than others. I naturally figure out how I can show this graphically using statistics. So here it goes!

 

The first chart shows the percentage of single family homes that are currently under contract. The larger the percentage, the more market activity there is currently in the market. This is a snapshot of the market but is a fairly good measure of what is going on. As you can see the areas with the highest percentages are Boulder, Louisville and Superior. The areas that have the highest percentage of unsold homes are the suburban mountains and the suburban plains.

 

The second chart shows the number of months of inventory given the sales rate during the past three months. This statistic shows what has actually been selling during the slower months and compares that to the current inventory. The lower the number the better. Again, Boulder, Louisville and Superior showed the best numbers and the mountains and plains again have the weakest numbers.

I am finding that there are many buyers starting to come out and the showings are at a level higher than a year ago. As always, if you are interested in finding out how your home fits into the picture give me a call. I’d love to put my experience to work for you. Neil Kearney 303-413-6624

 

The Pond and the Lily Pad – Opportunity Knocks in Boulder Real Estate

by | Jan 22, 2008 | Boulder County Housing Trends, For Buyers, For Sellers

Colorado Real Estate
Opportunity Knocks

Part 1: The Pond and the Lily Pad
Suppose you live in a large apartment building overlooking a 1.5 acre (65,536 sq. ft.) pond owned by the city. The city gardener wants to improve the looks of the pond and to improve the fish habitat so he plants a 1 square foot patch of pond lily. Let’s assume that this is a very fast growing type of pond lily and that its area doubles every week. After the first week there are only two square feet of lily pads. Nothing really to notice. After 4 weeks there are 8 square feet of lily pads, still no one living in the apartment building would notice. After 8 weeks, the growth of lily pads is 256% but still even the most observant people would not recognize this as a trend. Only after 13 weeks when lily pads fill an eighth of the pond would the early trend spotters usually notice the difference in the landscape. Just two weeks after the early adopters see the lily pads growing the pond is half full. At this point, the media discovers the lily pad situation and reports the explosive growth. One week later the pond is full of lily pads. It took fifteen weeks of very slow deliberate growth to fill half of the pond and only one week to fill the other half. When would you notice the lily pads in the pond? Ask yourselves these questions: Are you too busy to look in the pond? Do you know enough about lily pads to understand what your looking for? Do you see the lily pads but don’t care until you hear about it in the news?

Part 2: Tech Bust
Did you or someone you know buy a tech stock at the height of the boom? It was hard not get swept up in the fantastic media stories highlighting the huge IPO’s, the instant millionaires and the next big thing. Everywhere you went people were talking about how much money they have made by buying the stock of a company you had never heard with no sales and no product. The popular sentiment was “can’t lose”, “get in quick”, “if I could only get in on more IPO’s”, “nowhere but up”, “we are in a different era”… Obviously, this did not last and the lesson I took away from that era was that once ‘everyone” is talking about something, it is too late. In order to profit you must be a forward thinker, not influenced by the media. If you wait for the media to catch on, the trend is almost past and it is too late. The question is whether you are a forward thinker or a follower.

Part 3: Opportunity
Do you ever look back and wish you had bought real estate when it was more affordable, or just before the market took off in the 90’s, or before the rates went up. Now is the time to make up for those past mistakes. Now is a great time to buy real estate! Have you ever heard the phrase “buy when everyone else is selling”? These are the times when the smart money will be buying real estate. The national media has locked in to the housing story and will not let go. Locally, our paper is printing national stories with local bylines. People seem frozen by the negative news, waiting it out on the sidelines.

The CU Business Research Division in their recent 2008 Colorado Economic Forecast noted that “…the situation in this state is fundamentally different” (than the rest of the country). We did not participate in the recent excessive appreciation fueled by speculation that many other areas of the country had over the past four years. Our area is well ahead of the recovery curve. In my opinion our cycle is already in the process of turning. The news is gloom and doom but if you realize that real estate is local you can start separating truth from fiction. It is my hope to bring you that truth about our local market in this newsletter and it is my further goal to get you to see that the pond is just beginning to fill up with lily pads.

As always, we value your loyalty and friendship and I value your loyalty and friendship and am always available to answer any of your real estate questions. Neil Kearney 303-413-6624

NAR Chief Economist Visits Boulder Area (Part 2)

by | Jan 17, 2008 | Boulder County Housing Trends

NAR Chief Economist Visits Boulder Area (Part 2)

Front Range Real Estate Poised for Recovery

 

“When everyone is greedy, be fearful. When everyone is fearful, be greedy.”
Warren Buffett

 

 

In a meeting that I attended yesterday, Dr. Lawrence Yun, the Chief Economist of NAR (National Association of Realtors) painted a fairly positive picture of the Metro Denver real estate market. He stressed that our area has not followed the national pattern and that we did not participate in the “boom” largely fueled by speculation in areas like California, Nevada and Florida. He stressed mortgage affordability over prices and said that the low interest rates and larger overall wealth make homeownership more affordable to many more people even though prices have increased.

 

Nationally, he expects to report that home prices decreased 2% during 2007. This will be the first time in over 70 years that the nation’s home values will have decreased over a 1 year period. During the same time period the Denver area will report flat home prices and the Boulder area will be in the 2% range. For 2008 he predicts that the nation will be flat as a whole and our area will have appreciation between 4 and 5%.

 

The number of sales has fallen but only to the levels of the “pre boom” year of 2002. The excesses of speculation and sub-prime borrowers (who shouldn’t have been able to qualify anyway) have been skimmed off.

 

Helping us locally is the fall in housing starts. Our supply has fallen 50% over the past two years. However, he predicts that foreclosures will rise again because of the number of adjusting loans this year is larger than any year on record.

 

I have been expecting an influx of Californians selling their homes for less than they wanted and finding an affordable deal in a nice area here in Colorado. Dr. Yun says that the CA market has stalled in large part because of the jumbo mortgage pricing. He doesn’t think it is fair that the rest of the country is paying 5.875% for a mortgage and Californian’s are paying 7%. We’ll see how that plays out. He thinks it may be awhile before the correctio in bubble areas is complete.

 

Dr. Yun has been watching Denver and thinks it will be one of the markets that will be on top over the next two years. In our area he sees pent up demand, good underlying economics and good mortgage affordability. He even said that our area might be underpriced.

 

Here is an article from yesterdays http://www.rockymountiannews.com/ that gives a parallel account of a similar meeting held on the same day.

 

“Economist’s forecast sees Denver housing turnaround
By John Rebchook, Rocky Mountain News (Contact)
Thursday, January 17, 2008

Yun says metro market in better shape than much of nation. 


The only thing that is holding back the Denver-area housing market is “irrational pessimism” from prospective buyers. That insight comes from Lawrence Yun, chief economist and senior vice president of real estate for the National Association of Realtors. Yun, who presented his 2008 real estate forecast to the Jefferson County Association of Realtors in Lakewood on Wednesday, noted afterward that “all markets are local” and that the bleak national market conditions do not represent what is happening in the Denver area. Yun said unemployment is lower in the Denver market than nationally, while job creation is stronger.
The Denver-area housing market also didn’t experience the huge run-up in prices that other markets did. It takes far less of the typical income in the Denver area to buy a house than in such areas as San Diego and Miami, he noted during his presentation.
“And interest rates are basically at their 45-year low,” Yun said. “I would say the Denver market is past its bottom and is now in the early stages of recovery.
“The one thing that may be holding back your market is buyer pessimism,” Yun said. “I think for your housing market it is irrational pessimism. You have very strong affordability.”
He said buyers’ gloomy attitude springs from all the attention on the collapse of the subprime market.
“Wall Street made a very bad mistake by being overly exuberant on the profits gained from subprime lending,” he said. “But those are mistakes made in the past. It’s not related to home buying today or in the future.”
He did say, however, that the number of foreclosures, which set a record in the metro area in 2007, will continue to rise this year.
But he still expects overall housing appreciation in the Denver area this year to be 4 percent to 5 percent, while the nation as a whole will be flat.
Previously hot markets, such as California and Florida, will likely see home prices continue to fall this year, he said.
Yun predicts that home prices in the metro area will rise another 5 percent to 7 percent, on average, in 2009.
Yun said that if there is a recession this year, Denver should weather it better than the country as a whole.
“That would really be bad news for a city like Detroit, where they have had seven years of rising unemployment,” he said.
“But Denver will be able to escape most of the job losses of a recession because of the highly educated work force and because you’ve already wrung out the excesses of the dot-com boom,” with a huge loss of tech jobs starting in 2001, he said.
Also, a recession would mean further cuts in mortgage rates, which would make Denver housing even more attractive, he said.
Jim Smith, owner of Golden Real Estate, called Yun’s talk “fascinating.”
The facts speak for themselves,” he said.”

 

 

 

Chief Economist Visits Boulder Area (Part 1) Real Estate Is Local

by | Jan 17, 2008 | Boulder County Housing Trends

Chief Economist Visits Boulder Area (Part 1)
Real Estate Is Local

Yesterday, I had the opportunity to attend a presentation made by National Association of Realtors Chief Economist, Lawrence Yun. I found it to be very informative and in the end reinforced many of the conclusions that I have made recently about our market (positive).

Dr. Yun has come under scrutiny by many people for over stoking the real estate boom a few years back and now hurting the market with bad news. As Dr. Yun said yesterday, the media has made the real estate bust a top story. Only rivaled by the upcoming elections. He admitted that the media reports are hurting the market. Buyers are not ready to buy when they hear Great Depression and housing in the same sentence (ie. “National housing prices fall for first time since Great Depression”). He believes that the media has a bias toward negative news. The media has an agenda to report housing in a negative light and will find the sources to agree with their story. He said he was recently contacted by a producer from one of the national nightly news shows. The question to him was “How much has the American homeowner lost?” He gave information and statistics stating that the majority of homeowners were better off now than they were three years ago. On average they had gained about 50% over 5 years and were now down 2%. He watched the news report and his interview was not mentioned. The lead was “US homeowners have lost $700 Billion!”. They had found a source to tell their story.

Real estate is local and it is hard to characterize any one market by the compilation of all markets. Dr. Yun gave the analogy of providing a national weather report. Would it do any good to know that the national average temperature is 47 degrees? Weather researches would find the report interesting as they study global warming. Large energy companies would use the information to gauge overall demand for energy. People in Florida would hear the report and wear a jacket even though it was 78 degrees. People in North Dakota would think it was a heat wave and wear a light jacket instead of a parka and gloves. In the end, not that practical for any particular area. The citizens in Florida should have a local forecast and the people in North Dakota should listen to their local forecast. The same is true for real estate.

The NAR compiles and provides information on a national basis. This national snapshot is needed and used by various government agencies (including the Federal Reserve), large insurance companies and large investors. However, the national snapshot is picked up by the media and reported as fact for every locale in the nation. This is a disservice to the consumers and many people are making decisions based on a national report. Just like those people in Florida wearing a jacket, people in Grand Junction CO, where the market gained over 13% last year, begin to question their market because they hear it is so bad.

 

It is my goal to provide you the best local information. Don’t watch the national news to see how your house is doing, give me a call.

 

Tomorrow I will tell you what Dr. Yun said about our local market.