Each quarter I prepare a report on the Boulder area real estate market that puts into context how the market for homes is performing. I’ve just completed the latest iteration of The Kearney Report and the year end provides even more data for explanation and analysis. The Kearney Report is designed to give the reader a broad statistical view of the Boulder County real estate market by giving both the broad view and delving into the details. I will be presenting some of the breakout sections in the coming days but in the spirit of full transparency, today I’m releasing the full report. The text that follows is the summary letter on page two. To view and/or download the entire report in the form of a PDF click here Boulder Market Report Year End 2013.1
The Economics of Real Estate
Last year in this space I spoke of the recovery of the local real estate market. If the market is likened to a large ship, 2012 was a year where much of the work went into changing directions. By the end of the year the turn was made and it was full speed ahead into 2013. The beginning of 2013 was characterized by a very robust market where buyers were out in force and sellers were reaping the rewards of an improved market and multiple offers. Throughout the spring, sales were strong but new listings were scarce. This brought into play the basic supply/demand curve you may remember from Economics 101. The basic concept of this principle is that if demand exceeds supply then the cost of those goods will naturally increase. We definitely saw this in action. It wasn’t uncommon to have five offers on a home with bidding going well above the asking price. This gave the next seller in the neighborhood to ask even more for their home and many times their “aggressive” price was rewarded with a quick offer. The market frenzy continued until June when buyer demand slowed and more sellers decided to take advantage of the market. Below is a quick summary of the market in 2013. To get a full view of what is happening in the various market segments, I encourage you to study the graphs and explanations included in this report.
The number of residential properties that sold in Boulder County was up 9.7% during the year. Each month sales were higher than the previous four years until fall when the market slowed a bit after the flooding. The number of sales in the price range below $250,000 were down slightly but all other price ranges showed increased sales. The greatest increase was seen in the luxury segment where sales above $1.5 million increased by 65%.
Prices increased throughout our market area. The median price of residential real estate rose by approximately 9% during 2013. This is the largest single year gain we have seen since 2000 when our market was among the best in the nation. Through the third quarter, the national market increased by a similar amount (8.44%). The largest price gains were seen in the markets that were most depressed during the recent downturn. For example, prices in Las Vegas were up by 22.5% last year but they are still down 25% over the past five years. For comparison, Boulder County was up 8.11% (according to FHFA.gov) for the past year and up 7.44% over the past five years. Our one year appreciation ranks our market 60th out of approximately 300 market areas. The tide is rising.
The big story for the year was low inventory. Throughout the year buyers had very little to choose from and by the end of the year the number of active listings was down 37% from just two years ago. To go back to the ship analogy, the waters are clear but we can’t run the engines at full speed because we are low on fuel. In order for the recovery to continue we will need the supply of homes to more closely match the demand. Otherwise, would be buyers will turn into renters in frustration. If you have been thinking about selling but have been putting it off, we would love to explore that possibility with you and let you know if it makes sense for you.
The remainder of this report gives a detailed view on many segments of the local real estate market. If you don’t see your neighborhood represented please give us a call we can run the numbers for your specific area.
