This is a very informative article from the Daily Camera on what is going on in the Boulder market.
Darla Campbell purchased a $246,000 home in Erie last July, and got married a few months later in October. Her husband, Bob Waurio, was unemployed for about six months after their wedding, but finally found work as a draftsman in Fort Collins early this year.
Now, they’re looking to move out of Campbell’s house and onto some acreage somewhere between Fort Collins and Lafayette, where Campbell works as a physician assistant. They’re hoping to upgrade and look in the $300,000-$350,000 price range.
Campbell, 46, said her house has seen some activity — about 15 or so showings in the last two months — but so far no one has made an offer.
“A lot of people say they’re not making any decisions, they’re just starting to look,” Campbell said. “One buyer was going to come back for a second showing, but she had to get her finances in order first. We never heard from her again.”
If the house doesn’t sell by winter, Campbell will take it off the market until spring. She doesn’t have a realistic timeline for selling the house, and they won’t start seriously considering new houses until they see more concrete interest from buyers.
“It’s a crapshoot,” she said. “You just don’t know. We don’t have our hopes set too high. I doubt we will make anything, but we’re just trying to break even. I don’t want to have to come to the table with any money. We’re not desperate to sell by any means, which is a great position to be in. You have to put it on the market and see what happens.”
Campbell is like others in Boulder County and the surrounding area playing the waiting game to see what will happen with their house on the market. She’s not panicked, but she’s not overly optimistic either, a sentiment shared by area real estate agents and analysts.
Recent statistics point to very small growth in single family dwelling sales in Boulder County so far this year. Though home sales are flat, some area analysts are optimistic. Boulder County and surrounding areas are on the verge of a full recovery, but until the national economy improves, the area will continue to see slow, incremental improvements in real estate.
“If we had some help from the national economy, we have all of the patterns to indicate that a recovery is ready to happen,” said Lou Barnes, a mortgage broker with Premier Mortgage Group in Boulder. “We can stay in a state that’s ready for quite some time. We have population growth. We have scarcity (of land). We have a near total cessation of building. We have extraordinary affordability. We have all the pieces, but we need a trigger.”
Today’s real estate picture
Statistics from the Boulder Area Realtors Association
for single-family homes from January to August point to a 0.89 percent increase in home sales in Boulder from 2010 to 2011. In Boulder County, the story is similar; 2011 is behind 2010 by 0.83 percent.
Sales are essentially flat across the county when compared to a year ago, but this year’s sales have been made without the artificial boost of government tax credits. In 2010, first-time homebuyers could receive up to $8,000 if they had a home under contract by April 30 and closed by June 30.
The government boost was somewhat successful, though area real estate experts said the high number of sales early in the year was misleading.
“It really compiled all of the sales that we would have had throughout the rest of the year into that time frame,” said Dori Van Lone, assistant vice president of Land Title Guarantee in Boulder. “This year, it’s real-time sales.”
Home values have also stayed relatively flat. The median price for Boulder homes sold from August 2010 to July 2011 was $535,000 — a 0.9 percent increase from the same time period a year before. In Broomfield, the $325,000 median price remained unchanged; Longmont saw a 0.4 percent decrease to $224,000.
Condominium and townhome sales in 2011 are down by about 13 percent from 2010. Mike Malec, a broker associate for ReMax in Boulder, said these conflicting statistics make it difficult to answer the broad question “How’s the market doing?” for interested buyers and sellers.
“The market has become so specialized,” he said. “Housing is doing fairly well, but townhomes and condos are doing terrible. You really can’t use the general statistics, you’ve got to look at what you’re looking to sell or buy — how is the market doing in that particular area or type of home?”
Buyers are pickier this year, Malec added. If a home has any downfalls, like being near a busy street or needing lots of cosmetic work, buyers will cross it off their list.
“Buyers have realized that real estate doesn’t always go well, and they’re now looking to make as intelligent a choice as they can,” he said. “They’re looking at houses more critically.”
Pieces of the puzzle
Premier Mortgage Group’s Barnes is optimistic, but the trigger that will send Boulder County real estate into total recovery will be one related to the national economy, he speculated. An improvement in the unemployment rate or an increase in general consumer confidence would help, Barnes said.
Barnes remembers the housing crash of 1990. Now in 2011, Barnes said he sees all of the same signs that helped the real estate industry recover 20 years ago — a low rental vacancy rate, rising rent costs and population growth.
Low rental vacancy rates increase the demand for apartments and rental units, which makes rent prices increase. As prices increase, people start considering buying. As the population of Boulder County grows, however slightly, demand for housing also increases.
Add to those pieces the fact that Boulder County didn’t feel the housing bubble burst as much as other parts of the country did. The county is in a much better place to start recovering from, said D.B. Wilson of ReMax Boulder.
“When you look at the Las Vegases or the Miamis that had huge appreciation year after year in the early 2000s, Boulder was just kind of riding along at 2 percent, 3 percent, 4 percent appreciation,” Wilson said. “So when the recession hit, those areas’ values dropped and a lot of people are underwater. We didn’t have that. That’s a big bonus for us.”
Wilson, who just finished his term as president of the Boulder Area Realtors Association, attended numerous national conferences as president. As he listened to the tribulations in other parts of the country, he was reminded of Boulder County’s luck.
Through the end of August, Boulder County had the lowest foreclosure rate of all the metropolitan counties in Colorado with 2,690 households per completed foreclosure, according to Colorado Division of Housing economist Ryan McMaken.
John McElven, a marketing associate with ReMax of Boulder, pointed out that there were just four bank-owned properties for sale in the city limits of Boulder at the beginning of October, compared to hundreds and thousands in other metropolitan areas.
Another factor that points toward imminent success is the county’s inventory levels. Other areas were plagued by overbuilding, but in Boulder County, space is limited, and the low supply keeps prices stable and competitive.
At the end of August 2010, there were 2,160 homes on the market. One year later, there are 1,837.
“What that tells me is that home values are going to maintain just because we don’t have this huge amount of inventory,” Wilson said.
McElven also pointed out that the number of listings that expire has decreased this year, meaning that homes are selling instead of “languishing on the market,” he said.
Boulder has the supply part under control. It’s the demand that could use an extra push, Wilson said. Though population growth has been slow — about 1.1 percent since 2000 — even a small influx of people can impact the housing market. For more people to move to the county, Wilson said, there has to be job creation.
Plus, there are plenty of people in Boulder County who want to buy, they’re just waiting for the right conditions. That pent-up demand will unleash itself once consumer confidence increases or unemployment decreases, said Barnes. Prices have been relatively flat for the last 10 years, he said, and 10 years is a long time to wait for a new house.
“There are a ton of people who would love to move up in housing, but haven’t been able to,” Barnes said. “In a 10-year period of time, a charming 4-year-old turns into a 14-year-old with a trombone. Even though they need to move or have the resources to move, the overall scene out there is so nervous — meaning that people just stay put.”
At ReMax in Boulder, Wilson tracks the number of showings his office coordinates. There’s a quantifiable difference in the interest in homes, he said, which bodes well for topping 2010 home sales volume. The number of showings in 2011 is up about 50 percent from 2010, Wilson said.
“Showings beget contracts which beget closings,” he said.
What’s standing in the Boulder region’s way
Though interest rates are low, it’s become increasingly difficult for homeowners to obtain loans for homes.
“We’ve had changes in the lending environment,” said Ken Hotard, senior vice president of Boulder Area Realtors Association. “There are strict rules, much more difficult qualifying criteria for borrowers, banks with huge amounts of uncertainty about their futures because of a massive financial reform bill.”
That reform bill, the Dodd-Frank Wall Street Reform and Consumer Protection Act, laid out new specifications for banks’ mortgage lending practices when it passed into law last summer.
“Banks are afraid to lend,” Hotard said.
Though the low inventory numbers in Boulder County can point to a higher sales volume, they can also point to low confidence on the side of the seller, said independent broker Gary Bauer.
“The home owner wants to make a change, but is not willing to put his or her home on the market, wait several months for the property to sell and then go into a home-buying mode to look at limited listings,” Bauer said. “It’s almost a catch-22.”
At any point in the slow recovery, Hotard said, an event across the globe can impact the United States’ economy. Anything can happen, and if that anything is bad, don’t look for a total turnaround in Boulder County just yet, he said.
“I would not be optimistic that these conditions are going to arrive in the short run,” Hotard said. “I might be more looking for this to unfold over the next 12, 18, 24 months.”
On both sides of the transaction, it’s been increasingly difficult to see a sale through all the way to closing. With economic uncertainty, fear of job loss and difficulty obtaining credit, potential homebuyers are skittish, Hotard said. In 2011, he estimated that about one in five homes never make it to closing.
“There are a lot more obstacles that can crash a deal,” Hotard said.
Sellers are tentative because they’re selling for lower than they want, and buyers are tentative because they don’t want to purchase a house that could leave them owing money if the market crashes again.
Malec of ReMax in Boulder said there’s a certain amount of trust that goes into each transaction, and if that trust runs out, closing the sale is impossible.
“I’ve had some deals fall apart over relatively silly, small amounts of money,” he said. “If buyers come in and ask for a ton of repairs, sellers lose trust. If a seller doesn’t give (buyers) some important items, buyers lose trust. ”
The American mindset has changed, added Wilson of ReMax Boulder. Until the home-buying population in Boulder County feels less vulnerable, he said he doesn’t expect a recovery.
“It’s this overall psyche that people aren’t willing to extend themselves,” he said.
Buying or selling now
Though official statistics point toward 2011 home sales being flat, for real estate agents this year it has a different, positive vibe.
“It’s definitely better,” said Tom Kahn, an agent for Walnut Realty in Boulder. “There are more real buyers, not just lookers. There isn’t as much hesitation on the part of buyers.”
McElven of ReMax in Boulder said this year he’s seen at least five houses with multiple offers. In 2010, he said he saw just one house with multiple offers. McElven recommended ditching the national perspective if considering buying or selling, and looking deeper into the specific market you’re considering in Boulder County.
“You read the national news and foreclosures are up and people can’t sell houses, and in some cases here we have multiple offers on houses,” he said. “It’s a different world.”
Interest rates are at a historical low. The average rate on a 30-year fixed mortgage fell below 4 percent for the first time ever in early October.
And since so many homes in the $1 million and above price range have been on the market so long, sellers at that level are willing to negotiate.
“It’s more of a realistic price,” said Van Lone, with Land Title Guarantee. “The interesting part is we’ve noticed there’s a lot of cash sales on those high-end properties. It’s people who actually have money, they’ve been waiting for the right time and now they’re seeing an opportunity.”
Investors’ actions point to a feeling of confidence in the real estate market in Boulder County, too. Sales of investment properties are up 38 percent over 2010, McElven said, and he estimated that about 50 percent of those were cash sales.
“Investors feel our market is solid, it’s a good place to invest,” McElven said. “That’s a really good bellwether of the health of the market.”
Plus, analysts agree that if you’re going to buy a house, there’s really no better place in the state than Boulder County. McMaken of the Colorado Division of Housing said that if real estate is improving in the state, it’s usually better in Boulder County.
“It’s one of the most dynamic parts of the state,” he said. “It really has shown itself throughout recent years to be hanging on better than most of the state.”