Kearney Realty News Market Update The Boulder area real estate market had good activity during the second quarter and showed steady improvement from the first quarter of 2009. The number of sales for all residential units, year-to-date is down 28%. After the first quarter, sales were down 33%, so we are making some headway. Modest yes, but I’m grateful that it is headed in the right direction. The strength of the market continues to vary depending upon the price range in which you are interested. As I write this, currently 23% of all homes and condos in Boulder County which are priced under $350,000 are under contract. Compare this to 14% for properties priced between $350,000 and $600,000; 7.4% for those priced between $600,000 and $1,000,000; and just 3% for those priced above $1,000,000.
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The reasons for this stratification are varied but here are some of the major trends I am seeing:
Entry level homes in each of our local markets are moving quickly because first time buyers are out in force, taking advantage of the $8,000 tax credit and low interest rates. Foreclosures are more of a factor in the lower price ranges. Most of the foreclosures in our area are in Longmont under $250,000. Both first time buyers and investors are pouncing on these properties. There continues to be a sizable gap between conventional loans (those $417,000 and below) and jumbo loans. This gap is discouraging sales above $500,000. The wealth effect is a strong driver in the Boulder County luxury market. When the stock market is soaring and money is flowing to small businesses, money tends to find its way into
loans APR, then closing may be delayed by mandatory waiting periods. We will be advising our clients to do their loan homework up-front and secure a loan program well before closing.
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The Denver Metro Area was named by Barbara Corcoran on the Today Show as the “number one area poised for an upswing”. She cited several reasons why Denver is ready for an upswing. “1.) It has a “vibrant downtown” 2.) It has a large employment base 3.) It has an educated population 4.) It is a younger demographic 5.) It has one of the largest park systems in the nation.” Other areas on the list were Raleigh NC, Austin TX, Seattle WA, and San Francisco CA. We are very bullish about our future and it is nice to have national experts agree with us. New regulations regarding home loans are aimed to protect consumers but may also put them at risk. The Housing and Economic Recovery Act (HERA) changed how and when lenders must disclosure to buyers. The law was put in place to prevent situations where a buyer is expecting one rate and shows up and the closing table being forced to accept a higher rate. The intent is great but buyers must be aware that if they chose to lock-in an interest rate at the last minute or make other changes that change the
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Boulder real estate. When the opposite is true we see a definite slow-down in activity. Right now, inventories of properties above $1 million are quite high. Properties are selling, but just the cream-of-the-crop. Across all price ranges, we are seeing a lower percentage of offers being accepted by sellers. Buyers have the erroneous idea that any property can be bought for a fire-sale price and are submit very low offers. The reality is that very few sellers are able or motivated to sell their home below market value. Sellers know it may take awhile to sell and are not enticed by an offer 20% below asking price. We are in a stabile market where reasonableness on both sides goes a long way.
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The first time homeowner tax credit is still in effect for buyers who have not owned a home for at least three years. The sale must be complete by the end of November. Tax credits equal 10% of the purchase price with a maximum of $8,000. The tax credit can be claimed when filing federal income taxes, either an amended 2008 return or the 2009 return filed in 2010.
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Also available are tax credits for high efficiency home upgrades. Projects such as new insulation, new heating and cooling units or whole house solar all qualify for rebates. For more details on this program go to http:// www.energystar.gov/index.cfm?c=tax_credits.tx_index
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In a report which appeared in Business Week magazine Boulder was named the strongest market in the nation. The report was based on Zillow.com statistics and used the change in appreciation between the first and second quarter of 2009 as an indicator.
Americans Staying Put Just 11.0 percent of Americans changed residences in 2008, the lowest move rate on record since 1948, according to the U.S. Census Bureau. In 2008, 35.2 million people changed residences, a decrease from 38.7 million in 2007 and the smallest
number of movers since 1962. By Region, people in the South and West were likeliest to move, with rates of 13.5 percent and 13.2 respectively. The move rate in the Midwest was 11.1 percent, while the Northeast’s was 8.2 percent. In 2008, renters were five times more likely to move than homeowners.
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Neil Kearney MBA, CRS® Direct: 303-413-6624 Email: Neil@KearneyRealty.com Kristy Kearney Direct: 303-413-6621 Email: Kristy@KearneyRealty.com
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What’s Selling and Other Good News
Number of Sales Boulder County Residential 600
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M edian Sales P rice by M onth Boulder County Residential $ 400,000 $ 350,000 $ 300,000 $ 250,000 $ 200,000 $ 150,000 $ 100,000 $ 50,000 $Januar y
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Sales Trends The top chart shows the total number of sales recorded each month in Boulder County since 2004. During this time frame there has been a definite trend of fewer sales each year. Between 2004 and 2006 sales were fueled by easy credit and sub-prime mortgages. The top 20% of those sales were unsustainable in a realistic credit market. Sales in 2009 started out very slow and we are gradually seeing improvement when comparing same month sales. Through July we were still on an upward tact which is not always the case. The lower chart shows median prices on a monthly basis. Basing valuation on a monthly snapshot is not meaningful but the overall trend over the last 4 years has been positive appreciation by a few percentage points each year. In a nation characterized by recent boom and bust our slow and steady appreciation is now among the nations best. Helping us over the past few years has been a reduction in the number of homes for sale.
Financially speaking, these are tough times and it doesn’t take very much searching to get negative news on the state of the economy or real estate. But if you look closely, this is a time of great opportunity. Many of our great companies were created in tough times. Recessions are great times to re-trench and become better at what you do. In real estate it is easy to go with the group think that is created when the media reports focus on the past instead of focusing on the future and all the promise it holds. Real estate is cyclical and if we always look backwards to what has already happened we miss the best opportunities to take advantage of the market. The best gains are reserved for those who have the foresight and courage to act in a “down” market. Locally, homes under $300,000 in areas such as Lafayette, Longmont, and Louisville are selling especially well. Longmont was once overrun with foreclosures below $250,000 but now there is almost no inventory at all. The combination of a low interest rates, a tax credit and a strong and diverse local economy has fueled sales. We have already seen the signs that this activity is spreading to the higher price ranges. With a bit more consumer confidence our market will be off and running. Many of you remember the buying opportunities of the early 1990’s, well, this is your chance to get in early again. Money magazine recently named Louisville the number one city to live in for its size. The secret is out and people will continue to come to this beautiful area . The supply of new homes has dropped and as the economy improves there will be a lack of supply. This can only lead to value appreciation.