Kearney Realty News Market Update
Spring 2011
For many years our average negotiation off of list price has averaged between 2 and 3 percent. Lately, buyers are pushing those ranges. Sellers are seeing many low offers and many times those negotiations do not come to fruition. Buyers are looking for a deal, and who can blame them? Here is a list of average negotiation percentages off of list price for Boulder County across multiple price ranges:
mortgage interest rates since 1972. The combination of reasonable prices and historically low interest rates makes it a wonderful time to buy real estate.
30 Year Fixed Interest Rates Since 1972 20.00
18.00
16.00
14.00
12.00 Interest Rate
So far in 2011 the real estate market in Boulder County has been holding its own. The activity has come in waves, but has lacked the overall consistency which would signal a strong recovery. The market overall continues to favor the buyers. But it is not unheard of for exceptional homes listed at fair prices to have multiple offers. However, it is rare that either of those offers are for full price.
10.00
8.00
6.00
4.00
2.00
9.3%
The lower price ranges are holding close to traditional negotiation patterns but the higher ranges are seeing more buyer leverage resulting in deeper discounts. A common perception for buyers is that they are going to get an amazing deal. These numbers show that in most cases the market value of a home falls within 95% (if not less) than the list price. Interest rates, long expected to rise have remained low. At this writing 30 year fixed rates are again below 5%. Below is a chart showing the historical
2011
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> $1.5M
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•
1988
$1.25M - $1.5M 5.56%
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5.87%
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$1M - $1.25M
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•
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4.65%
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$750 - $1M
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3.82%
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$500 - $750k
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0.00 1977
3.04%
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$250 - $500k
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•
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3.1%
1973
0- $250k
1972
•
Total sales are still down considerably from our peak a half a decade ago. Sellers are reluctant to sell their homes for what the market will bear even though the buying conditions make long term affordability a reality. Sometimes it is hard to take your lumps up front even though it is the smart thing to do. If you are considering a move over the next few years, I would encourage you to look at the opportunities in today's market. People are still moving to our area and builders are still not building new homes. At some point over the next few years interest rates and prices will rise. Along with that trend affordability will drop as sales increase. No matter the market conditions, I look forward to being your number one real estate resource. I look forward to hearing from you.
Housing Design Trends 2011 • • • • • •
•
Outdoor living that serves as an extension of the inside of the home with outdoors that boast comfortable seating, audio, TVs, a fireplace, and artwork to punch up the space. Green design elements, such as water-efficient appliances and LED lighting under the kitchen cabinets, continue to gain traction and offer cost savings. Smaller Homes - In Boulder this trend has been helped along by regulations. Nationally, it is a combination of the response to the overdone McMansions and the overall trend toward smaller and better caused by the economic collapse. Larger Kitchens - Even with overall smaller homes the trend toward large, functional kitchens has persisted. Here are some of the popular features: recycling centers, recharging stations, integration with living areas (great rooms), sustainable product choices. Large functional bathrooms have become more popular. Universal design features in sustainable finishes are what people are looking for (think zen spa rather than ornate and overdone). High quality modular homes. No longer are modular homes just found in trailer parks. New designs are high quality, high style and pieced together on site, not brought in on a trailer. This trend is bringing contemporary style to ordinary people. Look for this trend to continue until it becomes main stream. Granite is no longer king. Composite countertops such as Ceasarstone and Terrazzo and natural stained concrete have replaced granite as the preferred high end countertop finishes. Prices of granite have come down so that it makes sense to install granite just to help the sale of a home.
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Sales Trends
Chart #1 Boulder County Real Estate New Listings - Weekly 250
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Chart #2 Weekly Under Contract 180
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Chart #3 Boulder County Sales by Month Single Family and Condos 600
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The three charts to the left show this years market conditions compared to last year. Chart #1 shows the number of new listings which have come on the market on a weekly basis over the first sixteen weeks of 2010 and 2011. Overall, the inventory of new homes as of the end of March is down roughly 7% from a year ago. However, the number of new properties to go on the market, as shown to the left has decreased 19% from last year. Our market is not being flooded with listings. Actually in many areas there are not enough good quality homes on the market in any given price range. The second chart shows the number of homes that have gone under contract during each of the first sixteen weeks of the year. The red line shows 2010 and the blue line shows activity from this year. So far 25% fewer properties have gone under contract this year. Keep in mind that last year the numbers were artificially inflated by the tax credit and as I have shown in past newsletters, our strong early sales last year came at the expense of sales later in the year. The hope this year is that sales will be more consistent throughout the year and we can make up for a slower start. The third chart shows closed sales . The blue bars show 2011 sales compared to past years. Through March sales throughout Boulder County are down 10.3% compared to a year ago. I expect this gap to increase in April and May and then the gap to narrow from June through to the end of the year. In the end I think we have a good chance to have more sales this year than we did last year. Population shift is a driving force in real estate. We are fortunate that many people continue to choose to live in Colorado. It is predicted that Colorado will gain 85,000 citizens during 2011. All of these people will need a place to live and new building is at an all time low. Most of these people will start out as renters but as jobs increase and as the economy improves these renters will become buyers. I predict that in a few years we will have a shortage of homes on the market and builders will be scrambling to keep up with demand. It is in this type of market that property values increase.
Website Redesign
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I have just completed a redesign of my website. Not only does it have a fresh look, it now is easier to find information pertinent to your situation. I invite you to take a look. If you are interested in this type of information on a consistent basis there is a place on the website to subscribe via email or RSS. www.NeilKearney.com