Kearney Realty News Market Update
Summer 2014
As we analyzed the sales results for the second quarter, the numbers didn’t seem to reflect the market. The number of sales was down slightly (2.7%) but that is like hearing a World War I report that casualties were down slightly and pretending to understand what is going on. More relevant to the understanding of the local real estate market are “Days to Offer”, “Sales to List Price Ratio” and “Median Sales Price”. I will go through each in order.
Days to Offer When someone says that “the real estate market is good”, I think they are referring to the perception of how long it’s taking for their neighbors houses to sell. The technical term is “Days to Offer” as opposed to “Days on Market” which includes the time the house took to go from contract to closing. Days to offer begins when the property goes on the MLS and continues until it is marked as under contract or pending. When I get the question asking how long it’s going to take to sell their home, this is what they mean. During the second quarter, the average Days to Offer of all properties in Boulder County was 31. Of course there were many homes that sold almost immediately (in practice, even if an offer is received on the first day the DTO will be 3 or 4 because it takes a bit of time to negotiate and get the paperwork done) but an average of one month is truly fast. Last year was a similar market and the DTO was 42. In 2012, it was 74, 2011 it was 89 and in 2010 it was 77. This year the inventory was low and with housing flying quickly off the market the problem was exasperated.
Sales to List Price Ratio A seller can put any price they want on their home. You see it all over Zillow with their “Make me Move” feature. Joe Homeowner in a fit of especially clear thinking one night at 3 am signs up for the service by listing his home which is worth $250,000 for $499,000. What the heck, maybe someone from China will come in and pay cash. He’ll let his wife in on the big plan once the dream comes true. Usually once a home seller meets with a Realtor and actually lists their home on the MLS the hazy reasoning that a buyer might pay $499,000 has lifted and clearer heads and data have prevailed. Still there, it is common for a seller to want to ask that extra 5% to “see what will happen”. In a normal market buyers see the premium price for what it is and wait for the price to come down. In a frenzied market, like the one we had this spring, buyers tend to quickly justify a reasonable price jump and pay at or near the list price. Traditionally, in the Boulder area the ratio between the sales price and the listing price has been around 97%. This means that the average negotiation is around 3%. This year for all sold properties in Boulder County the sales price to list price ratio was 99.01%. This means that the average negotiation was 1%. Included in this figure were all of the homes that sold for over full price. By any measure, this is a sellers market.
Median Sales Price How much ones home is worth is a big component about how one feels about their overall financial picture. Houses selling quickly and for near their asking price are strong indicators for the more important measure of Median Sales Price. Over the past two springs, housing prices have increased. How much is localized to each neighborhood/ home and coming up with an overall figure is fraught with some pitfalls. So far this year more homes are selling in higher price ranges. Is this a measure that all prices are rising or is it that more “high end” buyers are purchasing homes and thereby bringing up the average. It could be both. FHFA.gov measures same house sales which eliminates this problem. FHFA.gov reported the 1 year appreciation ended March 31st for Boulder County to be 8.1%. I would expect that number to increase for the second quarter.
Quick Facts From the Second Quarter: • • • •
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Median price of homes sold in Boulder County $350,000 (up from $345,950 a year ago) Median Price of Homes Sold in the City of Boulder - $457,000 (up from $449,900 a year ago) 72% of sales in Boulder County during the quarter were priced under $500,000. 54% of sales in the City of Boulder during the quarter were priced under $500,000; 79% of sales in Louisville, Lafayette, Superior and Erie were priced under $500,000. Total sales in the County during the first quarter decreased 1.4% from last year. Of the 1,686 sales in Boulder County during the first quarter, 67% were single family homes, 29%
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were attached dwellings and 4% were other types such as farm or income property. County wide properties sold for 99% of list price in the second quarter.
Kearney Realty Co.
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Neil Kearney MBA, CRS®
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Kristy Kearney
Kristy’s Rule For Successful Home Ownership As Realtors, we see many houses each week. Each house is different but all houses have one thing in common. At one point they were brand new and shiny. The pride and joy of the new home owners. But time moves on and what was once new isn’t the latest and greatest any more. Home ownership is a process, it isn’t a one time deal. In order to get the most out of your investment you need to keep up on it and improve it and this is most easily done incrementally. We find that many original owners liked their choices of carpet, counter tops and wallpaper so much that they haven’t changed them for 20 or 30 years. Many times these houses are well maintained but they are not updated. To the owner it’s fine. To a prospective buyer it’s a fixer upper! This brings me to Kristy’s rule for home ownership. In order to keep on top of a house you must do one project a year. This could be new counter tops, new carpet, new paint, new flooring in the bathroom or new doorknobs on the interior doors or … The list is endless and each house has it’s own list of things to be done. Action Step: Step Write out a list of needed projects without the baggage of how hard or expensive it will be. Prioritize the list in terms of needs. Then re-priortize the list in terms of cost and logistics. The main objective is to know what you need to do and then get started on it. If your first project will take 7 years to pay for, most likely nothing will get done. So my advice is to knock off a few ‘easy’ projects first.
Keeping Home Records With Evernote: Evernote is an online application that allows the user to easily store and information about anything that they want to remember. We use Evernote in our business extensively. All of our transaction files are stored and organized on Evernote as well as our personal information. A great use for Evernote is to keep track of home improvements and expenditures. After downloading the free program from Evernote.com you will receive an email address which you can send information to that you want to remember. This can be in the form of documents, photos, notes etc. You can also enter information directly in Evernote as well. Set up a file for your home and record information about what was done, when it was done and how much was spent. You will then have this information for tax purposes as well as for when you need to fill out the Sellers Property Disclosure when you move. The information is then accessible via your computer as well as on your mobile device. Here are some other purposes I use Evernote: • Storing travel information by forwarding confirmation emails from airlines, hotels and car rental agencies and saving them all in one folder. • Creating a “to do” list which is sharable among a group of people. • Keep copies of the contents of my wallet including the front and back of my credit cards. • Store insurance documents. • Store account information and login information. • Scan and store warranty information.