Kearney Realty News Market Update
Winter 2011
2010 was another interesting year in the local real estate market. The year started out with a bang. Through the first five months sales were up 33% from the previous year. Then the homebuyers tax credit expired and the air went out of the market. Starting July and extending through November, each months sales were significantly lower than they were during the corresponding month the year before. By the end of November all of our year-to-date gains had been erased. Even though we had a strong December, up 7%, we ended up the year with 2% fewer sales than we had in 2009. Picture a sharks fin and you can visualize real estate sales on a monthly basis during 2010.
3rd quarter was .55%. Not all that robust but better than all of the cities that show up to the left on the chart. As this is written interest rates are at 4.875% for a 30 year fixed conventional loan. Almost exactly where they were a year ago. During the past twelve months average interest rates fell to a low of 4.23%. They have come up a bit but are still exceptionally low. I expect rates to rise slowly throughout the year. If you are waiting for 4.25% it might be a very long wait. The entry level home market had a great beginning and then softened considerably after the expiration of the tax credit. The luxury home market had a good year. Sales of homes over $1 million were up by 14% during 2010. Many luxury home purchases have more to do with the personal balance sheet than income and this year was a year of wealth recovery.
The good news was that once again prices were relatively stable. Actually prices have done extraordinarily well in Boulder County. Consider this; since 2004 the number of sales has decreased by 40% while median prices have increased by 13% during the same five year period. To put even more clarity to our stability, average prices (according to FHFA.gov) have decreased 8.3% over the past 5 years and prices in Boulder County are up 3.92% over the same time frame.
Looking ahead, it looks like we have another year of recovery ahead. This means that it will still be a buyers market through at least 2011. I expect sales to increase a modest amount and for prices to remain stable. If you are thinking about making a move this year, take advantage of the interest rates before they rise. Call me to get started.
Below is a chart which shows annual appreciation for selected cities including Boulder County. Our annual appreciation (again from FHFA.gov) through the
4 Year Cumulative Appreciation 4th Quarter Data from FHFA
Cumulative Return
Sa n Diego
-2.8 -2.31 -2.3 -3.7 -3.5 -3.23
Pittsburgh
0.03 0.19 0.22 0.39 0.55
Los Angeles
Boulder
San Francisco
Oma ha
Denver
Da lla s
Ft. Collins
Ka nsas City
Minneapolis
Miami
Greeley
Salt Lake City
Chicago
Sea ttle
Detroit
Phoenix
La s Vega s
Grand Jct.
Orla ndo
Bend, OR
4 2 0 -2 -4 -6 -8 -10 -12 -14
1.68 1.79 2.37
-0.23 -1.16 -0.58
-8.38 -7.92 -10.04 -10.91 -13.73
Top Real Estate Trends for 2011 • •
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Slow Recovery - The housing sector is lagging and we are seeing improvement. The improvement won’t be dramatic until we see widespread job growth. I expect volume and prices to remain relatively stable in Boulder County. Foreclosures and Short Sales - Most areas in the Boulder area have been shielded from distressed sales. However, I expect these types of sales to be a part of our market for a few more years. They both create excess supply and provide downward pressure on prices. Eventual Housing Shortage - New housing starts in Boulder County are way down. Population continues to rise. Eventually something has to give. I suspect that the market will recover before the builders will catch up. This means positive pressure on prices and low supply of listings. Relief in the Rental Market - Because it is difficult to buy a home, the rental market has been strong. Instead of building condos to be sold expect for rental projects to be built. Interest Rates Increasing- Interest rates are at nearly 40 year lows. I expect rates to rise slowly with the economy. Take advantage now. Buyers Willing to Commute - Buyers are willing to drive the extra 10, 15, or 30 minutes to get more for their money. Much to the chagrin of the Boulder City Council. This I Know For Sure - I will spend this year continually striving to serve my clients. Giving them great information, helping them make smart decisions and most importantly, helping them achieve their objectives in a friendly and professional manner.
Kearney Realty Co.
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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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Sales Trends
Boulder County - Total Sales All Residential Categories 7,000
6,163
6,243
6,098
5,985
6,060
5,800
5,742
6,000
5,566
5,485
5,185 5,000
4,762 4,386 3,752
4,000
3,781
3,000
2,000
1,000
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Boulder County All Residential Properties Median Prices $400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
The charts to the left paint a broad picture of the local real estate market. Sales were up slightly compared to last year but are down nearly 40% from our mid-decade highs. The sales volume is well below what we have been used to seeing for the past decade. I can’t help but think that there is pent up demand just waiting for the full economic recovery. Average median prices for 2010 increased and are near all time highs. Median prices give an indication of the mix of sales rather than a true barometer of value. This year sales of low priced homes were down while the number of sales of higher priced homes increased year-over-year. The midpoint of all of these sales crept up. My intuition tells me that prices were fairly constant. Dropping in some areas/price ranges and increasing slightly in others. Inventory has dropped this year. This means that many would-be sellers have decided to wait. This has kept our market in relative balance and our prices steady. I expect a busy spring of listing and sale activity. Absorbtion Rate is an indication of the movement of the market in any given area. It compares past sales to the number of homes currently on the market. The lower the number the more liquid the market. •
Boulder
6.87 months
•
Louisville
4.44 months
•
Lafayette
5.94 months
•
Longmont
6.48 months
•
Superior
4.44 months
•
Mountains
13.73 months
•
Plains
9.13 months