Boulder County Real Estate Market Update Sales Soften – Prices Increase – Low Inventory

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2014 Market Summary

2014 started out with a bang! Throughout the spring the combination of low inventory and high demand fueled a sellers market that made it difficult and frustrating to be a buyer. Multiple offers were very common and in many situations full price wasn’t enough to win the negotiation. I personally helped a buyer make an offer that was 15% above the asking price and their offer wasn’t accepted! Throughout the spring, home values increased.

By mid June the pressure of the market had eased a bit. All of the fundamentals in the market were still in place but just less intense. More houses were coming on the market and that supply brought the market back closer to equilibrium. August was a slow month. Houses continued to slowly come on the market but the buyers who wanted to be in a house by the school year had already done so and the rest seemed to be on vacation. When September rolled around the market woke up again and since that time we have seen a fall surge characterized by good market activity.

Some Sales Details

Through the first three quarters tota l sales in Boulder County are down 6% from last year but up 6% from 2012. However, the sales volume is down just 2% YTD. This means that the average price for each home sold has increased.

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This increase has come in two forms. First, the median home price increased by 8% from the third quarter of 2013 and secondly more high priced homes have sold this year. Last year 24% of all sales in Boulder County sold for $500,000 or more. This year it’s 29% above that threshold.

So far this year there have been 1,557 sales in Boulder County. Here is where those sales have taken place:

City of Boulder – 43% (478 sales) City of Longmont – 39% (432 sales) Unincorporated Plains (including Gunbarrel and Erie) – 21% (231 sales) City of Lafayette – 16% (177 sales) City of Louisville – 8% (92 sales) Unincorporated Mountains – 8% (84 sales) Town of Superior - 6% (63 sales) Some Value Details

Prices have definitely been

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increasing this year, quantifying that change is difficult mid-stream but we’ll give it a try. Doing a simple comparison of the first three quarters of 2013 and 2014 we find that the median prices for 2013 were $333,000 and in 2014 they were $355,000. An increase of 6.7%. Average prices increased by 8.2% over that same time period. FHFA the national agency which tracks home sales for the Federal Government reported that the home values in Boulder County increased in value by 9.6% for the one year period ending on June 30th (see this represented graphically on page 3 of this report).

A statistic that isn’t directly related to values but demonstrates the strength of the market is the average negotiation off of list price per sale. The average negotiation off of l ist price this year has been 1.6%. For comparison, during 2007 – 2011 the average negotiation was 3.6% and for 2012 and 2013 it was 2.6%. Obviously low ball offers haven’t

been standard practice so far this year.

Kearney Realty News

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Price Trends in Boulder County Real Estate

Median Price

Average Price

US Existing Median Price

For more charts and graphs highlighting the real estate market go to www.NeilKearney.com and click on The Kearney Report in the right

Kearney Real ty Co. 2400 Spruce Street #201 Boulder, CO 80302

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THE CHANGING LANDSCAPE OF RENTAL COMMUNITIES IN BOULDER

If you have been driving around Boulder lately, you undoubtedly have noticed the building boom happening. Commercial buildings are going up, the University of Colorado is working on some big projects, there are hotels being built and most notably to me there are a bunch of new residential apartment complexes being constructed. While we don’t directly lease property, the implications of this development is interesting to note.

Historically a full half of all residential housing units in Boulder are for rent and this number is rising. Many of those apartments and rental condos were built in the 1960 – 1980 era and frankly many need a facelift. A few bold developers have recognized the lack of nice rentals over the past few years and have come to the market with a new housing product to Boulder; luxury apartment communities. These apartments work off of the premise that people will pay higher prices for really high-end places with amenities. After the first project like this worked, a flood of similar projects raced to be second. In this article I will give a few examples of some of the notable new high-end apartments in the Boulder area.

Two Nine North - www.twoninenorth.com Two Nine North is located at the North East boundary of the Twenty Ninth Street Mall. It is a high end apartment complex that is well located. Prices for a one bedroom unit start around $1900 and the largest two bedroom units (~1350 sq. ft.) go for around $2800.

Solana 3100 Pearl – www.solana3100pearl.com Solana 3100 Pearl is located within 2 blocks of Two Nine North. This project is recently completed and is going through its initial leasing. When complete there will be 319 units for rent. It’s located at the Boulder Junction which will eventually be a mass transportation hub just east of 30th Street on Pearl. The availability at Solana ranges from a studio 573 sq. ft. studio for $1450 to an 1,183 sq. ft. two bed, two bath for just under $2500 per month.

The Lofts at Peloton – www.theloftsatpeloton.com/ The Peloton is a large project that was initially slated to be sold as condos. Halfway through the sales effort the developers decided that the rental market was better than the sales market and turned half of the complex into rental units. The community center is really outstanding, best of the bunch, and features a health club quality workout center, a beautiful roof top pool and hot tub, a club room and a movie room. From their website it appears that they have 1, 2 and 3 bedroom units. One bedrooms start around $1900 and two bedrooms are just under $3,000

For those who own rental real estate in the area there are a few takeaways here. Many younger professionals are delaying the purchase of their first home. There are many factors involved such as distrust of the housing market, student loans and low savings rates making it hard to qualify for a loan and the desire to stay mobile to name a few. In this rental market an individual investor needs to compete on both price and condition. There may be an opportunity to raise rents but you may need to put some money into the upgrading of your condo. It will be interesting if these high rents will be able to be sustained over time. For more details on this topic as well as the profile of two complexes in Gunbarrel go to http://wp.me/p1vfRE-18m

Which Generation Is Buying The Most Homes?

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According to a National Association of Realtors (NAR) 2014 Generational Trends Survey, the Millennials made the most real estate purchases in 2013. Here is the breakdown:

Millennials (1980 – 1995) 31% of purchases Gen X (1965 – 1979) 30% of purchases Young Boomers (1955 – 1964) 16% of purchases Older Boomers (1946 – 1954) 14% of purchases Silent Generation (1925 – 1945) 9% of purchases Some facts about the Baby Boomers:

• The youngest of the 76 million Boomers are turning 50 this year.

• 10,000 Boomers a day are turning 65 years old, this

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will happen every day through 2030. • Younger Boomers have less savings and a lower

homeowner rate. • Boomers own 32 million single family homes. • So far this generation has been net even in the

housing market. When they sell one they buy one. This will change but will the Millenials be ready?

Some Facts about Millennials:

• They are the second largest generation. • Despite the housing crash in 2008, 2/3 believe

that owning a home is essential to living a good life. • This generation is delaying home buying due to

high student debt and a tough job market.