The Silver Fern Report - January 2011

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An analysis of real estate conditions in Boulder, CO.


<ul><li> 1. THE SILVER FERN REPORT: Boulder An analysis of real estate market conditions in Boulder, Colorado January, 2011 Phone: 303 586 1241 | </li> <li> 2. Legal <ul><li>This presentation was prepared exclusively for the benefit and use of the Silver Fern Homes clients in order to assist their study of real estate market conditions. This presentation is for discussion purposes only and is incomplete without an in-person, oral presentation by Silver Fern Homes. This presentation reflects our views of prevailing market conditions on this date, which are subject to change. Silver Fern Homes recommends careful and complete due diligence before buying or selling real estate or other investments. The following presentation is not to be construed as legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment decisions derived from this presentation. Previous market performance is not a guarantee of future results and there is financial risk associated with buying or selling property. Consult with your financial, legal, and real estate advisers before making an investment decision. The data in this presentation was obtained by private and public sources, without independent verification. </li></ul></li> <li> 3. Boulder, Colorado Phone: 303 586 1241 Our goal is help you get the most value from your unique real estate situation. We offer our clients the latest market information, straight forward advice and the highest standards of service. - Osman Parvez, Co-Founder </li> <li> 4. The Team <ul><li>Osman Parvez: Co-Founder and Associate Broker. Osmans professional experience includes investment analysis, real estate development, and investment banking. He also loves being in the wilderness and has research experience studying the impacts of climate change. Osman holds an MBA in finance and a B.S. in Biology </li></ul><ul><li>Email: [email_address] ph: 303.746.6896 </li></ul><ul><li>Dallice Tylee: Co-Founder and Managing Broker. She holds a GRI and CRS. Dallice is also a Certified Negotiation Expert, EcoBroker, and Accredited Staging Professional. A native of New Zealand, Dallice's attention to detail and thorough, disciplined approach comes from previous professional experiences in health sciences. She is passionate about interior design and landscaping. </li></ul><ul><li>Email: [email_address] ph: 303.746.6765 </li></ul><ul><li>Crystal Callipari: Associate Broker. Crystals experience as a real estate investor and home builder provides unique insight on buying, selling and marketing strategies. Prior to joining Silver Fern, she was a frequent client of the firm, giving her perspective on the quality of service clients should expect from their broker. Crystal has lived in Colorado for over 13 years with her husband. She has two grade school aged children, one of whom is a competitive figure skater and the other a black belt in martial arts. </li></ul><ul><li>Email: [email_address] ph: 720.841.2701 </li></ul><ul><li>Robbin Merta: Licensed Assistant. She has a B.F.A. in graphic design and experience owning several small businesses. Her strong interest and experience in home renovation, both personally and professionally, is a practical complement to the Silver Fern team. She is a stained glass artist who also enjoys volleyball, cooking and martial arts. </li></ul><ul><li>Email: [email_address] ph: 303.993.6139 </li></ul></li> <li> 5. Spotlight: Circle of Care Circle of Care is dedicated to providing accessibility to the arts, education and social/civic opportunities for the homebound elder, senior facility residents and older adults with physical, cognitive and financial challenges. Learn More Silver Fern donates 5% of every commission to local non-profits. 2009 Recipients: Boulder Shelter for the Homeless Colorado Chautauqua Association Greenwood Wildlife Rehabilitation Sanctuary Big Brothers Big Sisters I Have a Dream Foundation Circle of Care Growing Gardens Intercambio de Comunidades Wildlands Restoration Boulder Emergency Squad Boulder Day Nursery Citizens' Community Television 2008 Recipients: Archway Wildlife Rehabilitation Association for Community Living Big Brothers, Big Sisters Boulder Humane Society Boulder Shelter for the Homeless Front Range Center for Assault Prevention Greenwood Wildlife Rehabilitation Center I Have a Dream Foundation Circle of Care The Medicine Horse Program 2010 Recipients: Boulder Community Hospital Foundation Circle of Care Big Brothers, Big Sisters of Colorado Humane Society of Boulder Valley Medicine Horse Program Front Range Center for Assault Prevention Imagine! Foundation Growing Gardens Boulder Day Nursery Boulder Valley Rotary Community Foundation Intercambio de Comunidades I Have a Dream Foundation BouldeReach Boulder Shelter for the Homeless </li> <li> 6. City of Boulder Single Family Houses (detached dwellings) </li> <li> 7. House Inventory Approaches Normal <ul><li>Inventory levels finished the year in relative normal territory. </li></ul><ul><li>There were 297 houses on the market in December, a few less than last year. </li></ul><ul><li>As of January 20 th , there are 367 houses available of which 41 are under contract (11%). </li></ul></li> <li> 8. House Sales Volume Still Anemic <ul><li>Volume remains well below the long term average. </li></ul><ul><li>38 houses sold in December, about 24% below the long term average. </li></ul><ul><li>There is little reason to expect volume to rise markedly this year; mortgage rates are above historic lows and underwriting standards remain unreasonably difficult. </li></ul></li> <li> 9. House Sales Volume Mixed Year <ul><li>Total volume was higher than the preceding year but most of the gain occurred in the 1 st half. The second half of the year was actually down 15% from the same period a year before. </li></ul><ul><li>Sales would need to rise massively to return to 2005-2006 levels. </li></ul></li> <li> 10. House Absorption Rate Still Low and Erratic <ul><li>Absorption is the percentage of property that sells from available inventory. </li></ul><ul><li>Last month, absorption was 13.8% and about the same as last year. </li></ul><ul><li>If this years pattern is typical, absorption will begin to rise in January and peak in June. </li></ul></li> <li> 11. Sold vs. Failed Listings <ul><li>This chart compares sold listings to those that have expired or were withdrawn by the seller (detached dwellings only). </li></ul><ul><li>Sold is grey, failed is blue, and the ratio between is red. </li></ul><ul><li>The ratio fell steadily since 2005 and bounced up slightly last year. </li></ul><ul><li>Comparing the full year (top chart) to the six month (lower chart), its clear that the bounce occurred primarily in the first half of the year. </li></ul><ul><li>An usually large number of listings expired or were withdrawn in the 2 nd half of both 2009 and 2010. </li></ul>Analysis </li> <li> 12. Market Disruption in Action <ul><li>This chart shows the relationship between the first and second halves of the year. </li></ul><ul><li>The green is the 1st half, orange is the 2 nd half, and the black line is the ratio. </li></ul><ul><li>There was an unusually large volume of sales during the 2 nd half of 09 and the first half of 10. This period coincides with federal tax incentives to home buyers. </li></ul><ul><li>Typically, the ratio runs just under 1.2, but in 2009 it fell below 0.8 before bouncing back to about 1.3. </li></ul>Analysis </li> <li> 13. Notable Sales Modern and High End 1676 Sunset Blvd Key Statistics: 4 Bed, 6 Bath 6,790 SQFT Sold: 11/15/10 Days On Market: 727 Sold: $2,785,000 % of Original Asking : 63% Such a beautiful house, there isnt space to describe it. Clean, contemporary design and very sophisticated. It must have been painful to construct this gem at the peak of the market, only to partially recover the cost when the market turned. Powerlines Matter 755 Grape Ave Key Statistics: 3 Bed, 2 Bath 1,538 SQFT Sold: 12/07/10 Days on Market: 175 Sold: $538,900 % of Original Asking : 95% The market for homes on this street are impacted by power lines. What might have seemed like a bargain can become difficult to sell later. This one was purchased in 2006 and resold 4 years later at a substantial loss. Martin Acres Land Grab 3655 Martin Drive Key Statistics: - Bed, - Bath 4,069 SQFT Sold: 10/01/10 Days on Market: 194 Sold: $400,000 % of Original Asking : 73% Used a church, this vacant property sits on two 7,000 SQFT lots. The seller used wishful thinking to set the asking price at $550K. They missed the summer selling season and accepted a much lower offer in the fall. </li> <li> 14. City of Boulder Town Homes and Condos (attached dwellings) </li> <li> 15. Town Home &amp; Condo Inventory About Normal <ul><li>345 properties were available for sale in December, about the same as last year. </li></ul><ul><li>Inventory over the year was below the long term average, but this excludes certain developers who do not list full inventory. </li></ul><ul><li>A large amount of mid to upper priced inventory is expected to be available this spring as the Peloton begins marketing 2 unsold buildings. </li></ul><ul><li>As of Jan 20 th , there are 374 active listings of which 31 are under contract (8%). </li></ul></li> <li> 16. Town Home &amp; Condo Sales Volume Struggling <ul><li>38 properties sold last month, the same as the year before. </li></ul><ul><li>The market cooled dramatically in July and remained flat for the rest of the year. This was likely caused by the move forward affect of expired tax credits. </li></ul></li> <li> 17. Town Home &amp; Condo Sales Volume Struggling <ul><li>The top chart shows sales volume for the full year going back to 2005. The lower chart is the last six months of the year. </li></ul><ul><li>Over the past six and twelve months, sales have been down 32% and 3%, respectively. </li></ul><ul><li>The dramatically lower 2 nd half of 2010 does not bode well for the market going forward. </li></ul></li> <li> 18. Town Home &amp; Condo Absorption <ul><li>The absorption rate was 9.6% in December, the third straight month of rising levels. </li></ul><ul><li>Last year, absorption peaked in March and April. In the absence of stimulus activity, this is unlikely to occur this year. </li></ul><ul><li>We recommend that sellers have their property listed by March or early April. This avoids testing the market with a too high price and leaves plenty of time to sell into the peak season. </li></ul></li> <li> 19. Notable Sales The High End Is Alive 3120 Corona Trail #301 Key Statistics: 2 Bed, 2 Bath 2,181 SQFT Sold: 10/29/10 Days On Market: 317 Sold: $152,900 % of Original Asking : 90% Its not easy to find a 2 bed, 2 bath condo in Boulder at this price. The location is improving and this should prove a good long term investment. Disclosure: SFH represented the buyer. One Penn Plaza 2801 Pennsylvania Ave #204 Key Statistics: 2 Bed, 3 Bath 2,164 SQFT Sold: 12/15/10 Days on Market: 265 Sold: $550,000 % of Original Asking : 73% Beautifully finished, solid construction, and well appointed. The location is improving but still challenged, a fact reflected in the large discount from asking. Rebuilt but Tough to Sell 1201 Balsam Ave #302 Key Statistics: 1 Bed, 1 Bath 749 SQFT Sold: 11/12/10 Days on Market: 600 Sold: $332,000 % of Original Asking : 73% These condos were originally built in the 1950s and recently completely remodeled. Nice location, but fronts a very busy street. </li> <li> 20. High End Inventory Overhang <ul><li>This chart shows sold (green) and withdrawn/expired (grey) listings by year. The ratio is the red line. The listings are priced between $1,000,000 and $2,000,000. </li></ul><ul><li>There remains a large number of sellers sitting on the sidelines. The majority of unsold property will, at some point in the near future, return to market. </li></ul><ul><li>This market pattern suggests at least another 12 to 24 months of buying opportunity before the market for higher end property recovers and begins to rise in value. </li></ul>Price Range Analysis </li> <li> 21. Lessons from the Trenches <ul><li>On Financing: </li></ul><ul><li>Unbelievably, underwriting has gotten more difficult. Even exceptionally qualified buyers are having their patience tested by overzealous loan processors. Sellers should be patient with underwriting driven delays. </li></ul><ul><li>On Showings: </li></ul><ul><li>Check for interior condition before removing ones shoes. Dog pee is gross, DAMHIK. </li></ul><ul><li>Student tenants in Boulder have a tendency to be sleeping in the mid-afternoon. Its awkward and uncomfortable to show an occupied house, and surprising to walk into a bedroom with a sleeping college student. If sellers (or tenants) cannot leave due to medical or other personal reasons, buyers should be forewarned. </li></ul></li> <li> 22. Get A Great Deal <ul><li>Buying or selling a home is one of lifes largest financial decisions. Shouldnt you have a professional adviser? </li></ul><ul><li>Silver Fern Realtors add value and earn their commission. The sooner we get star...</li></ul></li></ul>