Old Mantra-Location. New Mantra-Inventory.
The real estate mantra used to be “Location. Location. Location.” I believe the mantra du jour is “Inventory. Inventory. Inventory.” 15 of the 18 grids shown in this month’s Boulder County regional report show a decline in inventory levels over this time last year. In fact, in the March 2013 report we saw a 24.4% decline over 2012 levels in available single family listings in Boulder. Today we are reporting another 24.7% decline which equals a 42.9% decrease in inventory over the past two years! That’s amazing!
While inventory decreases, demand remains strong.Despite overall sales being down vs 2013 levels, we are actually ahead of 2012 by 11.2%. How can this be? It just doesn’t make sense unless you factor in demand. It’s stronger than the numbers may suggest. Consider the additional impact of new construction. Two years ago there was almost none; now it’s everywhere and even includes high-end spec homes. The increases in price and interest rates have a place in the demand formula as well. In Boulder, the average price is up almost $140k in two years and up $180k over last year. This means houses are more expensive. Interest rates up up about a point…also contributing to the increase in the cost of a home. So, to be up in sales volume with the addition of new construction, increase in price and higher interest rates, demand cannot be understated.
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Last month we took a brief look at how slim the inventory levels were in Boulder County towns in the lower price ranges. This month, take a look at the Average Days to Contract in all areas of this report. There are just three grids that show a number above 56 with a low of 2!. Those are just silly-low numbers.I have a Realtor client who had a listing and the seller did not receive a contract after the first weekend on the market. The seller called in a panic to ask what they were doing wrong! Even the expectations of sellers has changed abruptly. Needless to say the seller received two full-price offers the following week, but still, the scenario is unbelievable. Managing seller expectations appears to be the upcoming mantra. Do yourself a favor and make sure to have that conversation when you take a listing.
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