March 2022 Boulder Area Real Estate Stats
When we were young, adults seemed so tall. When you bought your first home 20 years ago, it was a huge commitment and seemed so expensive. Now, adults aren’t so tall, and that first home was no big deal and inexpensive compared to today. It’s because you are taller and make more money. Each comparison is a snapshot in time. Your perception changed because your perspective changed.
Our monthly stats reports are a snapshot in time. This past March is compared to March of the last year. Sometimes monthly results can seem extreme. Take April 2020 as an example…it was bad. It was also the start of lockdown AND the beginning of one of the best-ever years in real estate. This month’s report shows fewer closed homes last month than in March of 2021 – in almost all markets. It also says we’ve closed fewer homes in the first quarter of this year compared to last. But where does that stack up against historical norms? Without perspective in the bigger picture, we don’t really know where we stand so let’s take a closer look.
For this month’s chart (go ahead and click on the link below to see what we are discussing), we chose the Boulder Attached Home Market. We did this to provide variety, but mainly because it’s the most active local market with the most sales. Over the past eight years, on average, 147 attached homes close in Boulder during the 1st Quarter. Four of the past 8 years have seen fewer than 147, but NOT any of the past 3 years! In fact, 2021 was the HIGHEST sales total in the past 8 years with 193 closings. This makes the most recent 1st quarter feel absolutely pedestrian, down 22.3% and just 150 closings. Where was the outcry over a slowing market in 2016 when sales were down 27.7% over 2015? 2019 had a big drop of over 16%… where were the doom and gloom-ers then? We might have started hearing the “bubble” word again. But with lenders busy refinancing the entire planet, we plunged ahead to a record year in 2020 despite a lockdown. Today, with both a slower pace of sales and rising interest rates (resulting in a 70% decline in refinancing), both lenders and Realtors have time to ponder the future demise of the market. Why is this different than 2019 or 2015?
We are still seeing increasing prices. We are still seeing fewer days on market. These are points of strength. They indicate a strong demand from those who can afford it. Rising interest rates have surely eliminated thousands, or hundreds of thousands, from the pool of potential buyers. The difference between now and 2019 is that now there are only half as many homes for sale. Our lower sales total is a direct result of fewer homes offered for sale, but somehow the old bubble talk is starting to creep back into the discussion…again. And by the way, I was right, no bubble burst and no foreclosure tsunami happened. This time, again, no bubble. Too much equity. Demand is too high. And interest rates are still way below their historic average of 7%. Compared the past 10 years, rates seem high, but they aren’t. Perspective people.
If you aren’t convinced yet. Take a look at the Longmont single-family sales on page 2 of this report. I didn’t do a square foot or bed/bath comparison, but I guarantee you the average home in Boulder, that’s 3X more expensive than the average home in Longmont, isn’t 3X bigger or 3X nicer. The extremely high cost of a home in Boulder is still pushing the demand and prices east and north throughout northern Colorado. And somehow, the area keeps pushing 14%-25% price increases (except for Lafayette – WOW!)
Speaking with clients recently, here are a few ideas when talking to buyers and sellers unwilling to participate in this market.
Seller-Sell now if you think it’s a market top. Reap the rewards of your equity, rent for a couple years, and buy low when the market crashes. I don’t think it will, but if they are convicted in their stance, this is a good strategy. They can do the whole equity build thing again.
Buyers-Buy now. Would you still buy a home in Boulder for $660k back in 2008, knowing its value was going to drop 6+%% (to $615k) within two years? That same house is now $1,670k for a 2.5X gain. What’s it going to look like 14 years from now? It’s a real-life example of what recovery looks like. And this is WORST-CASE scenario, because the only thing worse than that recession was the Great Depression!
Millennial Buyer-see above and ask if they’ve ever heard of Airbnb. They understand Airbnb, but not a long-term investment rental property even though they are the nearly the same thing. If they don’t put 20% down, they have a shot at building real wealth.
Seller who asks, “Where do I move?”, give them this ARTICLE for ideas. Or refer to my extensive list of ideas from my JULY 2021 stats piece. Or show properties in Loveland and Greeley, the two most affordable town in the northern front range.