Boulder Real Estate: February 2010

Boulder real estate - is it a good time to buy or should you wait?  According to IRES, there are 638 single-family homes on the market today in the City of Boulder, 94 (about 15%) of which are under contract.  That leaves 544 Boulder homes for sale, and buyers are asking whether it's a good time to buy a Boulder home?

There are so many distractions in the current real estate market that it can be hard to see the forest for the trees.  It's easy and maybe even popular to pick the negativity "flavor of the day" and extrapolate that into a news story that the real-estate sky is falling.  It's sensational and somehow news-worthy that " . . . home prices fell last month by x%, the biggest drop since . . . the month before."  It's much more challenging to look past the momentary blip(s) and the sensationalism, and evaluate the real estate market on a more long-term basis.

Buying a home used to involve at least medium-term commitment; most buyers bought homes to live in, and viewed them as their home, not as short-term fix-n-flips, investments, and cash-out refi piggy banks.  This shift in the way homes are sometimes viewed today, coupled with the challenges we've faced in the real estate market in the last few years, has caused some buyers to overlook the long-term benefits of owning a home.

Real estate is, by its nature, an illiquid asset.  It's not a stock or a bond that should be bought and sold in the open market on a daily - or even hourly basis.  On a short-term basis, owning a home can easily be viewed as a losing proposition, not because it's a bad investment per se, but because viewing it on a short-term basis is generally inconsistent with the nature of owning a home.  However, when viewed on a more long-term basis, home ownership has delivered positive results.

Here are some compelling home-price figures for the City of Boulder from Zillow.com.  The following chart represents the Zillow Home Value Index for Boulder, CO single-family homes over the past 5 years, broken down by area - North Boulder, Central Boulder and South Boulder:

While it's interesting that Central Boulder has the highest price, followed by North Boulder then South Boulder, the most critical things to focus on from this data are the long-term trend line(s)!!  If you look at the price index month-over-month or even quarter-over-quarter . . . you see some declines.  Boulder home buyers: Please look at the year-over-year results, then look at the 5-year trend line(s) - all positive.

Buying a Boulder home should be viewed in the context of a long-term investment.  When you consider the current federal tax incentives for home buyers, historically-low mortgage interest rates, and the long-term benefits of owning a home, the decision of whether to buy or wait becomes much clearer.  There's an old saying in real estate: "Don't wait to buy . . . buy and wait."  Waiting is not without its risks; not only are you taking the risk of trying to time the market, but you're also taking an interest-rate risk.  If you plan on staying in your new home for a while - and you should - the interest-rate risk is significant.

The principle demonstrated here not only applies to Boulder real estate, but Boulder Valley homes for sale in Longmont, Niwot, Lafayette, Louisville, and many other places.  If you have questions or would like more information about Boulder real estate, please feel free to call 303-441-5647 or contact us online.

1401 Galapagos in Longmont, CO: Open House this Saturday, 2/27, from 12-3 pm.  This is a great opportunity to come out and see what this one-owner gem offers.  There's still time to grab this home and the $8,000 1st time homebuyer tax credit! (if you qualify).  Conveniently located in The Ute Creek area of Longmont, close to shopping, I-25 and the Ute Creek Golf Course, this 4-bedroom + office, 3 full bath home is a great opportunity at only $289,900!  Features a nice, open floorplan with all 4 bedrooms, open loft and 2 baths on the upper level, family room with gas fireplace, large eat-in kitchen with upgraded 42-inch cabinets and solid-surface counters, breakfast bar that opens to the family room, a convenient main-floor office and another full bath, and more.  Click on the map below for more details, photos and driving directions, or call us at 303-441-5647.  Visit us online for all your Boulder real estate needs, including searching all Boulder MLS listings by map.

9009 Eldorado Dr. in Frederick: Open House this Saturday, 2/20, from 1-3 pm.  We may have some snow on Friday, but Saturday will be a great day and a great opportunity to come out and see what this one-owner short-sale offers.  There's still time to grab this home and the $8,000 1st time homebuyer tax credit! (if you qualify).  Conveniently located in The Farm area of Frederick, close to shopping, I-25 and near 2 golf courses, this 4-bedroom, 2 1/2 bath home is a great opportunity at only $225,000.  Nice floorplan with all 4 bedrooms and 2 baths on the upper level, family room with fireplace, large kitchen with breakfast bar that opens to the dining area, 2 pantries, and more.  The large back yard is fully fenced and the back patio has been generously extended.  Click on the map below for more details, photos and driving directions, or call us at 303-441-5647.  Visit us online for all your Boulder real estate needs, including searching all Boulder MLS listings by map.

A new Gallup poll of more than 353,000 Americans has resulted in the city of Boulder, CO being named as the "happiest and healthiest" city in America!  This may sound familiar as Boulder has been popping up on numerous "Best of" lists recently, such as one of the best places to retire, the #1, strongest real estate market in the country, #8 in the top 10 places for jobs (Boulder County), #3 in the top 10 cities in America poised for recovery, and more.

This huge Gallup poll ranked Boulder, CO in the top 10 "happiest and healthiest" cities as follows:

• #1 overall
• #4 in healthy behaviors
• #7 in physical health
• #10 in access to basic things needed for healthy life

With all these things going for us here along the Front Range of Colorado, it's no wonder that Boulder real estate is one of the stronger markets in the country.  If you have any questions or would like more information about moving to Boulder, please call 303-441-5647 or visit us online.

Home buyers have only 77 more days to contract for their new home and still be eligible for the federal tax credit of up to $8,500.  While buyers have until June 30th to get the deal closed, the deadline to contract for the property is looming (again).  And with the revised tax credit now applying to first-time buyers and repeat buyers who have owned their home for 5 out of the previous 8 years, the issue of "what then?" is an interesting one.  Put another way, does the residential real estate market have enough organic momentum to prosper without federal intervention?

There are two important issues here: 1) The importance of the pending deadline for the federal tax credit, and 2) What will the impact be of the tax-credit deadline expiration?  Many speculate that any further extension(s) of this home-buyer tax credit will be tough to pass given the costs involved, so buyers should probably view April 30, 2010 as a real deadline.  While some phasing out of the credit is an alternative to outright extension, the tax credit in its current form may really disappear this time.  With only 77 days left (as of today - 2/12/10), home buyers who are ready to buy should take advantage of all the factors working in their favor right now.

So what happens after the tax credit expiration deadline?  Long term, the housing market will likely rebound - albeit at a slower pace than we might all like.  In the short term, though, I thought it would be interesting to look back at the recent tax-credit expiration deadline of November 30, 2009, and see how the real estate market reacted.  That might be a decent barometer of what we can expect in say April/May of this year.

As this chart from NAR depicts, the Pending Home Sales Index (PHSI) dropped pretty dramatically from October to November, 2009.  The explanation is probably closely tied to the tax credit, as we saw significant increases in the months leading up to November - then the big drop.  In other words, most buyers trying to close by November 30th were under contract by the end of October.

It may be that we can expect something similar in the coming months, but hopefully not quite as severe due to the fact that we'll be in the Spring with this expiration vs. the Winter in the previous one.  That's not to say that housing markets will stay at those reduced levels, but there may be some short-term impact - whenever the federal tax credit eventually does disappear.

Ultimately, it will be good for real estate markets to operate without federal intervention and improve with organic demand, but in the short term, we may have to deal with a bit of volatility as the effect(s) of the home-buyer tax credit "wear off".

If you have any questions about Boulder real estate, please visit us online at www.boulderhomeresource.com.

One of my clients closed on her new home in Longmont yesterday and I thought it would be interesting to post some Longmont real estate statistics covering the past 12 months.  With all the negativity in the national media, it's easy to forget that real estate markets tend to be intensly local.  Longmont real estate is no different.

It's interesting to note that over the past 12 months, IRES data reflects a Longmont residential re-sale market that is actually improving.  The median price of a sold listing rose about 7%, the number of properties under contract is up, and the MSI (months supply of inventory) is down about 32%.  These are all signs of an overall market that may be different from what some perceive.  Of course these statistics will vary by location and price range within Longmont, but it is encouraging to see overall statistics that are improving - even if they're not dramatic.

If you're interested in searching residential inventory in any Boulder real estate market, including Longmont, please feel free to visit us online at www.boulderhomeresource.com.

Selling a home in today's real estate market can be an eye-opening experience for many sellers.  Many acknowledge the changing real estate landscape, but since their home is clearly the "best one in the neighborhood", short sales and foreclosure sales are often dismissed as irrelevant.  This perception is particularly true in areas where short sales and foreclosures represent a high ratio of overall home sales.

In order to effectively compete with this trend, it's critical to understand how these types of transactions impact local real estate markets.  Zillow.com recently published the results of their research into the percentage of foreclosure home sales and the associated "foreclosure discount" in different real estate markets across the country.  This research and the data summarized below illustrate the point that foreclosure home sales really do create two separate markets and that home buyers tend to demand a discount over and above the physical damage often seen in these homes.  All data was from the 3^rd quarter of 2009:

Metro Area                 Foreclosure Discount        Foreclosure Sales %

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Pittsburgh, PA                                   59%                       10%

Cincinnati, OH                                   39%                       15%

Columbus, OH                                  38%                       19%

Minneapolis-St. Paul, MN                     34%                       26%

Phoenix, AZ                                       29%                       58%

Denver, CO                                        27%                       25%

Los Angeles, CA                                27%                       39%

Kansas City, MO                               25%                       29%

Riverside, CA                                     25%                       66%

San Diego, CA                                    24%                       39%

San Francisco, CA                             24%                       39%

Las Vegas, NV                                    23%                       74%

Washington, D.C.                             21%                       21%

Sacramento, CA                                19%                       50%

Seattle, WA                                        19%                       17%

Portland, OR                                      18%                       18%

Source:  Zillow.com & Bloomberg.com

Based on the results of their survey Zillow.com reports an average "foreclosure discount" of about 28%, which is an important factor for other home sellers to consider.  For example, in the Denver real estate market where the foreclosure discount is reported at 27%, that $146,000 foreclosure sale down the street might suggest that a similar clean, well-kept, non-distressed home in the same area might command as much as $200,000.  We can't do much to change the fact that these types of real estate transactions are influencing many real estate markets across the country; what we can do is acknowledge the problem and figure out how to successfully market and sell homes in this environment.  Here are a few tips for home sellers who want to successfully compete against foreclosures and short sales:

•·         First and foremost, price your home competitively.  This does not necessarily mean that the foreclosure sale down the street is the best comp for your home, but it has to be considered.

•·         Present your home in prime condition.  Foreclosures and short sales tend to be in comparatively rough shape; people losing their homes often neglect routine maintenance for quite a while before they actually lose the home.  Your home has to clearly out-shine the competition in this area.  Doing so will go a long way to overcoming the "foreclosure discount".

•·         Hire a Realtor® who will out market the competition.  Just putting a sign in the yard and flyers in a box won't cut it.  In order to stand out and differentiate your home from sub-par competition like foreclosures and short sales, your marketing efforts need to include an intense online focus with quality details, i.e. virtual tours, lots of good photos, enhanced listings, detailed descriptions, etc.  Make it clear to potential buyers that there's a difference in quality.

•·         Offer minor incentives that highlight some of the advantages your home offers.  Foreclosures and short sales tend to represent increased risk to the buyer as these homes have not been cared for, may have been vacant and neglected for a long time, and can even be tough to inspect thoroughly because the utilities are shut off.  Offering things like a home warranty, a pre-sale inspection report, etc., can draw attention to the fact that your home is a better value because it represents higher quality and less risk.

•·         Make sure you can offer a reasonably quick closing.  Particularly with short sales, timing can be a deal killer for many home buyers.  Waiting for a response from the bank - sometimes for months - is frustrating for many potential home buyers and makes these types of sales a challenge.  With the federal tax-credit deadline looming, timing will become more and more of an issue and is an area where you can easily stand out.

These are just a few tips on how home sellers can effectively compete with foreclosures and short sales.  The main focus should be creating separation on points of interest that matter to home buyers, and marketing those differences in the most effective way.  Understanding the effect these types of transactions have on the residential re-sale market in your area will enable you to plan your home-selling strategy appropriately, and overcome the dreaded "foreclosure discount"!

For more information about Boulder real estate or to contact us, please visit us online at www.BoulderHomeResource.com.