What’s happened since January/2013 to have an impact on the Boulder Valley real estate market, and on a regional, state and national level? This blog looks at changes in the economy, both locally and nationally. This March update looks at the financial market and is a continuation of my Saturday market update.
Five Trends In Boulder Home Sales
1. Unemployment Rate: According to the Department of Labor and Unemployment things have improved. In January/2014 the Colorado unemployment rate was 6.2% (nationally 7.3%; Boulder County 4.4%). In January/2013 the Colorado unemployment rate was 6.6% (nationally 7.9%; Boulder County 5.5%).
Unemployment is down. Hiring numbers are up. This is good for the economy, bad for interest rates. Good news sends investors to the market and out of bonds. This change in interest rates is reflected by warnings I’m receiving from lenders. If you are thinking of buying: lock now before rates go up.
2. Mortgage Interest Rates: The traditional thirty year fixed rate loan has increased from 3.51% at the end of February/2013 to 4.37% at the end of February/2014. Still a very reasonable rate when compared to double digit rates in the not too distant past. Talk to Brian Crowder for more info.
Myth: rates will come down in the future if we wait. Rates are increasing and only likely to be higher in the future.
3. Home Values: Scarcity creates demand and home values have improved over the past twelve months. For the Northern Colorado real estate market, which includes the Boulder Valley, residential properties increased in value on average 7.36% in 2013 compared to 2012 ($322,186 vs. $300,083).
Historically, the trend is for homes at the entry level to appreciate at a higher percentage rate as first time buyers and investors see an opportunity when the market rebounds.
4. Foreclosures: According to the Colorado Division of Housing, Northern Colorado experienced a 42% decrease in foreclosures from January/2013 to January/2014. Statewide foreclosure filings were down 34.3% for the same time periods year over year, with foreclosure sales down by 37.1%. Once the happy hunting ground of savvy investors looking to either fix and flip or hold and rent, foreclosures are no longer as prevalent.
5. New Construction: New home construction continues to be a viable part of the real estate market, adding inventory to a depleted resale market. Available building sites have been swallowed up over the course of the past few years as production builders saw an opportunity to benefit from bank owned properties. The focus now is on creating new subdivisions, with the infrastructure (roads, utilities, flat work, landscaping, etc.) being the priority.
March Update Bottom Line
In analyzing the current Boulder Valley real estate market, we’ve experienced a noticeable shift from a declining market in the 2006 -2011 period; to a somewhat frenzied market in the 2012 -2013 period; to a more rational market now in 2014.
(All statistics for this March update are from IRES, the Northern Colorado MLS.)