Appraising the 2011 market
Well, if you were to look at just the numbers, you'd be hard pressed to call 2011 a banner year for Boulder Valley home sales. Still, there is a lot of optimism in the market, especially because the market appeared to be generating momentum through the end of the year and into the first two months of 2012.
“If you look back at the final two quarters (of 2011) sales were up. The only month that tailed (2010) was December,” said Ken Hotard, vice president for public affairs at the Boulder Area Realtors Association. “I'd say the momentum is positive and in the right direction. There's no question about that.
“But it's still tough. We have pretty thin inventory in most of our markets, which is impeding home sales and impeding the economy in general. I'm hoping that we see that the inventory picks up, and improved credit conditions add to a better year this year.”
According to information from BARA, the city of Boulder recorded a slight drop in the number of single-family homes sold in 2011 (615), compared with 2010 (623), but the average price showed a 2.2 percent increase, from $663,912 to $649,726. In Broomfield, that situation was reversed, with 3.3 percent climb in sales (from 338 to 349) resulting in a 6.7 percent decrease in the average home sale price, which was $354,617 in 2011.
Beleaguered Longmont, which suffered the most from foreclosures during the depth of the housing market crises and recession, showed some pretty flat numbers. Two fewer homes were sold in 2011 than the 831 sold in 2010, and the average home sale dropped 6.7 percent in value to $244,717.
Lafayette looked to be coming back strong, with a 9.6 percent increase in the number of homes sold, from 229 to 251 and the resulting average home sale price jumping 4.2 percent to $372,446. Louisville saw a small decline in the average price, while Superior was fairly flat and Erie saw a drop in both the number of homes sold, down 10.7 percent, and the average price, down 4.5 percent.
Hotard noted that the mountains seem to making a comeback after both the devastating housing market bubble and the more devastating FourMile Fire. Mountain home sales were up 9.5 percent, from 231 to 253, though the average home price dropped 3.4 percent to $396,422.
Hotard said home values continue to be strong in the Boulder Valley, especially in the city of Boulder, and the slipping prices are more indicative of the price points of homes being sought. The momentum of the second half of the year, he noted, occurred without the assistance of a federal tax credit for new homebuyers and also without the higher conforming loan limit, which fell back to $417,000, from $460,000, at the end of the third quarter.
“It's pretty clear that $700,000 to $750,000 is a breaking point, with most sales occurring at $750,000 and below,” he said. “In January (2012) we had 167 sales in the market; 124 of those were at $500,000 and below, and 148 of those were $700,000 and below. So below $500,000 continues to be the sweet spot.”
“I think what you are seeing is a concentration of sales at a lower price point. It's probably going to continue to be that way until we have a much stronger economic recovery.”
However, according to mortgage experts, the return of the jumbo loan indicates a substantial turnaround in the availability of credit, and some real estate experts said it has created an absolute shortage of homes in the $1 million to $2 million range.
“There are absolutely no new homes on the market, and if you have a really well-kept expensive home, you will almost immediately have three offers on it,” said Scott Franklin, owner/broker of Legendary Properties at Coldwell Banker Residential Brokerage in Boulder. He said the inventory in the $1 million to $2 million range is probably one-third of what it was a year ago.
“I've got three buyers right now I can't find homes for,” Franklin said.
Joel Ripmaster, founder of Colorado Landmark Realtors, said the top five real estate firms saw 131 Multiple Listing Service (including farm and condo) sales of more than $1 million in the Boulder Valley and the mountains during 2011, compared with 137 in 2010.
“I would say that one third of our transactions are cash,” he said. “I think it's a flight to safety. People are taking their money out of the market and putting it into the Boulder market.”
“I would say that a home in Boulder is better than gold. Gold has hit its peak; expensive, nice homes in Boulder have just hit the bottom of the market.”
Ripmaster said one of the most important aspects to reestablishing the luxury home market has been the creation of good, comparable appraisals that reflect the stability of home prices in the Boulder Valley.
“We were losing, or having to be creative, in a lot of deals because the appraisals were just emasculated by the lack of sales,” he said. “Now that we've had some sales, appraisers are more comfortable with the values.”
It's a first step in having the market stop bouncing off the bottom; now I expect that we will have natural appreciation,” Ripmaster continued.
“We're jellin' – we're going to have a great year.”