Real Estate Rebound
"I have been a Boulder Realtor over 40 years and have seen at least seven recessions, but this one has been the toughest," said Jim Bodin of Bodin Realty International in Boulder.
But times are changing.
"It's like someone turned on the light switch in February, and we are rock 'n' rollin' – especially with anything priced under $500,000," he said.
"We're definitely experiencing a rising tide, which will eventually lift all boats."
Bodin credits "low inventory, low interest rates, improved job market, rising rents and pent-up buyer's demand" as major factors for improvement in the Colorado housing market.
The trickle-down effect plays into Bodin's forecast with the increased demand for houses in the $200,000 to $500,000 price range. He sees the interest as a stage-setter for sellers to move on and purchase more expensive homes.
Even though home buyers and sellers are starting to step back into the game, however, properties on the market are showing up at a slower pace than are people ready to move into them.
"Inventory is so much lower than expectations that it's almost a challenge to find good homes for buyers," said Steve Remmert, Colorado Landmark broker associate.
"Homes in the $400,000 to $500,000 range are selling well across the market. They're doing exceedingly well," he said, adding that he believes the market is creating optimism that hasn't been around for the past year-and-a-half.
Pitting the limited inventory against the abundance of demand puts buyers in the position of needing "to be on their game to find homes," he said.
What's behind the decreased inventory? "My sense is that some people have rented and some have resolved their financial situations and decided to wait for a better market to sell," Remmert said.
According to a market report he created, area communities all are experiencing a reduced amount of inventory.
Basing percentages on information collected by the Boulder Area Realtor Association, Remmert reports that Boulder's available inventory was down 17.7 percent in March compared with the same month in 2011.
Using the same comparison, Broomfield was down 32.1 percent, Longmont was down 22.1 percent, Lafayette was down 25.9 percent, and Louisville was down 1.3 percent.
In spite of the inventory, however, the volume of sales continues to increase for most communities.
According to the report Remmert created, Boulder sales volume increased 62.5 percent when comparing March 2012 with March 2011, Broomfield was up 38.1 percent, Longmont saw a 40.7 percent gain, Lafayette sales volume increased 10.5 percent and Louisville showed a 52.9 percent decrease.
Remmert quantifies the upward trend of buyer demand by comparing the number of units sold with the number of showings relative to 2012 and 2011. "We're dramatically above last year in buyer demand. I think when I do my next quarterly update it'll be clear that there's a lot of absorption."
Tom Cohen, Re/Max of Boulder broker associate, describes the low inventory for homes in the city of Boulder as the lowest it's been since before 2000 in comparison with an all-time high for median sales.
Stretching the view to Boulder County, he said that 36 percent of the single family homes on the market are currently under contract, and that at the end of 2011 that number was 20 percent.
"Market-wide, the absorption rate means there is about a nine-month supply of inventory," he said.
The inventory supply estimate is based on a snapshot of what's on the market today and how quickly it's been moving. The information is then used to determine how long it would take to exhaust inventory if everything stays as it is.
"Some of the higher-priced homes aren't seeing as much action as they were two to three years ago," Cohen said, explaining that the nine-month inventory supply estimate changes with higher-end homes.
For homes priced in the $950,000 to $1 million range, the supply estimate is about 65 months using the same formula.
"What that says is it's better to price a house at $949,000," he said, adding "It's still extremely important to have well put-together houses that are priced appropriately."
Since funding sources are becoming more available, buyers are more able to purchase homes, which is helpful, Cohen said, since a lot of discretionary sellers are holding out for their asking prices.
"There's still a big chunk of people who say 'We'd move if someone would give us the amount of money we want.'
"Now there are more lenders as opposed to the one primary lender that was available for jumbo loans," he said, referring to IMG in Europe. "It's difficult but possible now because there are more lenders than there were three years ago."
What are buyers looking for?
Cohen advises sellers to realize that people who are shopping the market today are more educated on things such as market value. He stresses the need to make sure that properties being sold compare well with similar properties in the area.
"Location, square footage, floor plans and school districts are the main points people are focusing on, he said.
"The uniqueness factor is important to a lot of buyers. In Boulder, for example, there's probably not a home that's like the one next door."
Architectural style, craftsmanship, organic qualities and energy efficiency play into the sales appeal of a home. "People are looking more for quality over square footage."