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The Real Estate Cycle – Where Are We Now?

The Real Estate Cycle – Where Are We Now?

The Real Estate Cycle Approximately 2500 years ago Heraclitus of Ephesus said “The only thing that is constant is change”.  In the moment we sometimes forget that forces larger than we can see are slowly moving culture, markets and people.  Everything we see is changing, however the rate of change makes a difference. We notice more readily the melting of an ice cream cone than the erosion of a mountain.  It’s normal to only take note of what we can readily see.  However, there is wisdom in taking a longer view. Real estate is cyclical.  There are many factors involved, but the peaks and valleys of the real estate demand and value have been shown to have a relatively consistent cycle of approximately 18 years.  Economist Homer Hoyt made a detailed study of the Chicago real estate market and the broader United States real estate market and found that it has run its course in a steady 18 year rhythm since 1800.  There have been exceptions that have disrupted the normal cycle such as The Great Depression, World War II and the post war boom but on average, the business cycle and the real estate cycle have been very consistent including the 18 year cycle than ended in 2008.   The infographic above shows the four phases of the real estate cycle.  Here is more information on each of the stages of the cycle.  Most studies present Recovery as the first phase of the cycle, but since the last recession was so memorable I think it makes a good starting point. Recession  Think back to what was in the news...
Boulder County Real Estate Statistics October 2017

Boulder County Real Estate Statistics October 2017

Sales Down – Inventory Stable – Increased Price Reductions and Negotiation As we head toward the holidays and the end of the year it is normal to see a slow down in the market.  During October sales were down 3.7% from last October and down 17% from two years ago but they were actually up by 12% from sales in the previous month.  So while the overall trend shows a general slowdown in the market that started around Memorial Day, there is still some life in the market and sales are still happening.  In October there were 392 closings in Boulder County. Inventory showed some good improvement during the first half of the year but over the past few months it has reverted to levels that are lower than last year.  As the market has slowed we have seen a bit more negotiation (on average homes sold for 97.4% of list price which is roughly 1.4% lower than a year ago) in the market as well as many more price reductions (see the graph directly below). All of the trends in the market are highlighted in the slide presentation below. Boulder County Real Estate Statistics October 2017 from Neil...
The Kearney Report 3rd Quarter 2017

The Kearney Report 3rd Quarter 2017

The Kearney Report I’ve just published the latest Kearney Report which highlights the latest trends in Boulder County real estate and compares them to the longer term trends.  I break up the county into a few smaller areas including Boulder, Longmont, East County (which includes Erie, Louisville, Lafayette and Superior) so that you can compare price ranges and other statistics in our different communities.  You can view The Kearney Report below online or you can download the PDF here The Kearney Report 3rd Quarter 2017 Real Estate Market Update At the end of the second quarter the Boulder area real estate market started to show signs that the strong sellers market that had been in place for over four years was wavering.  The third quarter solidified that trend as sales slowed, negotiation edged toward neutrality, properties stayed on the market longer and price reductions were very common as sellers figured out that their optimistic expectations were not being realized in the market. During the third quarter of 2017 there were 1,335 sales in Boulder County which reflects an 12% drop from the same quarter of the previous year. The median sales price during the quarter was $475,000 which is 8% higher than it was a year ago (the median price for sales during the second quarter were $500,000).  Homes are staying on the market longer and this has given buyers more choices when looking. During the second quarter, 31% of the homes sold for a price above the list price, this is down from 41% during the second quarter and 42% during the third quarter of 2016.  The average premium...
1775 Linden Avenue, Boulder – $800,000 – New Listing

1775 Linden Avenue, Boulder – $800,000 – New Listing

1775 Linden Avenue Boulder, CO 80304 – $800,000 Great North Boulder location! Lots to love here including; hardwood floors, remodeled kitchen including maple cabinets, quartz countertops, stainless appliances and an induction cooktop, 8 kw owned solar system takes care of all the electricity needs for the home (and more), stained concrete floors in the lower level, a great yard with multiple sheds, a koi pond, new deck, large garden area & a potting shed. Upgraded baths with a steam shower in lower level. Multiple off street parking spots.    ...
1601 24th Street, Longmont – $335,000 – Under Contract

1601 24th Street, Longmont – $335,000 – Under Contract

1601 24th Street Longmont, CO 80501  – $335,000 I’ve just listed this very nice ranch style home in a great North Longmont neighborhood. The home features a good sized and well maintained yard, a nice back deck, a beautiful flagstone entry patio and a two car garage. Inside you will find three bedrooms and two baths on the main level, a living room with vaulted ceilings, a wood burning fireplace, a large basement with one finished room and lots of room for further expansion. Well located just a short walk to Sanborn Elementary School. Radon mitigation is already installed. A great value in Boulder County.  ...
The Strength of the Market Depends Upon Price Range

The Strength of the Market Depends Upon Price Range

In a recent market update I outlined how we are seeing more price reductions, fewer sales and that the market seems to be shifting away from a strong sellers market.  However, there are still pockets in the Boulder County market where most of the houses are under contract.  As I looked further I found that these “pockets” around the county all seemed to be in the lower price range of their community.  The graphic below shows the absorption rate of the inventory throughout Boulder County in different price ranges.  Think of it this way, if we froze the market and accepted no new listings but sales happened at the rate they have been happening over the past three months, how long would it take to sell all of the listings.  According to NAR (National Association of Realtors) a balanced market is 6 months.  Anything less than that is a sellers market and more is a buyers market.  So what we have is a sellers market under $1 million, a balanced market between $1 million and $2 million and a buyer’s market above $2 million. Another interesting graph that helps to tell the story of the market is below and it shows the number of price reductions in the market on a weekly basis over the past three years.  2015 and 2016 were markets characterized by multiple offers and above asking price sales.  2017 started out in much the same way but by the end of spring we were seeing some softening.  One way to see this softening graphically is in the number of price...
Boulder County Real Estate Statistics for August 2017

Boulder County Real Estate Statistics for August 2017

The real estate statistics for Boulder County for the last few months have shown a shift in the market.  August continued this trend.  Sales during the month were 11% lower than last year and lower than any August since 2011.  We are seeing more price reductions, more negotiation room and it’s taking longer for homes to sell.  It seems that we are shifting away from a strong sellers market to a more balanced market.  View the presentation below to see multiple statistics pointing in the same direction.   Boulder County Real Estate Statistics August 2017 from Neil...
Neil Kearney is Again Recognized as a Five Star Real Estate Agent Award Winner

Neil Kearney is Again Recognized as a Five Star Real Estate Agent Award Winner

Neil Kearney has once again been recognized as one of the top real estate professionals in the Denver Metro Area.  The “Five Star Professional” award in the real estate category is awarded each year based upon independent research and interviews with actual clients from the past year. The Five Star Professional research team applies a vigorous research and evaluation process to identify service professionals who provide quality services to their clients. Professionals do not pay a fee to be considered or placed on the final list of Five Star award winners.  Along with outstanding survey results the real estate agents who are considered must obtain a high standard of production. This year the criteria was tightened, and under 750 real estate agents in the Denver Metro Market were recognized as a Five Star Professionals. There are currently over 20,000 licensed real estate agents in the Denver area.  Neil feels honored to be once again be designated award winner.  This is one of the most credible awards a real estate agent can receive because it is based upon direct feedback from recent clients.  Only the highest scoring agents are selected. Here is a description of the research methodology that is used.  Five Star Professional follows standard survey practices used by other professional research organizations. The research also includes a regulatory review to provide necessary checks and balances. Five Star Professional conducts research to help consumers with the important decision of selecting a service professional. The Five Star award is presented to wealth managers, real estate agents, mortgage professionals, home/auto insurance professionals and dentists in more than 45 markets in the...
A Summer Wrap-Up and What’s Next in the Boulder Real Estate Market

A Summer Wrap-Up and What’s Next in the Boulder Real Estate Market

Market Update The next sixty days will tell us much about the direction of the real estate market in Boulder County.  If you are reading this newsletter, you are aware that our market has been on a torrid pace since 2013.  Over the past five years the average home has appreciated in value by over 60%[1] .  A year ago, during the second quarter, our annual appreciation rate was ranked number 1 in the nation.  In short, our market has been sizzling hot.  As I have written about before, net migration to the area, a strong economy, a desirable lifestyle and a shortage of housing and buildable land have been the major drivers of this trend.  However, anyone who pays attention to markets over the long term knows that all markets are cyclical.  In this short update I will highlight some current trends in the market and see what that might mean for the future. Trend #1 – Slowing Sales Through the end of July, sales in Boulder County were down 3% from a year ago.  This alone isn’t such a big deal.  What is more interesting is looking at sales on a monthly basis.  Through March, cumulative sales in Boulder County were up by 6% over 2016.  The market was strong, multiple offer situations were common and houses were selling quickly.  Sales tailed off a bit in April and May but that was due more to lack of inventory than anything else.  Then right around Memorial Day the market noticeably slowed down.  Houses that one would expect to sell quickly lingered on the market. We also started to...
Boulder County Real Estate Statistics – July 2017

Boulder County Real Estate Statistics – July 2017

Right around Memorial Day we saw a shift in the market.  At that point properties started staying on the market longer, inventory started rising and sales started to drop.  It’s normal in Boulder County to have a slow down during the summer but this year it began earlier than usual.   This decrease in sales coupled with an increase in inventory has led to a slowing of price appreciation in the county.  Is this a shift in the market or just a seasonal slow down?  The next 30 to 60 days will tell a lot.  What happens during the fall will give us a good indication of what to expect next winter and spring. See the presentation above for a more in depth view of the market as well as graphs and...