We have just published The Kearney Report for the 2nd quarter of 2014. This 17 page report gives a detailed view of the real estate market in Boulder County as a whole as well as a view of each of the communities within the county.
As we analyzed the sales results for the second quarter, the numbers didn’t seem to reflect the market. The number of sales was down slightly (2.7%) but that is like hearing a World War I report that casualties were down slightly and pretending to understand what is going on. More relevant to the understanding of the local real estate market are “Days to Offer”, “Sales to List Price Ratio” and “Median Sales Price”. I will go through each in order.
Days to Offer
When someone says that “the real estate market is good”, I think they are referring to the perception of how long it’s taking for their neighbors houses to sell. The technical term is “Days to Offer” as opposed to “Days on Market” which includes the time the house took to go from contract to closing. Days to offer begins when the property goes on the MLS and continues until it is marked as under contract or pending. When I get the question asking how long it’s going to take to sell their home, this is what they mean. During the second quarter, the average Days to Offer of all properties in Boulder County was 31. Of course there were many homes that sold almost immediately (in practice, even if an offer is received on the first day the DTO will be 3 or 4 because it takes a bit of time to negotiate and get the paperwork done) but an average of one month is truly fast. Last year was a similar market and the DTO was 42. In 2012, it was 74, 2011 it was 89 and in 2010 it was 77. This year the inventory was low and with housing flying quickly off the market the problem was exasperated.
Sales to List Price Ratio
A seller can put any price they want on their home. You see it all over Zillow with their “Make me Move” feature. Joe Homeowner in a fit of especially clear thinking one night at 3 am signs up for the service by listing his home which is worth $250,000 for $499,000. What the heck, maybe someone from China will come in and pay cash. He’ll let his wife in on the big plan once the dream comes true. Usually once a home seller meets with a Realtor and actually lists their home on the MLS the hazy reasoning that a buyer might pay $499,000 has lifted and clearer heads and data have prevailed. Still there, it is common for a seller to want to ask that extra 5% to “see what will happen”. In a normal market buyers see the premium price for what it is and wait for the price to come down. In a frenzied market, like the one we had this spring, buyers tend to quickly justify a reasonable price jump and pay at or near the list price. Traditionally, in the Boulder area the ratio between the sales price and the listing price has been around 97%. This means that the average negotiation is around 3%. This year for all sold properties in Boulder County the sales price to list price ratio was 99.01%. This means that the average negotiation was 1%. Included in this figure were all of the homes that sold for over full price. By any measure, this is a sellers market.
Median Sales Price
How much ones home is worth is a big component about how one feels about their overall financial picture.
Houses selling quickly and for near their asking price are strong indicators for the more important measure of Median Sales Price. Over the past two springs, housing prices have increased. How much is localized to each neighborhood/home and coming up with an overall figure is fraught with some pitfalls. So far this year more homes are selling in higher price ranges. Is this a measure that all prices are rising or is it that more “high end” buyers are purchasing homes and thereby bringing up the average. It could be both. FHFA.gov measures same house sales which eliminates this problem. FHFA.gov reported the 1 year appreciation ended March 31st for Boulder County to be 8.1%. I would expect that number to increase for the second quarter.
As you browse through the rest of the attached report you will find a number of market measures displayed for smaller areas within our market. Boulder and Longmont have the most sales in the area but the real estate markets in those areas are very different. Enjoy the report!