I have just finished compiling the year end market data and have just published “The Kearney Report – 2014 Year In Review”. If you are interested in learning about the real estate market over the past year and how it relates to overall trends over the past fifteen years, I would encourage you to view and download the report. To view the report scroll down and read it on this page. If you would like to view it as a PDF for easy printing click here. I take the time to produce the report so that my clients and you (whomever is reading this) can better understand the market. From good information comes good decisions!
2014 Boulder County Real Estate Market Summary
2014 started out very strong and continued in a healthy manner throughout the year. It was definitely a sellers market. Throughout the spring, the combination of low inventory and high demand made it difficult and frustrating to be a buyer. Multiple offers were very common and in many situations, full price wasn’t enough to win the negotiation. Throughout the spring, home values increased.
By mid June, the pressure of the market had eased a bit. All of the fundamentals in the market were still in place but just less intense. More houses were coming on the market and that supply brought the market back closer to equilibrium. The fall continued in a similar fashion with even fewer houses coming on the market. In 2014, it took on average 38 days to find a buyer and accept an offer. This is a full week quicker than 2013 and a full 49 days quicker than 2010. Low inventory and good buyer demand were the trends for 2014.
The Causes and Effects of Price Appreciation in Boulder County
Using a simple measure, median prices of homes and condos in Boulder County increased by 5.5% this year. Last year they were up 6% using the same math. FHFA the national agency which tracks home sales for the Federal Government reported that the home values in Boulder County increased in value by 8.35% for the one year period ending on September 30th (see this represented graphically on page 4 of this report). Homes have appreciated over the past three years, which has erased the affects of the economic downturn. What I’d like to touch on are the causes of the appreciation locally and the effects of the appreciation we are seeing in the market.
Boulder County didn’t go through the boom and bust cycle between 2006 and 2011 that much of the country experienced, so our recent appreciation can’t be explained by saying it is a bounce. A return to historical value. Home prices are now 17% above where they were 5 years ago. Over the past three years I point to three major factors that contributed to our appreciation; low supply of homes on the market, strong buyer demand caused by a strong local economy, low interest rates.
The supply of homes on the market comes from two main sources, resales and new construction (note we don’t have, nor have we had a large supply of foreclosure homes, this has been another source in other areas). Both sources of supply have been constricted since 2008. Existing homeowners have increasingly been sitting out of the market. Many feel that while it would be easy to sell their home it would be difficult to find an acceptable replacement. If you have enough people thinking along these lines it becomes a self-fulfilling prophecy. The economic downturn was difficult on home builders and their banks forced them to sell existing supply and to stop building spec homes. The supply of new homes was a trickle in 2009 and 2010. Builders are now up and running but they can’t keep up with buyer demand. They are also constricted by a lack of tradesman due to so much commercial construction.
The US Census Bureau estimates that Boulder County grew by 5.3% between 2010 and 2013. This means that 15,000 new people moved to our county. Given that there are on average 2.42 people in a household in Boulder County this means that there are over 6,000 new households in Boulder County over the past four years alone. People are moving here because of our robust economy and available jobs. This equation has led to the construction of many new apartment buildings, rising rents and a very tight real estate market with low inventory and rising prices.
The last factor causing appreciation is low interest rates. Affordability has two multipliers; price and cost of money. If one stays low while the other rises, affordability stays reasonable. If both rise, demand falls. For the past six years interest rates have been very low so as prices have risen the out of pocket expense is still reasonable. From the buyer’s perspective, if they need to be aggressive on price in order to get a home, they can do it because they can still easily afford the payment. Sellers have been able to ask more for their homes and buyers have had the ability to afford the payment and the will to beat out their competition.
As you browse through the rest of the report you will find, for comparison purposes, a number of market measures displayed for each of the submarkets in our area. Enjoy the report.