Broomfield/Westminster Economic Snapshot - October '11

The economic climate these days is reflective of a yo-yo. One day it’s up, the next it’s down. I believe we would all be a little happier if it would stay about the same from one day to the next; preferably up.

The Broomfield/Westminster real estate market has experienced a reduction in sales activity over the course of the past few years. According to MetroList, the Denver area Multiple Listing Service, through September/2009 there were 3,829 single family/attached unit sales in Broomfield/Westminster. There were 3,468 sales through September/2010. Through September of this year that number is 3,169.

Home mortgage interest rates have slipped to the lowest level in decades, which has impacted the refinance market, but not so much the resale market of homes. The traditional thirty-year fixed rate mortgage can be had for less than 4%. A 5/1 Adjustable Rate Mortgage, where the first five years are fixed, is vacillating around 3%. Be aware that lenders are still wary of whom they lend to; requiring reams of paperwork and documentation to cover their rear ends. Bank foreclosures and short sales have resulted in lower appraisals; creating a potential road block to refinancing a current property.

As is characteristic of this time of year, the inventory of available properties continues to drop. Many sellers have decided to weather the holidays and wait until after the first of the year to consider placing their home on the market. This pattern of reduced inventory will sustain itself into the spring of 2012.

If you are a home seller, where do you go from here in a real estate market that will naturally continue to soften? Where there are fewer prospective buyers, but also fewer options for the buyers who are actively in the market. There’s an old saying in real estate: “Price overcomes all objections.” That statement holds most true in a slowing real estate market – a buyer’s market.

Like much of Denver Metro, the Boulder Valley and Northern Colorado the Broomfield/Westminster real estate market has struggled to right itself since 2005, when the market peaked. On the bright said, the Absorption Rate for Broomfield/Westminster (single family homes) at the end of September was only 3.5 months or 105 days.

As we wind our way through fall toward winter, there doesn’t appear to be a white knight perched on the horizon that is going to magically lift us out of this somewhat stagnant real estate market. Jobs are the white knight. They are at the core of the economy. As jobs are created, the economy shifts in a positive direction, which benefits the housing industry.

So, if you are a home seller looking for that one buyer, you need to be the best value not only on your block, in your neighborhood or in your community; you have to be the best value out there from the perspective of that one buyer. Buyers have other options to choose from and they are willing to wait for the right opportunity.

Real estate is a little different from many other types of business. It is a business of negotiation pitting buyers against sellers; each wanting to garner the “best deal”. That is where the Broomfield/Westminster real estate market is today. Buyers have the upper hand. Sellers who aren’t willing to play in what seems like a “zero sum game” can be left standing on the sidelines; hoping for another prospective buyer to come their way.