Boulder Valley Economic Snapshot - November '11

The Boulder County real estate market has remained relatively stable for the past three years. Sales of single family homes and attached units have been on equal footing. Home values have trended-up in some price ranges (mostly at the entry level), but experienced a downward shift in others (homes priced over a million). As 2011 winds to a close, it appears this year will continue a similar pattern to 2009 and 2010. Sales activity will be down slightly compared to those two years (about 6%), with single family home sales settling around 2,600 units. That would compare with 2,612 single family homes sold in 2010 and 2,536 in 2009. Those numbers are substantially lower than the peak year of 2005 when 4,193 single family homes sold.

One of the noticeable changes Boulder County has experienced this year is the growth in new home construction. Production builders like Meritage Homes, Ryland Homes, Toll Brothers and Richmond have either developed new parcels of land or purchased in-fill lots from other builders, banks, etc. Most of these homes would be considered “start-up” homes for first-time buyers or buyers moving-up from a smaller home or attached unit. Prices are in the $325,000 to $550,000 range after design center add-ons.

The Daily Camera newspaper recently ran an article updating the status of bank foreclosures throughout Boulder County. The article states foreclosure filings were down 28% for the third quarter of 2011 compared to the third quarter of 2010 (25% statewide). Foreclosure sales were down 25% when comparing the two timeframes (30% statewide). Based on those numbers, one would surmise things are improving on the foreclosure front. They may be, but there could be a couple of reasons why those numbers are suspect. First, the article suggests banks and mortgage companies may be holding off pursuing foreclosures due to the “robo-signing” controversy. A second thought is lenders are suggesting/recommending/advising borrowers to consider a short-sale solution rather than going through the foreclosure process, which can potentially be more costly to the lender.

Short sales are simply defined as a lender is willing to accept less than they are owed on a property in lieu of ending-up with the property through the foreclosure process. It’s a cut your losses and move-on with your life approach that benefits the lender and provides the borrower with a way out that may not have as great a negative impact on their future credit worthiness.

As we drift from fall into winter, expect mortgage interest rates to continue to remain around the 4% level for the traditional thirty-year fixed rate mortgage. Adjustable rate mortgages with fixed three, five and seven year terms, and fifteen-year mortgages can be had for a lower rate. Obtaining financing can still feel like having your teeth pulled, but lenders do have funds available and are willing to work with qualified buyers; the key word being “qualified”.

Look for the Boulder County real estate market to experience its normal quiet period as the holidays take precedence over finding the perfect house. But, there will still be buyers out looking and, hopefully, buying this time of year. There will just be fewer of them. Inventory levels also soften as sellers decide to wait for spring to start the process.