The Leaves are Changing.....is the Real Estate Market Changing Yet?
Happy Halloween! Beautiful sunny days and temperatures in the 60s have made it a very nice October here in Boulder Valley. Time to check in on the Real Estate Market and give you an update on where things stand and what to plan for in the months ahead.
In short, it's been another year of increasing prices, decreasing inventory and quick sales. As you've undoubtedly heard, Colorado has a booming economy and the demand for housing remains very strong and the supply of homes is simply inadequate for the demand. That said, with the rise in interest rates this year, there has been an expectation that the market would begin to slow somewhat.
You may have heard that In Denver, there have been some noticeable changes. For one, in Denver, the Inventory of single family homes for sale is Up 31% over last year at this time. That's a big change in the market trend. On the other hand, in Boulder County, Inventory levels are Down 8% from last year at this time. The trend in Denver could be the bellweather of things to come for Boulder County. We'll know more in the months ahead.
Here are some charts to illustrate what's going on in the market. This information is drawn from Detached Single Family Home Listings (not including Condos and Townhouses) in Boulder County.
Inventory - Still Dropping but Leveling Off?
As you can see below, the number of homes for sale (Inventory) has been steadily dropping since 2010. However, looking at the last couple of years, the steep decline through 2016 has leveled off. It seems like we've reached the bottom, a point where inventory levels can't get much lower.
Also note that there's a nice Bell shaped curve every year, where Inventory levels consistently move from a low point in December to a high point in mid summer. More on that later in this article.
Median Sales Price - Still Going Up - 8% this year to date
As you can see in the chart below, prices have continued to rise in Boulder County as a whole, going up 6.5% in the last 12 months. Within Boulder County, towns like Longmont and Lafayette have seen over 10% appreciation in the last 12 months, while Boulder, Louisville and Erie have been in the 7% range. Superior and Plains areas (ie East County) have been lower.
There is a direct relationship between our low inventory levels and our increasing prices.
If the Market is so strong, does it matter when I sell?
We get this question a lot. Many homeowners think that Summer would be the best time to sell. Kids are out of school, the weather is nice, people have more time available, the days are long, folks want to move before school starts, etc. But this is absolutely not the case. Would you believe it if the answer was February or March? "No way", you'd say. "It's winter, it's cold, who wants to look at houses in the snow and ice", etc, etc. But it's true. Here are the facts about it.
First, look again at the chart above showing Median Sale Price. Note how jaggedy this line is. It illustrates how the median sale price varies during the course of a given year. Though it's hard to see in the small chart, the lowest median prices each year consistently occur in December and the highest ones are around May. That's pretty amazing when you think about it, because prices are going up on average 10% a year. So, you'd expect that just the effect of time would mean a house that sells in December would sell for more than one that sells in May. But it's not the case. On average, you'll sell for more in May than 7 months later.
Now think about it, for a house to "sell" in May, that means it was listed 45 to 60 days prior to that, in March. So there you have it, list in February or March to sell at the peak price for the year.
But still you may ask....Why? Why does a house sell for more in May than in December? For answers, lets look again at that Inventory chart:
While December may typically have the lowest median prices of the year, things start to shift as the New Year comes around. By the end of January, people have recovered from the holidays, kids are back in school, it's a New Year and buyers are out looking at houses again. The inventory of homes for sale is very low. Houses that come on the market in late January and February get a lot of attention because there's so little for sale. Consequently, it's not uncommon to see nice homes, that are well priced, receive multiple offers that are over list price.
However, by June and July, inventory levels are at their peak, people are going on vacation and activity cools down. The supply is relatively high and the demand is lower so prices moderate for the remainder of the year. That said, the market is still strong in our area, and houses sell throughout the year, but they'll typically sell for the highest prices and in the shortest amount of time earlier in the year.
For more proof that February or March is the best time to list your home for sale, consider the number of days it takes to sell a home in Boulder County at different times of the year:
Days on the Market
The following chart shows the Median Days on the Market for homes in Boulder County:
Homes listed in February or March, sell in about 40 days, whereas homes that are listed in November and December take about 60 days to sell.
Overall, we continue to see a strong sellers' real estate market here in Boulder County through the 3rd Quarter of 2018. However, Inventory levels aren't decreasing as sharply as they have been in recent years and interest rates are rising, so a change may be in the air. It would not be surprising to see prices start to level off in the months ahead as it becomes more difficult for buyers to enter the market with increased loan costs. We will keep you posted.
We hope you find this information helpful. Let us know if we can provide you with a tailored market analysis for your home as well as assistance with preparing your home for sale.