What's the Boulder County Real Estate Market up to in 2023?
We're two plus months into 2023, there's a hint of spring in the air, the ice wasn't too bad this morning hiking at Chautauqua and March Madness starts this week. Must be time to check into the state of the real estate market so far this year.
For starters, lets compare some basic numbers comparing the end of last February with the end of this February for detached, single family homes in Boulder County.
| February 2022 | February 2023 | Percent Change |
Median Sale Price | $820,000 | $780,000 | Down 6% |
Inventory of Homes For Sale | 164 | 381 | Up 132% |
Number of Days to Sale | 36 | 70 | Up 94% |
Sale Price to List Price Ratio | 104% (Houses sold for 2.5% under list price on average) | 97.5% (Houses sold for 4% over list price on avearage) | Down 6% |
As you can see, prices are down compared to last year, there are more than twice as many houses on the market, it's taking twice as long to sell and generally houses are selling under list price, whereas last year at this time they were selling over list price and with multiple offers routinely. The market last spring was brutal for buyers. There was so little for sale and so many interested buyers trying to capitalize on the low interest rates that competition was intense and prices were skyrocketing. The median sale price hit $900,00 for the County in June 2022.
These price increases have been going on for the last 13 years. The chart below provides a graphic representation of home price increases in Boulder County from 2013 to the present. Up and Up and Up prices went....
Median Sale Price Rise in Boulder County - 2013 to Present
Prices kept going up until the middle of 2022 when, you guessed it, Mortgage Interest Rates started to climb from their rock bottom low point of 2.65% in 2021 to 6 and 7% in 2022 and 2023. The following chart shows mortgage rates from 1970 to the present.
Mortgage Interest Rates - 1975 to 2023
Note that over this time period, the average mortgage interest rate was 7.5%. We've gotten used to rock bottom low rates, but they are not the norm. Who knows, the rates we're seeing now could be around for a while.
Lets not forget that all the while Prices were rising and Interest rates were falling, the number of homes for sale was dropping each year. Sellers didn't want to sell their main appreciating asset, otherwise known as their home, and where would they move to anyway since there wasn't anything to buy. The following chart depicts home inventory levels in Boulder County from 2013 to the present. Note that inventory goes up and down throughout the year in a pretty predictable bell shaped curve - low in December and January, rising into the summer and dropping back down in the fall. This is because sellers are inclined to list in the late spring and early summer so there's more supply in the summer.
Inventory of Homes for Sale in Boulder County - 2013 - Present
To add a little more context to the low inventory levels we reached last year, back in February of 2011 there were 1,343 homes for sale in Boulder County. In February of 2022, as shown in the table above, there were just 164 homes on the market!
To summarize then, since the middle of 2022, the market has shifted, based on basic supply/demand dynamics. Demand has dropped somewhat since many buyers can't afford to purchase a home with a 7% interest rate. Or they may have to purchase in a less expensive location in the county or outside of Boulder County. The supply of homes for sale has increased, more than doubling from last year at this time. Consequently, the median sale price has dropped, it takes longer to sell, fewer homes have sold, etc.
However, all that said, it's still a "Sellers Market" in Boulder County. Things are shifting, yes, but it's not a sea change. The main driver of that is inventory and we still have relatively low home inventory. Remember in Feb. 2011 there were 1,343 homes for sale in the County and this year there were 381 for sale at the end of February. That equates to just 1.5 months of supply and 6 months of supply is considered a balanced market. Low supply = Sellers Market. In addition, there are a lot of cash buyers in our area as well as working folks with good salaries who can still afford to purchase a home with a mortgage.
As a buyer these days, there's still not a large volume of good houses to choose from. Some of our inventory is made up of houses that have been on the market for some time because they were either over-priced or in poor condition or both. It's not easy to sell those houses anymore and some sellers haven't adjusted to that reality yet. In addition, as mentioned previously, inventory is always low at this time of year. Consequently, the really nice houses still attract a lot of interest. While it's not like last year where houses getting 10 or 20 offers and prices going 10-20% over list price was common, the most desirable houses may still sell over list price. In fact, 1 of every 6 houses that sold in the City of Boulder this year sold for over list price.
If you're a buyer, this may sound like discouraging news, but things are changing in your favor. It's just going to take time. In the short term, due to seasonal inventory increases, there will be more houses for sale in the summer than there are now. That's the way it is every year. And in the long term, if interest rates remain at this higher level and the economy is still so uncertain, home prices will most likely continue to stall or drop in our area and inventory levels will increase over time. All that considered, patience could be your best friend.
