by Osman ParvezWhat do you think the future looks like for Boulder real estate? Consider the following.
1. Record Low Inventory (Low Supply)
This chart shows the number of homes in inventory in the City of Boulder over the last four years (traditional detached houses). Inventory started the year at record lows and appears to be trending even lower. Meanwhile, there is no immediate catalyst for more inventory to hit the market.
New supply is severely constricted in Boulder and while personal circumstances (job changes, death) will continue to bring a limited selection of pre-owned homes to market, until prices rise in earnest, a substantial increase in inventory is unlikely. Coming higher prices may encourage investors to liquidate and roll capital gains forward. Higher prices may encourage move-up buyers and downsizing activity.
The chart ends in August because that's the most recent official data available for this year. Unofficially, inventory is running flat over the last few months. Right now, there are slightly more than 300 homes on market, 26% of which are under contract - impressive for October.
2. Rising Sales Volume (Increasing Demand)
This chart shows sales volume over the previous six month period going back to 2009. Again, we're only looking at houses within the City of Boulder. Volume is up for the fourth year in a row. This year, we're seeing a 13.4% increase in volume compared to the same period in 2011.
That's right, despite low inventory - sales volume is rising. Sales volume is a good proxy for demand.
3. Record Low Mortgage Rates (Low Cost of Capital)
The chart above shows monthly average mortgage commitment rates and points charged to borrowers. It's never been lower. The cost of capital is absurdly low. Meanwhile, the Federal Reserve has announced their intention to keep the Fed Funds rate low until 2015 at the earliest and continued buying of securitized mortgage (QE3).
What does this mean? Rates will probably stay low and have a reasonable probability of trending even lower in the short term.
Think About It
Low Supply and High Demand is a forecast for higher prices. That's economics 101. Adding to the fuel is the ultra low cost of capital. Cheap money doesn't make an asset intrinsically more valuable, but does make it more affordable, which increases the pool of potential buyers.One thing to keep in mind. The market varies by price range, house type, and location. One size does not fit all. If you want to make a smarter real estate decision, you have to understand market conditions for your specific situation and act accordingly.
To point - the entry level has been very hot. As my clients over the past few months will attest, selection was limited which resulted in bidding wars breaking out - particularly for houses valued under $500,000. However not all entry level houses are the same. Houses which are suitable for student rental, marketed during the off season, are not as desirable. In other words, if you're an investor - now is a very good time to shop for rentals.
As always, I stand by to answer questions and help you get the most from your real estate situation. Blogging always takes a back seat to clients, so if you're in the market, give me a call. 303.746.6896.
p.s. Rental prices have been rising for 5 years in Boulder and the local economy is getting stronger. There are a lot of potential buyers waiting in the wings.
---Note: Our goal is to provide exceptional service to our clients. The ideas and strategies in this blog post are the opinion of the writer at the time of publication. Silver Fern Homes recommends careful and complete due diligence before buying or selling real estate or other investments. Consult with your professional advisers before making financial decisions. This article is not intended as legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment choices derived from this article.
Hiç yorum yok:
Yorum Gönder