Boulder Real Estate Cycle Ending? Don't Be Spooked! [Fresh Listings, Get 'Em Hot]



One of those most important things is knowing where we stand in the cycle. As I say, I don’t believe in forecasts. We always say,“We never know where we’re going, but we sure as hell ought to know where we are.”  

- Howard Marks, 
Oaktree Capital Management


I've been tracking the Boulder real estate market for 14 years. Before there was a Zillow or a Redfin, with their erroneous (but pretty) charts, I was crunching data to put together accurate inventory, sales volume, price, and absorption charts for Boulder real estate. Back then, to make ends meet, I also worked for an investment firm in Denver where I served a similar mission - to provide the best analytics possible for the principals to make intelligent investment decisions. 

My day job had a few perks, like a Capital IQ account and a Bloomberg terminal at my disposal, but both jobs were actually somewhat similar. On weekends I was showing homes, but during the week, I was crunching numbers.   

House Einstein's approach - provide actionable, detailed analytics to our clients to help them make smarter decisions - turned out to be a winner. Within a few years, my real estate practice had taken off and I left the investment firm to work as a Realtor full time. Our loyal client base and business grew, despite the '06 to '08 downturn. It's been on a roll ever since. 

Why am I sharing all of that backstory? Because what was true in the market back in 2006 appears to be nearing again. The end of a cycle is approaching. Like Mark Twain said, history doesn't repeat itself but it often rhymes. 

Remember, nobody can time a cycle perfectly and humans are more biased against loss over gain. The investment community is a little superstitious about the month of October, but there's no particular reason the Boulder real estate market won't continue to stumble along sideways (or slightly up) for the next few months or even several quarters. Housing doesn't react with the speed of the equities market. Sellers are notoriously optimistic, ill informed or ill advised, and prices tend to be sticky on the downside of a cycle. There almost certainly will be opportunities, especially given a seller's propensity to overprice and cause the listing to go stale. 

We can't time the market peak perfectly, but we can adjust our strategy for this phase of the cycle. It starts by being more prudent, more cautious, conducting deeper due diligence, and frankly by being more selective. Accordingly, we will be culling our weekly "fresh listings" of homes worth seeing. Going forward, we won't present as many fresh listings and notable sales. It's time for more focus.   

That said, are you ready to see some houses? There are several interesting new listings that hit the market this week. The fact that sellers are listing at the end of October also suggests a high degree of motivation. Are you ready? Let's go.


Remember: Worth seeing does not mean worth buying - especially at the asking price. For a private showing and a discussion of valuation, negotiation strategy, and market conditions, call Osman at 303.746.6896. 

Our goal is to help you make a smarter real estate decision.


Market Conditions

S&P Case-Shiller HPI (click for a larger image)
I know, I promised you fresh listings but before we dive into that, take a look at the chart above. It shows the S&P Case-Shiller Home Price Index for Denver (Red) and the 20 City Composite (Blue). Shaded areas represent recessions. The historic housing bubble is clearly visible. Note Denver's relative lack of participation in the bubble and also how it's now in line with the long term trend for the composite. You may also want to note the length of time since the last recession. It's a record.

The HPI is a matched pairs analysis, meaning that the same home is analyzed for gain/loss. It's the gold standard for measuring home price fluctuations at a macro level. 


Here at House Einstein, from our first meeting to our last property showing, we advise real estate buyers and sellers about risks and opportunities. Many are concerned with capital loss, rightfully so. Others are afraid of being priced out of Boulder real estate, forever. That's why no discussion is complete without talking about what happened during the last downturn in our local markets. We have tracked Boulder, Longmont, Louisville, Lafayette, Erie, Broomfield and Superior for more than a decade. We know what happened at the luxury end of the market and at the entry level. The past is not the future, but it is rich with lessons and helps us advise our clients with intelligent strategies for the future.   

In short, it's time for more caution and for measured decision making. Whether you're buying or selling, whether your goal is to maximize the sale price of your existing home or limit the potential for capital loss during the coming downturn, it's important to consider where we are in the cycle. There is no substitute for deep market knowledge. If you're thinking about buying or selling (and aren't locked into an agreement with another Realtor), give us a call. We'd love the opportunity to earn your business. 


Sold Listings of Note



1676 Sunset Blvd | $4.8MM | Details
We know this location well, having evaluated 1765 Sunset last year for our buyers. It's a spectacular and rarely available perch, with true A+ views and within strolling distance of downtown Boulder. It's not subject to redevelopment risk, like the properties near the Alpine Balsam and 311 Mapleton projects. It's also nestled among many other high-end homes, which strongly supports the valuation. That said, the highest tier of the market moves slowly (if your agent tells you different, find a better one). That's why it's critical for sellers and buyers to feel confident in the valuation and the longer term marketing approach. This listing was available since May and the seller was correct to wait for the right buyer. It sold for 3.9% below the asking price, within the range of a normal discount.  



230 Bellevue Dr | $2.45MM | Details
A good example of fair value for this relatively rare location (under $550/SF finished). Backs to open space, updated kitchen with an open floor plan. 48 days on market before the offer was received. Sold at 5.6% below asking






3086 4th St | $1.15MM | Details
Sold at slightly over dirt value with a structure that should be decent bones for an expansion/remodel project. Mid 60’s construction means fewer problems with permitting. Larger lot, which offsets the possible double front yard setbacks from having a corner lot. Good comp for buyers looking for similar. Originally listed at $1.3MM and under contract within a week, but the first buyer bailed. The second buyer closed the deal at 11.5% below asking. Note: It's not uncommon for the first buyer to get over excited during a bidding war, bail out, taint the listing, and end up costing the seller a lot of money. This is why it's critical to choose a listing agent who knows the ropes.


3215 Foundry Pl 101 | $720K | Details
Excellent investment play for quality construction and design in a mixed use development next to the big G campus. Originally overpriced at $740K when it was first listed in July, the listing went through two price cuts before a buyer jumped on it. Sold for 2.7% below asking. Pro tip: Funky customizations and fuzzy, dark listing photos didn't help. The Steel Yards and other mixed-use developments in Boulder require portfolio lending, which limits the availability of financing and drives up borrowing costs. You should know that before you write the offer. 



For a private showing, which includes a discussion of valuation, negotiation strategy, and market conditions, click here. Our goal is to help you make a smarter real estate decision.

Fresh Listings

Boulder

1840 Hawthorn Ave | $1.85MM | Details
It's a flip. Purchased for $1MM in June, the seller gave it a good refresh over the past couple of months. Do the improvements justify the price? The only way to find out is to take a lookDue diligence: Construction costs are high in Boulder due to a skilled labor shortage. $/SQFT for the fit and finish of the final product plus the premium for having it turn-key should be considered. Pro tip: Stated value of the permit was only $106K. How do we know? We do our homework.



3113 11th St | $1.55MM | Details
A remodeled Victorian in Newlands. Reasonable size. Decent location. Some of the finishes are looking a little dark and dated, but this one is mostly done. It's far easier to refresh a kitchen than gut and remodel an entire house. At $458/SF ($575/F.SQFT) it should move fairly quick. 






For a private showing, which includes a discussion of valuation, negotiation strategy, and market conditions, click here. Our goal is to help you make a smarter real estate decision.



2075 Yarmouth Ave | $1.35MM | Details

Unique location and a large parcel. Construction date is almost certainly wrong on the listing. More likely 1990 era, like the interior finishes. The mother in law suite might offer short-term rental potential. It's in unincorporated Boulder County… hint hint.   






245 Brook Pl | $1.2MM | Details

Likely estate sale in Chautauqua for this mid-century modern. Gut and remodel. Great cul-de-sac location backing to the cemetery with nearby social trails to Kohler Mesa.   












2200 Dartmouth Ave | $935K | Details

Dartmouth Ave is a busy street but this should be far enough up that traffic might not be a huge issue. The value is in the large lot and sprawling ranch, conducive for an expansion/remodel project. 







3223 Iron Forge Pl 106 | $620K | Details

Close proximity to Google and the very active nexus of 30th and Pearl. Early 2000’s construction, should make for an easy rental in the future or first time buyer. Ignore the poor listing photos. 











2833 Springdale Ln | $620K | Details

Gold Run has been an exceptional rental location for students. It’s right on the bike path, has amenities, and only rarely catches fire. This is a solid play for an investor that wants extremely low vacancy and doesn’t want to deal with exterior maintenance.  







Louisville

1016 Grant Ave | $650K | Details
A historic downtown bungalow in a solid location for the same price as a basic Martin Acres ranch. Louisville is an excellent alternative to Bouder, more family friendly, historic and thriving downtown area. Decent square footage. Basement for storage. 1 car carport is a bummer, but maybe there's room for a future garage in the back?







For a private showing, which includes a discussion of valuation, negotiation strategy, and market conditions, click here. Our goal is to help you make a smarter real estate decision.

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The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties.  We strongly recommend conducting rigorous due diligence and obtaining professional advice before buying or selling real estate. 

Cover image: Leximphoto

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This document contains forward-looking statements. You are strongly cautioned that investment results are subject to business, economic and other uncertainties. There are no guarantees associated with any forecast and the opinions stated here are subject to change at any time. Always consult your financial advisor before making an investment decision.