The Market's Peaked. Now What? [Analyze This]

by Osman Parvez
I've heard the question from buyers.  I've heard it from potential sellers.  Has the Boulder real estate market peaked?   Is now a good time to buy (or sell)?

I prefer to let data answer the question.  No hand waving. No Realtor happy talk.  Remember: Intelligent real estate decisions are based on a deep understanding of market conditions.   

Inventory, Absorption, and Sales Volume
This morning, I analyzed the most recent market data for Boulder real estate.     Let's take a look at the numbers. 

The chart above shows total inventory of houses in the City of Boulder for the summer selling season for this year (black) and last year (blue).  Total inventory includes pending sales, active/backup properties, and available homes.  

I know, the chart is a little busy.  I wanted to show both timelines on the X axis.  They're not identical time periods but they're within a day of each other.  Close enough. 

Inventory was higher throughout the peak selling season this year.  Only for the last reading (taken today) shows inventory lower than 2015.  Inventory has been 3.4% higher on average than last year.  If you exclude the last data point, inventory was 4.8% higher. 

This chart shows the percentage of houses under contract over the same time period. With the exception of one week, inventory under contract has been lower than last year.   2016 was also less volatile. 

This last chart shows a running tally of the volume of sold properties during the preceding 30 days.  The 2016 selling season started off with lower sales volume before flipping into high gear in late June.   Beginning in August, it cooled slightly below sales volume in 2015.  

By historic measures, the 2016 peak selling season was another year of strong appreciation, limited inventory, and bidding wars for the most desirable properties.  It was also not quite as strong as the preceding year, which hints that we are nearing the end of a real estate cycle. 

The 3rd and 4th quarters are typically a slower time of year in Boulder real estate, butthere are plenty of buyers still in the market. It's possible that the fall 2016 market might be stronger than spring or summer next year.  If you're thinking about selling, you might want to accelerate your plans.  If you've had your house on the market for a while, now is a very good time to re-evaluate your marketing strategy with someone who really knows the market.

For buyers, the next few months will bring fewer fresh listings but also less competition and fewer bidding wars.  I've always been able to negotiate the biggest discounts for my buyers early in the 4th quarter by focusing on homes that were overpriced and are now being overlooked by the market.   175 Bellevue is a potential example.  It's a beautiful house with killer views, easy trail access, and adjacent to Chautauqua.  The house needs to be reconfigured to maximize the view potential of the perch and the large lot should allow plenty of opportunity to do so.  It's been on the market since February 2015 and the seller has cut the price three times, from $3.0MM to $2.2MM.   It's also owned in a trust, which suggests the owner has plenty of equity.  Now is a good time to test their willingness to negotiate.   Just make sure you have a savvy buyer's agent

note: A few years ago, the Boulder Area Real Estate Association stopped tracking inventory and sales data and resorted to a third party vendor.  The third party has not been detailed enough to provide accurate metrics so I started manually tracking my own.  The charts above are based on combined IRES and Metrolist data, the two MLS systems which cover Boulder County. 

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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.    image: djandyw

Please Note

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.