Signs of a Slowing Market [Analyze This]

by Osman Parvez
The Boulder market appears to be slowing. Although inventory levels are about the same as last year, absorption has dropped substantially. The high end is also starting to see inventory pile up. Smart buyers and sellers should adjust strategies and tactics accordingly.  

Before we begin, read Boulder Entry Level Remains Strong, High End At Risk of Correction and Boulder Inventory Stabilizes, Spring Outlook Positive.  It will provide some background information on market conditions and is part of this inventory analysis blog series.  

The chart below shows the percentage of listed houses under contract in the City of Boulder, from January to mid March, over the past three years. 

The gray line represents 2015.  The orange line is 2016 and the blue line is 2017. 

Think of percentage under contract as the market's ability to absorb new inventory.  If there are many active buyers, the percentage will be quite high.  If there are fewer, the percentage will drop.  

Although the market started in roughly the same place during the past three years, with around 50% of inventory under contract, there was an early season dip during the past two years.  It dropped to almost 30% under contract and is now hovering around 40%. 

By most measures, 40% under contract is a sign of a strong seller's market.  Depending on price range and location, it remains true, but the dip is a technical warning. Perhaps it was caused by an influx of new inventory onto the market. Perhaps it's the Trump driven interest rate bounce driving this year's dip.  In the end, it doesn't really matter.  It's prudent to treat it like a warning sign.  

For buyers: it's now more important than ever to track how homes are selling across price ranges and to exercise extreme selectivity in which ones you wish to pursue. Don't enter bidding wars for marginal properties. For seller, now is a good time to get it on the market - especially if your home is in a compromised location or has functional deficits. 

My crystal ball says the market is likely to crest this year.  

For a private consultation on your specific real estate situation, contact me.  My goal is to help you make a smart 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. 

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.