Sales Plunged in June [From our Newsletter]

Happy Independence Day, friends. The following was published in our latest newsletter. What's missing is our take on fresh listings and notable sales. For the complete newsletter, sign up HERE. What's New at House Einstein? It was a fun week:   - 4606 Ipswich Street closed, for full list and with a post closing occupancy. Our sellers are now shopping for a new home in Boulder. They're looking for something updated and with a private backyard in Unincorporated Boulder County, Gunbarrel, Lake Valley, Niwot, Louisville, or Lafayette. They prefer property that is adjacent to open space.   - The team took a tour of Denver condo and town homes, led by our Denver expert Sophie Kloor. It's surprising how much more you get for the dollar in Denver, even in highly desirable locations. There are a lot of tradeoffs though, including trail access and the density of the built environment.  - We learned how to use a tone generator to trace damaged wiring behind walls. It's shocking how little an HOA will do, even for an electrical short that could easily burn the building down. On the plus side, after nearly a decade of ownership, we finally got to meet most of the neighbors in our office building.  - We successfully negotiated a large inspection related credit for one of our buyers in Denver. It's been at least two years since we were able to push that hard on a seller. Take home lesson: the market has changed (more below). If you're thinking about selling, it's smarter to address likely inspection issues prior to listing. That way you can do it on your budget, with a contractor of your choice, and without the stress of deal imploding.  - We celebrated the closing of 4170 Pinon at Santo, one of our favorite Boulder restaurants. Chef Hosea has done such an amazing job with both Blackbelly and Santo. We're huge fans! We're also feeling excited for our sellers as they accelerate their plans to move to Greece and build their dream home.  - House Einstein is planning all sorts of interesting new content in the third quarter, from house tours to market updates. You'll find our content on Instagram, Facebook, HouseEinstein.com, Newsletter, YouTube, and Twitter. Unlike some of our competitors, we don't pay for followers, so every like and subscribe is deeply appreciated. Check it out!

How's The Market? This is what it looks like when the real estate market slams the brakes. Sales volume in June was down 29% compared to last year for single family, detached houses in Boulder. Condos and town homes dropped 24%, respectively. The data is preliminary, and given the Independence Day holiday, a clearer picture won't be available for about a week - but even if it is adjusted significantly - it indicates a massive sea change underway to market conditions.  I've been tracking the Boulder market obsessively since 2003, and the last time we had a June with this poor of showing was 2009 - the bottom of the Global Financial Crisis. Overnight, it feels like the market has shifted. Although prices have not dropped noticeably (yet), buyers already have far more selection. That's the reality of this market.  3Q and 4Q Strategy We're now advising our sellers to be far more aggressive when it comes to listing preparation. The days of putting a sign on the front lawn and getting a bidding war are over. In addition to upping our marketing game, we're also expanding our effort to track the competition when it comes to individual listings. Pricing strategically to other options is key to a successful sale. Previously, there were few alternatives and sellers often achieved wishful thinking prices. No longer. The game has changed.  For many buyers, this is welcome news. You can be more picky about which listings you target. Your agent can now negotiate discounts and in most cases, you no longer need to waive inspection or appraisal. Of course, this comes at a price. Purchasing power has taken a hit. As one of our clients recently told us, they could have bought a $1.2M house in the 1Q. Now they're limited to about $900K for the same monthly payment - a 33% reduction to their purchasing power.  For a deal we currently have in play, we just negotiated a large credit from the seller due to inspection issues - the first time we've been able to negotiate a credit that substantial in several years. Our advice to our buyers is to enjoy the increase in selection and negotiation leverage. We don't believe high rates are here to stay for long because (a) our country can't afford a to refinance its debt at high interest rates and (b) the real estate market dwarfs other asset classes and has follow-on effects. A lengthy engineered recession is politically untenable. It will likely be over before the next Presidential election campaigns begin in earnest. When rates drop again, and they will, refinance.

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Osman Parvez  is the Founder and Employing Broker of House Einstein. Originally from the Finger Lakes region of New York, he lives in Boulder with his wife and their Labrador Retriever. He has been a Realtor since 2005.

Osman is the primary author of the House Einstein blog with over 1,200 published articles about Boulder real estate. His work has also appeared in many other blogs about Boulder as well as mainstream newspapers, including the Wall Street Journal and Daily Camera. For more information, click HERE.

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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. House Einstein strongly recommends conducting rigorous due diligence and obtaining professional advice before buying or selling real estate.