Signs of Relaxation
Market Stats For August 2021 - Boulder County
The sales price / list price ratio is the average sale price divided by the average list price expressed as a percentage. If it is above 100%, homes are selling for more than the list price. If it is less than 100%, homes are selling for less than the list price.
In August 2021 sale price/list price ratio was 101% for Boulder County, down from 106% in May when bidding wars with 10 to 15 offers on highly desirable listings drove up the sales prices of homes in unexpected amounts. In August, the entire process of buying a home, especially making an offer and getting under contract got back more to normal. Many homes got under contract with full price offers and only some busy listings may still have gotten 2 or 3 offers resulting in contracts with modest levels over asking price. I expect that the market will pick up again this fall when buyers who could not compete in the spring market will try to get their chance now.
Please see the market data for Boulder and Boulder County:
Market Statistics | August 2021
Why is there such an incredible buyer demand and a continuous shortage in supply of inventory?
Besides the historically low interest rates and the desire of wealthy city dwellers to move further out into the suburbs caused by the pandemic the birth rates are an important factor for understanding housing demand according to Suze Orman, well known financial advisor and book author. She cites Berry Habib ( also a well known professional speaker and TV commentator on the Mortgage and Real Estate markets) who points out that the age group of 33 year old people are crucial for the housing demand. They point out that the average American buys his first home in the age of 33 years. To understand the current demand you just have to go back and look at the birth rates 33 years ago. For example birth rates in the US started to fall dramatically in 1973 what led to fewer first time home buyers 33 years later in 2006 when the housing market run into deep trouble. This was of course not the only reason as we know but a main contributing factor nobody talks about. Inventory of homes for sale was the highest in the US in 2007 and is dropping since then continuously. 33 years ago from today was the year 1988. In 1987/88 birth rates started to rise again and accelerated for the next years until it peaked in 1992 and started to drop again in 1993 and is continuously dropping since then until today. According to Berry Habib and Suze Orman we can expect that the housing market will do good for the next years until about 2025 when demand and prices will probably start to decline a bit.
These first time home buyers who are buying right now and in the next years belong to the very large generation of Millennials who are now between 25 and 40 years old. They sometimes compete as well for smaller homes with Baby Boomers ( 57 to 75 year old) who are about to down size which adds even more buyers to an already very competitive market.
This strong demand by especially first time home buyers of the population rich generation of Millennials was not taken into account by the planning and building of new construction homes. The opposite was the case. Since the recession in 2007/2008 new construction building was falling behind demand dramatically. The number of home builders declined significantly after the Great Recession and housing production was unable to meet buyer demand.
If you are interested to read more about this in detail please see "A decade of Home Building: The Long Recovery of the 2010s" by Robert Dietz, chief economist of NAHB (National Association of Home Builders of the United States). Click Here
The chart below shows the significant drop in new home starts in the last decade after a continuously strong building activity over the course of five decades.
The Colorado Real Estate market is no exception to this. According to USAJRealty: "A 10 Year Look at the Denver Real Estate Market" Denver's population had grown by 17 percent since 2010 and the housing shortage is significant. "Compared to nationwide statistics, Colorado is more popular as a work-from-home destination with 46 percent of the population reporting that they telework compared to only 35 percent of adults nationwide. Luckily for Denver's economy, it was identified early on as a friendly city for telecommuters and the city's population actually grew. Between April and October of 2020, for every one person who moved out of the Denver Metro area, 1.34 people moved in. And we expect the growth in Colorado to continue into 2021. A recent U.S. News & World Report ranked Denver as the #2 best city to live and Boulder #1. As more people move here, there continues to be a housing shortage (with no end in sight), prices will continue to rise."
I am looking forward to seeing many of you at my art show this weekend. Please let me know if you did not get an invitation and I will send you one. I have already all these wonderful paintings on my walls and I can tell you, this makes quite a difference how I feel at home! The paintings do not only add a new quality of taste and beauty to my home but also elevate the atmosphere through their vibrant and creative energy. You can feel this! Please come and experience this with me!
Please don't hesitate to contact me if you would like to talk about this market, how to prepare a home for sale or any other real estate needs you have.
Coldwell Banker Realty