Just when it appeared the Boulder-area real estate markets’ sales were headed downhill for the remainder of 2012, buyers surprised industry experts with a late-year surge in October.
“We had a surprise this month,” notes Ken Hotard, senior vice president of public affairs for the Boulder Area Realtor® Association. “Typically we would have seen month-to-month sales drop. Instead we saw a 12 percent increase in single-family sales from September to October.”
Three hundred and fifteen single-family homes sold in Boulder County in October compared with 281 in September. And October’s sales represented a 27.5 percent increase compared with the 247 single-family homes that sold October 2011.
The condominium and townhome market also showed improvement compared with a year ago, increasing from 78 sales in October 2011 to 96 in October 2012, which was up about 1 percent compared with the 95 units that sold in September.
“All in all it was a very positive month,” Hotard says. “I’m hearing anecdotally from Realtors® that they are unusually busy – happily so – though we’re still seeing a pattern of declining inventory.”
The number of single-family homes for sale year-over-year dropped more than 20 percent, with 1,827 homes available in October 2011 compared with 1,452 in October 2012. That was also 12.5 percent fewer homes for sale than the 1,661 on the market in September.
The attached-dwelling market is also seeing decreases in inventory, with the number of units for sale dropping 11.3 percent in October compared with September, and a dramatic 36.1 percent compared with October 2011 – from 648 a year ago to 414 in October.
Hotard attributes the low inventory numbers to a percentage of potential sellers who are still not ready to get back in the market for a variety of reasons, such as a concern about recouping their investment at the end of the sales transaction, whether they will qualify for their next mortgage and employment uncertainty.
“They’re not confident yet that economy has turned the corner,” he says, noting that 30-year mortgage interest rates are only 3.5 percent or lower in some places. “It can’t be the cost of borrowing money. That can’t be stopping anyone.”
Regardless of the lack of inventory, the Boulder-area market has held its own.
“We’re very fortunate here that we continue to have strong interested buyers and strong sales numbers that continue to grow,” Hotard says. “We also have the good fortune of having posted some of the best average FICO (Fair Isaac Corporation) score in the nation. That’s important right now because the average FICO score in order to obtain a mortgage continues to rise.”
Hotard anticipates little fallout from the results of the national election.
“I think it’s going to have a very minimal effect,” he says. “We’re already on a positive trajectory. Members of congress are committed to avoiding a ‘fiscal cliff’ that would bring about automatic tax increases and spending reductions. There’s nothing suggesting that the trend is going to change going into this year.
“I expect consistent sales volume increases in January compared with last year, and last year was not a bad year.”
But Hotard notes that inventory will play an important role in the real estate market’s future.
“It’s one of the key ingredients,” he says. “Inventory will come into the market from various places – not just homeowners interested in selling, but I think you’re going to see more properties in that shadow (foreclosures and bank-owned) inventory being released into the market.”