Is Robert Shiller Right?

by Osman Parvez

Historically, house prices have tracked inflation.   Robert Shiller, creator of the Case Shiller House Price Index, predicts the future will be more of the past.  

From The Daily Ticker (emphasis mine) 

Shiller says the housing market is operating in an “abnormal economy” where the Federal Reserve is buying $40 billion worth of mortgage securities and $45 billion worth of Treasury notes each month. This has driven mortgage rates to record lows.

According to Freddie Mac’s weekly survey out last Thursday, the average rate for a 30-year fixed rate mortgage is a record low 3;4%; for a 15-year fixed rate mortgage it’s a record low 2.61%. The Fed will eventually stop buying these securities, says Shiller, and mortgage rates will rise.

Shiller, also an economics professor at Yale University, says the biggest home price increases now are seen in multifamily rather than single family homes which reflects a shift from home ownership to renting. The buyers are investors who rent their properties.

“Most of the increase in households in this country has been met by an increase in renting,” says Shiller. “My own survey data with Chip Case confirms that people feel more positive about renting.” He suggests that those investing in real estate buy homes that are most suitable to convert to rentals.

Another shift that Shiller observes in the housing market is the growing popularity of urban areas and suburbs near those areas.

Shiller says people don’t want to commute long distances because of relatively high gasoline prices and in the current “ideas economy,” many want to live in close proximity to others.

There are also demographic shifts: aging baby boomers who no longer enjoy working on the upkeep of their homes and the increase in single-person households.

When asked where this all leaves the housing market 10 years from now, Shiller says home prices will be “about where they are now” after adjusting for inflation.

So, is Robert Shiller right?

He's right about the abnormal stimulus.   Historically, the Fed primarily utilized the discount rate to set the risk free borrowing cost.  Today, they're doing a lot more including these programs to buy trillions in housing debt.    When rates rise, monthly payments will also, slowing the housing market. 

I've had many conversations with my clients about the timing of rising rates.    We've also talked about it at the Boulder Real Estate Meetup.    Nobody has a crystal ball, but it seems likely that rates will remain low until after the elections of 2014.  The exception is if there are clear signs of the economy growing too quickly (i.e. inflation above the the Fed's benchmark of 2.0%).   Instead, we're seeing the opposite.   Read Fed's Credibility Tested for more details. 

As for the idea that housing will track inflation, it's likely both right and wrong.    On average, Shiller is probably right.     Good thing our market is far from average.  When it comes to specific locations and property types, there will likely be strong gains.    

1. Desirable areas to live will continue to appreciate at a faster rate than "average house prices" because people and capital are more mobile than ever.        Read The Rise of the Creative Class. 

2. There is increasing demand for lower maintenance living.

3. Demand is also rising for urban areas with easier commutes.

4.  Energy efficient and alternative energy supplied housing will increasingly be attractive.

5.  Good design, matters.    At all ends of the housing spectrum but particularly relevant for higher end housing.

My Market Prediction     

I'm advising my buyers and sellers to expect another 12-18 months of high market activity.   Inventory will begin to rise as builders bring new product to market in outlying areas.  Owners will see prices rise to levels last seen in 2006/2007, which will provide the needed encouragement to sell.   Eventually, rates will rise too - cooling the market further, but expect a short frenzy when rates initially start to move upward.    

In Boulder, specifically, we have hundreds of new rentals coming this year.     That should help the entry level cool off a bit as prices flatten in the rental market.   Remember, 51% of the Boulder real estate market is rentals.   No analysis is complete without a discussion of income property.  

Keep in mind that my crystal ball is far from perfect.   Although I expected the market to return to health, I didn't anticipate the current inventory shortage.  There was also clearly pent-up demand.   Sales volume is up 16.8% and 17.3% for the twelve month period ending April, for Boulder houses and attached dwelling respectively.  

Meanwhile, a lot of sellers are waiting on the sidelines.   What are they waiting for?    Higher prices.  

Although I've been very successful helping my buyers in the current market, it hasn't been easy.      In a normal market, I'm advising buyers on how far we can drive the price below asking.   Right now, I'm advising Buyers on strategies that can win a bidding war without going over budget (and not necessarily by being the highest price).    

For sellers, the key is to choose an agent who can professionally manage the auction environment.   Sellers are in the driver seat in this market and should use that leverage wisely.  My last deal had NINE competing offers.  The typical agent is overwhelmed by that sort of thing and has limited experience in handling an auction.   Be very careful selecting your listing agent.    

It's a jungle out there. 

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Like this analysis?    Subscribe to my research.       Want to meet me in person?    Attend a Boulder Real Estate Meetup.    Ready to buy or sell?  Call me at 303.746.6896.  

Please note:  My goal is to provide exceptional service to our clients. The ideas and strategies in this blog post are the opinion of the writer at the time of publication. Careful and complete due diligence is strongly advised before buying or selling real estate or other investments. Consult with your professional advisers before making financial decisions. This article is not intended as legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment choices derived from this article.

THIS Is What An INVENTORY SHORTAGE Looks Like [Analyze This]

by Osman Parvez

The latest data on Boulder area real estate has just been released.     People,  THIS is what an inventory shortage looks like.  

Check out the table below.

You're looking at inventory in our local markets for April, including the Year of Year (YoY) and Month over Month (MoM) change.

In ALL local markets, inventory is down heavily.    The YoY change ranges from a tolerable 15.9% in Erie to a shocking drop of 51.1% in Louisville.     Meanwhile, at a time of year when inventory nearly always rises, it's actually slipping MoM in Lafayette, Louisville, and the Plains.

As anyone who is shopping in Louisville knows, market competition has been intense and as you can see above, the numbers prove it.   Last weekend, I helped my client win a bidding war with NINE competitive offers in Louisville.     We weren't even the top dollar amount.    Negotiation is rarely just about the price.

GET THE RESEARCH
The table above is from the upcoming Silver Fern Report.   It's our monthly report to clients and friends on local real estate market conditions.    Sign up HERE, for the highest quality, most up to date research on Boulder area real estate available.

And don't forget, I'm not just a blogger.    I'm a Realtor and I can help you get the most for your money.   Give me a call.  303.746.6896.  
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Like this analysis?    Subscribe to my research.       Would you like to meet me in person?    Attend a Boulder Real Estate Meetup. 

Please note:  My goal is to provide exceptional service to our clients. The ideas and strategies in this blog post are the opinion of the writer at the time of publication. Careful and complete due diligence is strongly advised before buying or selling real estate or other investments. Consult with your professional advisers before making financial decisions. This article is not intended as legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment choices derived from this article.

Finding the Signal In the Noise in Boulder Real Estate

by Osman Parvez

How do you determine the signal from the noise in Boulder real estate?      Earlier today, I stumbled on an article called Six Ways to Separate Lies from Statistics, by a couple of University of Michigan Professors.  It's a handy guide.  

Over the next few weeks, I'm going to reference this article for a series on analyzing Boulder real estate market conditions.     This blog post is the first in the series.    For data, consider last month's Boulder Real Estate Research (PDF). 

From Six Ways to Separate Lies from Statistics (Stevenson and Wolfers):

1.  Focus on how robust a finding is, meaning that different ways of looking at the evidence point to the same conclusion.  

As far as real estate markets go, Boulder is small.  Monthly sales volume can be highly volatile, which is why it's important to look at longer periods of time than a single month.  In my client edition report (sign up here), I usually include a single month volume chart like this: 

 and charts that look like this: 

In the top chart, you're looking at monthly sales volume for the past few years (lines) and the longer term average (shaded area).   66 homes sold in March, up 1.5% from a year earlier.   You can also see the market is highly seasonal, typically peaking in June. 

In the lower charts, you're looking at sales volume increases over a longer period of time; a far more robust indicator of a changed marketplace than a single month.    Volume over the past six and twelve months has increased 18.5% and 18.6%, respectively. 

An even more robust finding would show supporting results for larger regional markets like Denver, Ft. Collins, and Colorado Springs.    Data from markets around the country would add even more credibility that real estate is indeed in recovery - as far as increased sales volume goes.   Coincidentally, we're seeing that now.  

When it comes to price appreciation, a much deeper level of analysis is necessary.  This article from the WSJ is a good starting point.   Stay tuned for the next post in the series on analyzing Boulder Real Estate. 

note:  The charts above show sales volume for single family, detached houses in the City of Boulder only.    If you're serious about buying or selling, you should be considering market conditions in your targeted neighborhood, for your specific property type, and in your given price range.    In today's bidding war environment, it pays to know the market.

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Like this analysis?    Subscribe to my research.       Would you like to meet me in person?    Attend a Boulder Real Estate Meetup. 

Please note:  My goal is to provide exceptional service to our clients. The ideas and strategies in this blog post are the opinion of the writer at the time of publication. Careful and complete due diligence is strongly advised before buying or selling real estate or other investments. Consult with your professional advisers before making financial decisions. This article is not intended as legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment choices derived from this article.

Running on Empty - Market Update

by Osman Parvez

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I sent out the Silver Fern Report to my clients and friends last week.  It's the most current, up to date, and detailed research report on Boulder real estate available.    

Didn't get a copy?  Sign up HERE.   

To give you a taste of what you're missing, here's a few snippets from the report.   

BOULDER INVENTORY

This chart shows the inventory of houses for sale in the City of Boulder for the past few years,  plus the latest data.  There were 263 in inventory last month, down 24.4% from the same period a year ago.   If you're looking an analysis of sales volume, days to offer, absorption, and more - sign up for the report.    

LOUISVILLE SALES VOLUME

This charts shows sales volume for houses in Louisville.     Volume was up 62.5%, year over year during March.     In a smaller market with intense activity, volume can be highly volatile on a monthly basis.   This is why it's important to look at longer periods.  Over the past six and twelve months, cumulative volume was up 18.1% and 25.5% respectively.     For more analysis, including inventory, days to offer, absorption, and monthly comparisons to the long term average,  sign up for the report. 

SUPERIOR ABSORPTION RATE

This charts shows the absorption rate for house sales in Superior over the past few years.     In January, it was a stunning 66.7% and last month, it was 55.3%.   These are record rates!       If you're looking for a detailed analysis of sales volume, inventory, days to offer, sale prices, and more - sign up for the report. 

BOULDER TOWN HOME AND CONDO PRICES

This chart shows the median sale price of condos and town homes in the City of Boulder over the past few years, plus the latest data.     The median sold price during March was $265,000, compared with $305,000 in February and $281,816 a year ago.     

Note:  Median sale prices are NOT a reflection of price appreciation.   They are the mid point (median) of what sold during the month, an indication of the price point that is selling.     If you want to see appreciation rates for your target property type and location, start by signing up for the report and then call me at 303.746.6896.   I'm happy to advise you on local market conditions, based on hard facts and solid analysis.  

Remember, my goal is to help you make a better real estate decision.     

ANNOUNCEMENT:    The Next Boulder Real Estate Meetup is Tuesday April 30th.    Topic:  10 Things Your Agent Won't Tell You.     Learn more and RSVP by clicking HERE. 

Like this analysis?    Subscribe to my research.       Would you like to meet me in person?    Attend a Boulder Real Estate Meetup. 

Please note:  My goal is to provide exceptional service to our clients. The ideas and strategies in this blog post are the opinion of the writer at the time of publication. Careful and complete due diligence is strongly advised before buying or selling real estate or other investments. Consult with your professional advisers before making financial decisions. This article is not intended as legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment choices derived from this article.

Boulder Market Update [Inventory Tightens]

by Osman Parvez

Here's a quick update on inventory conditions in Boulder real estate.     This post covers detached houses and attached dwellings (town homes and condos),  all current listings on the MLS. 

The last update on inventory was about a month ago.   Click HERE. 

Buyer Strategy

As I'm advising my buyers - at all price ranges - moving fast is a competitive advantage in this market. Hesitation on submitting the offer often means losing the house.   The strategy I recommend is to know the comps so that you're confident on valuation, see houses as soon as they're listed, and get your offer in first.   This is one of the reasons I strongly advise that we sit down together for a work session to review the comparable sales before going to see actual houses.   It will help you understand valuation and avoid overpaying.   

Most Boulder agents are not experienced with managing multiple offers and they simply focus their attention on the first offer, or go with a "submit your highest and best offer" strategy.    Even if it means leaving money on the table, the seller and their agent are likely to choose bird in hand over those in the bush.  This happens even if the house has been listed only for one day, which is why it's important to drop everything and see inventory immediately.  

Complete House Inventory

There are currently 273 houses on the market in Boulder.    54% of these homes are available, 46% are under contract.    Total inventory has increased 24% but there is no change in the percentage under contract from my report a month ago.    In other words, selection has increased for buyers but the incredible fast pace of the market remains unchanged.     

Houses under $400,000

Sadly, there are only 16 houses on the market in Boulder priced below $400,000.    This is an increase of only 7% from last month (i.e. one more house), so selection remains more or less unchanged.      As of today, a whopping 81% of the inventory is under contract (compared with 73% last month).   

Houses Above $1,000,000

The market for homes above $1,000,000 is quite different from other price ranges.   Buyers for these homes have the most selection and the least competitive pressure (from other buyers).    As of this post, 86 homes are on the market.    74% of the inventory is available and only 26% is under contract.   

Tale From The Trenches

The most desirable homes always go under contract quickly.   This morning, I heard from a listing agent that a $1MM+ property I had scheduled to see later today went under contract last night.    It's likely that the buyers heard about the high market activity, knew other showings were scheduled, and felt compelled to make a fast decision.  

Did the buyers under contract have the full picture on market activity or were they swayed by hand waving and generalizations?    Did they review the sale price and average negotiated discount for similar homes before submitting their offer?    Impossible to know, but I'm still taking my clients to see the house because buyers who make decisions under pressure often get cold feet and back out.    

If you'd like to talk to my about Boulder Real Estate and how to make a smarter real estate decision, call me.  303.746.6896.  

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Like this analysis?    Subscribe to my research.       Would you like to meet me in person?    Attend a Boulder Real Estate Meetup. 

Please note:  My goal is to provide exceptional service to our clients. The ideas and strategies in this blog post are the opinion of the writer at the time of publication. Careful and complete due diligence is strongly advised before buying or selling real estate or other investments. Consult with your professional advisers before making financial decisions. This article is not intended as legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment choices derived from this article.

The No Flipping Rule - New Affordable Housing Regulations Pass

by Osman Parvez

City Council modified the Affordable Housing rules last night.   Let's talk about the impact.

From the Daily Camera (my comments in-line):

The Boulder City Council adopted several changes to its inclusionary housing code Tuesday night in advance of a more in-depth conversation around affordable housing goals set for later this year.

From the it's better to ask forgiveness than permission school of behavior, why would Council WAIT for a pesky in-depth conversation, when they can force their agenda now - right?    

The inclusionary housing ordinance requires that developers build a certain amount of permanently affordable housing for each unit of market-rate housing that they build or, particularly for smaller projects, provide a certain amount of cash-in-lieu to the city.

By the way, the rules apply to anyone who scrapes a house or starts building a house on an unimproved lot.   Even if you renovate/expand beyond a certain point, the city will also consider it a fresh start.    This is why it's important to discuss your plans with the City as early as possible.   The cash-in-lieu surprise could be $25,000.    Read the horror story, Coors Light and Affordable Housing.   This means YOU.

Most of the changes are designed to give builders more flexibility in complying and clarifying differences between owner-occupied, for-sale homes and projects designed for rental use.

A huge percentage of current new development in Boulder is designed for rental use.   We're talking about hundreds of units here so it's not surprising to see the city making some adjustments.       p.s. Expect the percentage of owner occupied properties to drop below 50% in the near future.   Yes, this will have an impact on the real estate market.   We'll talk about that in another blog post. 

The changes include giving builders who are removing existing structures and building new ones three years instead of one to fulfill their affordable housing requirements and giving owners of new single-family homes either until they sell the home or 15 years to pay their cash-in-lieu fees.

Why pay today when you can pay tomorrow, right?     It works for Wimpy.    

Snarkiness aside, the flexibility for owner/builders is greatly appreciated but giving commercial builders three years could pose problems down the line.    What happens if the developer goes belly up mid way through a project?

The Camera also forgot to mention that the rule changes include bumping up the occupancy requirement for owner/builders from one to two years.     Let's call it the No Flipping Rule.    See page 8 of the presentation below.

The changes also add an "intent" statement instructing builders that the city would like affordable housing to be distributed throughout new developments and not be easily distinguishable from the market-rate housing. Housing and Human Services officials are also working on a plan to give more flexibility to developers who are building affordable housing off-site.

These two ideas seem very much in conflict.    To me, off-site affordable housing sounds like a project in the Bronx.   We've seen that story before and it's not a happy ending.   On-site, distributed affordable housing are the existing rules which appear to work better (not great, but better).     Pay attention to this one.

One idea is to develop a points system and allow developers to "spend" their points in a variety of ways that would allow them to offer a greater variety of housing and still comply.

We already have point systems for green building codes and for rental housing.     It does seem to offer greater flexibility and future adjustments, I'll give you that much.    Spend their points, indeed. 

The City Council is scheduled to hold a study session on broader affordable housing strategy questions in May

Council hopes you've forgotten about the issue by then.

Here's the presentation:


If you can't see the embedded presentation above, click HERE to download the PDF.

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Like this analysis?    Subscribe to my research.       Would you like to meet me in person?    Attend a Boulder Real Estate Meetup. 

Please note:  My goal is to provide exceptional service to our clients. The ideas and strategies in this blog post are the opinion of the writer at the time of publication. Careful and complete due diligence is strongly advised before buying or selling real estate or other investments. Consult with your professional advisers before making financial decisions. This article is not intended as legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment choices derived from this article.

Unless There's a Black Swan [Boulder Market Research]

by Osman Parvez

As part of continuing service to the Boulder Real Estate Community, here's my research from last month.   This was sent out to my client list on March 6th.     If you'd like to get it's actionable, click HERE to sign up. 

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Clients and Friends, 

My latest research report on Boulder is now available.   This is an analysis of January's data from the Boulder Area Realtor Association and MLS market conditions during February.   It includes a look at sold houses and condos/townhomes,  analysis of inventory, plus the latest sales data.  

A few thoughts;

• The data points to a strong and sustained seller's market.    Activity will likely accelerate into the Summer.   Unless there's a Black Swan, I'd plan on it.
   
• Inventory remains at record lows but selection is greater at higher price points.    If you're a buyer, you really should go see property within a day or two of listing.   For my clients, I'm now setting automated alerts to search the MLS up to 3x daily and I'm always prepared to drop everything to see a hot listing.  It's a little like being a fireman.
  
• Buyers should anticipate bidding wars and plans their strategy accordingly, particularly for freshly listed properties priced below $500,000.   At the same time, you should be aware that most properties are still being sold at a discount.  See the table of sold listings in the report for more details.   Oh, and talk to me if you're buying.    We should be working together.
   
• If the stock market continues to rise, this will add more fuel for buyer appetite for higher end homes as investors seek to reinvest their gains.   The market for $1MM+ property set a record last year.   I wouldn't be surprised to see another one in 2013.
  
• There is so little inventory that many brokers (including me) are actively soliciting unlisted properties.   Methods include knocking on doors, direct mail, and social media.    See Seller's Wanted for an example.  If your broker is reluctant to do this, get a better Broker.  

Click the link below to download.  

 

The March Silver Fern Report (PDF)

On a personal note, blogging and meetups take a back seat to my client activities.    It's not even spring yet but it already feels like peak summer.     To point, absorption in January was 18.2% for houses and 21.3% for townhomes/condos - much more typical for summer.     The good news is that I've located a space for the next Meetup and i'm awaiting confirmation for scheduling.  Expect an announcement soon.    

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Like this analysis?    Subscribe to my research.       Would you like to meet me in person?    Attend a Boulder Real Estate Meetup. 

Please note:  My goal is to provide exceptional service to our clients. The ideas and strategies in this blog post are the opinion of the writer at the time of publication. Careful and complete due diligence is strongly advised before buying or selling real estate or other investments. Consult with your professional advisers before making financial decisions. This article is not intended as legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment choices derived from this article.

Boulder Entry Level FSBO Opportunity

by Osman Parvez

Given the extreme shortage of inventory - I wanted to let you know about an unlisted property on 32nd in Boulder that will work for both investors and entry level buyers (the most active segment of the market).

15 S 32nd Street, at the corner of Ash and 32nd.    It's a for sale by owner priced at $398,000.   The house is a  1,300 SQFT 1950's era ranch with a stone porch, typical layout, and some upgrades.    The garage has been converted to a 4th bedroom with a 2nd bath, which will make it more attractive to income property investors.

The most unusual feature is that the yard is fenced nicely with a stucco wall (very private).
This unlisted property was first advertised yesterday (Friday 3/22) and will go quickly.  The seller will work with buyer's agents so please call me if you want to see it.  303.746.6896.

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Like this analysis?    Subscribe to my research.       Would you like to meet me in person?    Attend a Boulder Real Estate Meetup. 

Please note:  My goal is to provide exceptional service to our clients. The ideas and strategies in this blog post are the opinion of the writer at the time of publication. Careful and complete due diligence is strongly advised before buying or selling real estate or other investments. Consult with your professional advisers before making financial decisions. This article is not intended as legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment choices derived from this article.

Development Update [Pics!]

by Osman Parvez

How about a few photos showing the progress of area development?   Click on the pics for a larger version.

High Mar Senior Housing

Here's the High Mar Development, located at the south east corner of Martin Acres.

Drill baby, drill

High Mar is a 62+ affordable senior housing apartment community with 59 one and two bedroom units.   Rent will start at $600 per month.  

Some sort of drill rig is operating in the picture, likely for soil sampling purposes or something similar.    Construction only began in February but it's making progress.

Rumor has it that a recreational/medical marijuana shop will occupy retail space in the building, fulfilling High Mar's potential.   - Just kidding.

Boulder Junction (formerly Boulder Transit Village) 

Here's Junction Place, also called Junction Village, located at 3100 Pearl Street.

No fear of heights

A little drafty

walk to Target, Whole Foods, and more

Junction Place (Village) is a 319-unit rental only apartment complex in four separate buildings and seven retail spaces in 8,112 square feet of space. There will be a two-level, partially below-ground, wrapped parking structure for 363 vehicles. The site will also include a recreation center, multi-use paths and a variety of interior courtyard spaces.  

More pics of Junction Village/Place are HERE

Boulder Depot Square

Meanwhile, across the street from Junction Village is Boulder Junction itself or what's currently being called "Depot Square."     Hopefully our great-grandchildren will fix that horrid name before it's finalized.

Check out the progress... or lack thereof.  

That's right - no progress is visible on the grounds or in the public records for that matter - not since January 2012.       The city promises, PROMISES, that the mud pit in the photo above will one day feature "RTD Depot Square at Boulder Junction. Depot Square will serve as a mixed-use, transit-oriented private development that will include an underground RTD bus station, new hotel, affordable apartment complex, parking structure, restaurant or pub within the restored Historic Train Depot, and an open plaza."

Don't hold your breath.  

Tell you what - if you correctly guess the completion date of Depot Square within two months,  I'll buy you a pint.    City Council members are excluded.    Toss your guess in the comments below before the end of April to play.

Additional Resources

Boulder Development Map
Osman's Photos of Development in Boulder
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The Boulder Real Estate Meetup is tonight (3/21/2013) at 7pm.   Click HERE for more information.
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Like this analysis?    Subscribe to my research.       Would you like to meet me in person?    Attend a Boulder Real Estate Meetup. 

Please note:  My goal is to provide exceptional service to our clients. The ideas and strategies in this blog post are the opinion of the writer at the time of publication. Careful and complete due diligence is strongly advised before buying or selling real estate or other investments. Consult with your professional advisers before making financial decisions. This article is not intended as legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment choices derived from this article.

How to Win a Bidding War

by Osman Parvez

Right now, Boulder real estate is very active and the market has ultra low inventory.  This is resulting in bidding wars and in some cases, buyers are clearly overpaying.

On Thursday evening, join me at the Boulder Real Estate Meetup.   We'll discuss the biggest risks for buyers - including overpaying and poor property selection.   When other buyers are swirling, the pressure is on.   A frenzied market can result in poor decision making.   Don't let that be you.  

Sellers - I've got you covered too.    I'll be hosting a discussion on how to properly manage the sale of highly desirable property in an auction environment, resulting in a higher price and less risk of the contract falling apart.    Hint, hint - the answer is not a short, sealed bid auction as we've recently seen on several Boulder listings.    

Ready to sign up?    

Register for the event by clicking HERE. 

It's this Thursday from 7 to 9pm at the Hubb.    Space is limited.

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Like this analysis?    Subscribe to my research.       Would you like to meet me in person?    Attend a Boulder Real Estate Meetup. 

Please note:  My goal is to provide exceptional service to our clients. The ideas and strategies in this blog post are the opinion of the writer at the time of publication. Careful and complete due diligence is strongly advised before buying or selling real estate or other investments. Consult with your professional advisers before making financial decisions. This article is not intended as legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment choices derived from this article.

Strategies for the Inventory Shortage [Meetup!]

by Osman Parvez

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Ultra low inventory is driving a strong seller's market in Boulder.   Bidding wars are igniting for desirable properties and buyers are seeking alternative strategies for finding property.

Join me for an open discussion of strategies for handling the inventory shortage.

Space is limited for this Meetup.    Please register early (click here).    Walk-ins are always welcome, but only if space remains.

TOPICS

- Approaching For Sale by Owner (FSBO) properties, including Zillow's Make Me Move

- Finding Unlisted Properties

- Managing a Bidding War (the Sell Side and the Buy Side)

- The New Inspection Objection and Resolution Reality

- Osman's Real Estate Crystal Ball.   What to Expect In the Future

WHEN

Thursday March 21 from 7pm to 9pm.

WHERE

Hub Boulder - 1877 Broadway (Suite 100).

MEETING SPONSOR

Tact, L3C.    Strategy+Technology to Do More of What Matters.

Mission: Help impact organizations combine strategy and technology to scale their impact. TACT helps develop a clear vision of success, provides a strategic roadmap, then backs in to the technology to get there.

Obviously Not to Code [Stage This]

by Osman Parvez

This is obviously not to code, but it's still an ingenious way to install a flight of stairs in a narrow space.

Check it out.

The alternating steps allow a large overlap between the risers.   This reduces the horizontal distance the flight of stairs travels and thus the staircase takes up far less room.    It's intimidating to look down but I found it quite natural and easy to use.

Spotted during a showing last week.

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Like this analysis?    Subscribe to my research.       Would you like to meet me in person?    Attend a Boulder Real Estate Meetup. 

Please note:  My goal is to provide exceptional service to our clients. The ideas and strategies in this blog post are the opinion of the writer at the time of publication. Careful and complete due diligence is strongly advised before buying or selling real estate or other investments. Consult with your professional advisers before making financial decisions. This article is not intended as legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment choices derived from this article.

Boulder House Inventory [Analyze This]

by Osman Parvez

Yesterday, we analyzed the availability of listings in Louisville.    Today, let's look at Boulder.

Strategies for the Inventory Shortage

Current market conditions are deeply frustrating.    There are many potential buyers in the market and very little inventory.    This results in bidding wars of desirable property, hasty decisions, and a much higher volume of "return to market" properties.  

There are consequences for both buyers and sellers.    There are also strategies to make the most of the situation.    How to intelligently deal with the inventory shortage is the topic of my next meetup.    The tentative date is Thursday, March 21st at 7pm.    As soon as I confirm the location, I'll announce it.

Boulder's Current Inventory

As of this writing, there are about 220 houses on the market in Boulder.    This is 48% below the long term average for March and 37% below last year. 

46% of the available inventory is under contract, the majority of which will close within the next 45 days.     When I'm working with my buyers, I'm honest about the pros and cons of each house we see.    Typically, I'll recommend NOT BUYING about 25% of the houses we see.    The reason is usually location, but sometimes it's massive deferred maintenance or a ridiculous price. 

Removing a quarter of the available inventory drops the percentage of available homes to 41%.    This is a remarkable number for the peak of summer, let alone March.    

 

Just like Louisville, buyers in Boulder will have the toughest time shopping for houses if their price range is below $400,000.    This price ceiling is very typical for buyers seeking to acquire their first house and it's also the most competitive.  You're looking at a very small selection of properties (currently only 15) of which a shocking 73% are under contract.   

Potential sellers in this price range should be aware that they can, and should, receive a premium for their property.    I always recommend cosmetic updates before listing, but at this price range, for cosmetic updates you could conceivable put $1 in and get $1.20 out (within tight constraints).      Expect some house flipping to occur this summer. 

Don't forget, the next Boulder Real Estate Meetup will focus on strategies to combat the inventory shortage.    The tentative date is Thursday March 21st at 7pm.     Whether you're a buyer or a potential seller, attend the meetup for a great discussion on how to get the most from your real estate goals.
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Like this analysis?    Subscribe to my research.       Would you like to meet me in person?    Attend a Boulder Real Estate Meetup. 

Please note:  My goal is to provide exceptional service to our clients. The ideas and strategies in this blog post are the opinion of the writer at the time of publication. Careful and complete due diligence is strongly advised before buying or selling real estate or other investments. Consult with your professional advisers before making financial decisions. This article is not intended as legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment choices derived from this article.

Under Contract Again? [Louisville Market Update]

by Osman Parvez

Right now, the Louisville real estate market has extremely low inventory and buyers are competing for the most attractive houses.   Sound familiar?      Yep, it's just like Boulder.

Let's take a quick look at inventory under contract.  

This chart breaks down inventory of houses (no attached dwellings).  45% of the inventory in Louisville is available, the rest is locked down by a buyer.    

Right now, I have several clients looking for property with prices below $400,000.   Here's what the picture looks like for them.

For houses priced below $400,000 - not only is there very little inventory, but more than two thirds is under contract.     This is why I'm telling my clients to drop everything and see fresh listings as soon as possible.   We used to wait for the weekend, now I'm ready to roll at the drop of a hat.  It's sort of like being on call.

Since January, there have been 11 closings in Louisville.    The table below are the stats.   Click HERE for photographs and more details.

Most of these houses sold for close to asking, a few for more.     You might also be wondering how someone managed to negotiate almost 7% off 825 La Farge.   I'll tell you.

825 La Farge sold for a discount because the house had been on the market for a long time and had major issues.  It's what we call in the business, a scrape off.    I know because I had it under contract with a buyer.    After we did our due diligence, it became clear that to build what my buyer really wanted would have cost at least $300,000 in addition to the purchase price.    And that was after bulldozing the house and shoring up the underground mine tunnel.

I'm not kidding, here's a pic. The flooring of that old house is severely canted and held up by old bed posts.  

What about 768 Nighthawk, with a 5% negotiated discount?  I advised my buyers to walk away from it.   The house backs to Via Appia.      Houses in bad locations appreciate slowly and are much harder to sell because far fewer buyers are willing to consider it.  

Bottom line, sellers in Louisville are getting close to asking prices and are starting to see premium prices.   Expect this to continue, if not accelerate, into the spring.    

Want to make a smarter real estate decision?   Call me.   303.746.6896.

p.s. This analysis mostly excludes the new stuff that Markel and others are building.   Developers rarely list their full inventory on the MLS (they don't like to flood the market).  My sources with knowledge of those projects tell me that the developers are extremely busy and in some cases are raising prices.  
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Like this analysis?    Subscribe to my research.       Would you like to meet me in person?    Attend a Boulder Real Estate Meetup. 

Please note:  My goal is to provide exceptional service to our clients. The ideas and strategies in this blog post are the opinion of the writer at the time of publication. Careful and complete due diligence is strongly advised before buying or selling real estate or other investments. Consult with your professional advisers before making financial decisions. This article is not intended as legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment choices derived from this article.

Boulder Real Estate Research, Get it Hot [Market Update]

by Osman Parvez

Just a heads up.  My latest research report on Boulder real estate has been published.  Based on a mix of the most relevant and recent data available, it's a the best available snapshot of market conditions.  

If you're buying or selling real estate in Boulder, get the report.   Sign up below.  

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Like this analysis?    Subscribe to my research.       Would you like to meet me in person?    Attend a Boulder Real Estate Meetup. 

Please note:  My goal is to provide exceptional service to our clients. The ideas and strategies in this blog post are the opinion of the writer at the time of publication. Careful and complete due diligence is strongly advised before buying or selling real estate or other investments. Consult with your professional advisers before making financial decisions. This article is not intended as legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment choices derived from this article.

Boulder's Off Campus Housing Fair [Rent Me]

by Osman Parvez

CU's second annual housing fair is today from 10am to 4pm in the UMC Glen Miller Ballroom.    Some folks in Boulder call this "pre-leasing."  

Here's a few tips.

LANDLORDS/INVESTORS
If you own multiple properties, the CU Housing Fair might be a good use of your time and money.  The cost is $250 for a half table and $400 for a full table, plus the value of your time. 

The idea is that you can meet prospective tenants face to face and pitch your property for the highest rent.       I've heard it argued that students who are proactive enough to organize a household early might be better tenants.   I'm not sure I buy it.   

There are two fairs every year.   The larger one is held in late January and the smaller one in March.  If you missed it this year, you can learn more and register for next year's event by clicking HERE. 

Pro tip:   I have an investor who takes 15+ properties to the CU housing fair every year and he's been doing it for more than a decade.  He says it's getting less effective every year and recommends Craiglist.

STUDENTS
If you know who your housemates are going to be next year, this is still a good use of your time.    And hey, there's free food and possibly other give aways.    If nothing else, it will help educate you on the rental market.      Personally, I'd shop Craigslist pretty hard.     Most landlords don't attend the CU housing fair. 

Pro tip:   Most landlords are going to ask your parents to cosign.  Expect it.    At the end of the lease, they're also going to charge you for any damage you've done to the property, so take careful photographs at walk-through, noting pre-existing damage.     If you're going to have a party, this is a good reason to charge at the door.   Oh, and don't forget to register your party.

NOTE:   I help investors purchase and sell investment property in Boulder.  If you want to talk about cap rates and the pros/cons of various options in Boulder, I'm your man.    I'm not a property manager or leasing agent, but I can refer to you to great ones. 

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Like this analysis?    Subscribe to my research.       Would you like to meet me in person?    Attend a Boulder Real Estate Meetup. 

Please note:  My goal is to provide exceptional service to our clients. The ideas and strategies in this blog post are the opinion of the writer at the time of publication. Careful and complete due diligence is strongly advised before buying or selling real estate or other investments. Consult with your professional advisers before making financial decisions. This article is not intended as legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment choices derived from this article.

Boulder Real Estate on Crack

by Osman Parvez

What would you think if you walked into a house for sale and saw this:

No big deal, right?  It's just a funky purple shag rug from the 70's.  You can just replace it.

How about this?

Just a drywall crack, right?

Guess again.   You're looking at a crack in a painted concrete wall in the basement.   The crack extend into the next room.    Closer inspection shows signs of patchwork on the wall, beneath the paint.

Now, if you were my client, I'd strongly recommend you get a structural engineer to evaluate the foundation of the house.   This sort of work could be expensive to repair and might impact the loan.

Now what if I told you that despite being run down, beat up, and completely dated - the house went under contract, with multiple bids, in just six days?    That's right, there was so much demand for this jalopy, that a bidding war broke out.     Why?

Here's why:

 
The property backs to a small reservoir and has views of the mountains.     It's idyllic and in a wonderful setting.  Plus, you're on an acre of land and just outside the city limits.    You could build your dream home on this lot and still ride your bicycle to work downtown.   More pics.

Asking Price?  $420,000.     Right in the sweet spot of the entry level of Boulder's market.    I wouldn't be surprised if the bidding war drove the price to 5%-10% above asking.

Take Home Lesson 

Market value is bolstered and protected when property backs to open space or has protected A+ views.   Typically, the cost of entry is much higher, but the property will likely appreciate much faster than other similar homes.   Conversely, prices might snap lower during a downswing too.   Thus, these sort of properties tend to have greater volatility in price, but they also sell much faster.
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Like this analysis?    Subscribe to my research.       Would you like to meet me in person?    Attend a Boulder Real Estate Meetup. 

Please note:  My goal is to provide exceptional service to our clients. The ideas and strategies in this blog post are the opinion of the writer at the time of publication. Careful and complete due diligence is strongly advised before buying or selling real estate or other investments. Consult with your professional advisers before making financial decisions. This article is not intended as legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment choices derived from this article.