Wednesday, April 05, 2006

It's Bubblicious

by Osman Parvez


No doubt, if you read this blog you may also be reading all sorts of information online. The housing bubble continues to be a hot topic in real estate, and many industry participants are finally acknowledging that certain markets (particularly in coastal metro areas) are overvalued.

As everyone knows, fear sells and the bubble blogs tend to draw tremendous traffic. They also usually have lots of ads and often move towards exaggeration and spectacle to draw visitors (like the tabloids).

The Bubble Blogs can be wildly entertaining, however if you are thinking about buying or selling here in Boulder or surrounding communities, I recommend getting the latest local market information. You can also check this blog for market statistics. Here are the last numbers I posted for homes in the City of Boulder Inventory.

On request, I can also provide an analysis for Broomfield, Lafayette, Louisville, Longmont, Erie, or Superior. If you're looking to understand the market within a price range similar to your home's value, contact me. I strongly recommend a full opinion of value prior to listing your home for sale.

The last few days, I've been actively commenting on a one particular bubble blog (usually when I saw extreme examples of fear mongering and bias).

----
Like this analysis?    Subscribe to our client research report.     
Want to get blog updates via email?  Click HERE.       
Ready to buy or sell?  Schedule an appointment or call 303.746.6896. 
You can also like our Facebook page or follow us on Twitter.

As always, your referrals are deeply appreciated.  

--
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. 

4 comments:

  1. If you are thinking about buying or selling in Boulder or surrounding communities, I recommend getting the latest local market information because Boulder is different.

    ReplyDelete
  2. ...different from San Diego, or Miami, or Aspen. And these markets are also different from each other.

    Maybe I wasn't clear.

    You shouldn't base your local real estate decisions on what's happening in other markets. If inventory goes up 30% in Miami, should you reduce your asking price in Boulder?

    ReplyDelete
  3. In what way is Boulder different? Seriously, not a rhetorical question. Everyplace has unique characteristics but with respects to residential housing prices the sum of those differences average out. In the end Boulder is exposed to 80% of what evryplace else is exposed to. There's interest rates, exotic financing, speculators the general economy, etc. Is the remaining 20% so truly outstanding that it negates the 80% similarity?

    ReplyDelete
  4. Robert, I'm not saying that Boulder's market is somehow different from the basic concepts that underly all real estate.

    With some notable exceptions, our homes are built in standard ways with typical materials (although trending greener each year). Our homes are usually bought using mortgages which will later be repackaged and sold on the secondary markets. And yes, a fair number of buyers have and *are* using riskier mortgage products to to purchase property.

    We're different from Miami because we haven't seen rampant condo construction and flipping. Boulder's growth controls prevent the sort of rapid, uncontrolled building activity that is a prerequisitve to condo flipping.

    We're different from New York City because an family can buy a $200K, 3BR 2BA ranch in a nice tree lined, quiet, safe neighborhood in a neighboring community (like Broomfield) and commute to Denver or Boulder in under 30 minutes.

    We're different from all Bubbles in that our rate of appreciation (2001 to 2005) was relatively mild.

    We're unlike the entire state of California because our population is growing, people are moving here because of the high quality of life and corresponding low cost of living.

    I could go on, but you get the point. Let's try it the other way. While I'm certainly not an expert in every market around the country, but which markets in particular would you like me to compare Boulder to?

    Will the Boulder Real Estate market be affected as bubbles deflate in other parts of the country?

    Probably, yes.

    As I've said many times, we may see a slowdown and see inventory levels rise (I think as much as 20%). BUT - that sort of scenario should be shortlived in Boulder (and a great buying opportunity) because the fundamental drivers of supply and demand for this market are not rooted in speculation. The typical buyer of Boulder real estate isn't looking to flip, they're looking to buy and live here.

    ReplyDelete