Wednesday, March 25, 2009

Back from Moab

by Osman Parvez
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I recently returned from a 4 day trip to Moab (pic below), and I'm feeling recharged. There is something mystical and purifying about being in the desert. It feeds the soul.

Expect more real estate blogging in the next few weeks as lots of stuff is happening, least of which are preparations for the next Boulder Real Estate Meetup.

Speaking of the Meetup, our scheduled presenters include a relatively new Boulder home owner who is developing Bob Villa like expertise as he madly tears into improving his 1950's Martin Acres ranch. Hopefully he'll share some his secrets. Plus, the Executive Director of the Boulder Carriage House is coming to talk to us about solving the homeless problem in Boulder.

Stay tuned..






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2 comments:

  1. Congrats on the Daily Camera mention, Osman. 'Bout time someone shone some light on your analysis.

    I am interested on your take on the comments - one or two raise some very intriguing issues (euro conversions? IBM layoffs?). So what will it be - crash and burn @ 15-20% below current values? 5-10%? Will we be the city that escapes unscathed? Interested in your take...

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  2. A few of the comments are quite insightful.

    Jobs traditionally drive the primary home market, and in Boulder we have a couple of additional factors to consider. To name just a few; CU, the wealth (and sources of income) of incoming residents, the lack of a historic bubble in prices relative to true bubble markets, and the widespread appeal of living here.

    As the real estate collapse began a few years ago, I predicted much softer market conditions than occurred. It's been somewhat surprising to see how the market has played out. Price declines, where they've occurred, have been primarily at the high end. The low end has been so strong for so long that the downturn has barely registered.

    City Council could change this dynamic when it institutes tougher restrictions on house sizes. But even without City Council changing the rules, I think we're in for a rough ride. House prices are historically sticky to the downside, but with 2+ years of inventory above $1MM, motivated sellers will eventually set a market clearing price for their property. Those new prices become the basis of what future buyers judge value.

    The high end of the market is also driven by the psychology of wealth. With the stock market 60% or more off its peak, many $1MM+ would be buyers are feeling cautious. When credit markets eventually normalize and equities markets stage a sustained recovery (not the current bear market rally), I think luxury homes will benefit.

    Many professional forecasters are saying 2H10 is when the recovery will eventually take hold. Given their track record, they are most assuredly wrong but who am I to argue?

    With 5 or so months of inventory at the low end in Boulder, this part of the market will probably not see any price declines. Those hoping a basic Boulder ranch will go back to it's 1990's prices will be disappointed. 5% conforming rates are encouraging many entry level buyers (with confidence in their incomes and strong credit) to take the plunge.

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