Monday, June 02, 2014

The Market is Hot for $1MM Boulder Condos, Right? WRONG [Analyze This]

by Osman Parvez

Sorry, it's been a while since I last posted.  Clients are my #1 priority and we're now in the busy season for real estate in Boulder.   Expect blog postings to remain slim during the summer.  If you want me  to represent you (buying or selling), just call me at 303.746.6896.   I'll give you the straight talk, no hand waving or pushy sales pitch.  

The Boulder Condo and Town Home Market
Google your way around the net. You won't often find much in the way of analysis on market conditions for Boulder condos and town homes (except my old posts on this blog).   Let's shine a little light in the darkness.  

Here's an up to date inventory analysis for attached dwellings.

Note:  The following analysis applies to the City of Boulder only.   The data source is the regional MLS.   The effective date fro this analysis is June 2, 2014.


There are 300 units on currently on the market today.  More than half are under contract with a buyer.   This shouldn't surprise you.  The market is experiencing record low inventory levels, the economy is improving, and rates remain near historic lows.  

Negotiation tip:   if you're absolutely in love with a property, go ahead and write a backup offer but keep in mind the vast majority of property closes with the first buyer under contract.    When you submit a backup offer, smart listing agents will just use it for negotiation leverage against issues found during the first buyer's property inspection.

   
As you can see from the chart above, a quick analysis shows you the market varies dramatically by price.    The median asking price for all attached dwellings is $300,000 but the median for property under contract is quite a bit lower.   Properties actually available for purchase (not under contract) have a median price of $345,000.

Let's dig deeper. 


This chart breaks out the percentage of units under contract by price range.   From the entry level (which includes affordable housing) to the mid range of the market, 50% to 75% of the market is under contract.   Notable tightness exists in the 150 to 200K tranche (65% UC), 250 to 300K tranche (68% UC), and the 350 to 400K tranche (76% UC).   In the 700 to 800K tranche, everything is under contract (100%).   Look higher than 800K and very little is under contract. 

Negotiation Tip:  When you're contemplating what price to offer, it's critical to know how the market varies by price range, property type, and location.   You should know how many homes are on the market in your price range and how many are likely to come on market in the near future.   A good buyer's agent educates his clients.

Take a look. 


The chart above shows how many condos and town homes remain at each price tranche (i.e. not under contract).   For example; 65% of units in the 150K to 200K tranche may be under contract with a buyer, but you still have 22 units to choose from.   If you're shopping in the 350K to 400K range, you have nearly 20 units to choose from.  Now check out the $1MM+ category.  What do you see?  Tons of selection and very little buyer competition.    


Negotiation Tip:  Study the percentage under contract in your price range and compare it to selection.  This should give you a sense of the competition among buyers for desirable property.  If there is high selection and a high percentage under contract, you should go in strong with your offer but if you miss it, there will probably be anther option on the market soon.  Do your homework, understand the market, don't let the listing agent tell you differently. 

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