Thursday, February 23, 2017

Signs of a Slowing Market [Analyze This]

by Osman Parvez
----
The Boulder market appears to be slowing. Although inventory levels are about the same as last year, absorption has dropped substantially. The high end is also starting to see inventory pile up. Smart buyers and sellers should adjust strategies and tactics accordingly.  

Before we begin, read Boulder Entry Level Remains Strong, High End At Risk of Correction and Boulder Inventory Stabilizes, Spring Outlook Positive.  It will provide some background information on market conditions and is part of this inventory analysis blog series.  

The chart below shows the percentage of listed houses under contract in the City of Boulder, from January to mid March, over the past three years. 



The gray line represents 2015.  The orange line is 2016 and the blue line is 2017. 

Think of percentage under contract as the market's ability to absorb new inventory.  If there are many active buyers, the percentage will be quite high.  If there are fewer, the percentage will drop.  

Although the market started in roughly the same place during the past three years, with around 50% of inventory under contract, there was an early season dip during the past two years.  It dropped to almost 30% under contract and is now hovering around 40%. 

By most measures, 40% under contract is a sign of a strong seller's market.  Depending on price range and location, it remains true, but the dip is a technical warning. Perhaps it was caused by an influx of new inventory onto the market. Perhaps it's the Trump driven interest rate bounce driving this year's dip.  In the end, it doesn't really matter.  It's prudent to treat it like a warning sign.  

Recommendations
For buyers: it's now more important than ever to track how homes are selling across price ranges and to exercise extreme selectivity in which ones you wish to pursue. Don't enter bidding wars for marginal properties. For seller, now is a good time to get it on the market - especially if your home is in a compromised location or has functional deficits. 

My crystal ball says the market is likely to crest this year.  

For a private consultation on your specific real estate situation, contact me.  My goal is to help you make a smart real estate decision.


----
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. What about Longmont?

    ReplyDelete
  2. Great question, Anon. Ask your real estate agent. If you find their answer curiously lacking in detail, fire them and call me.

    ReplyDelete
  3. Can you generate the same report for houses, apartments, condos, and townhomes under $1 million?

    ReplyDelete