BOULDER – The Boulder County real estate market has been robust since the end of the recession in 2012. None of the boom markets since the 1980s have lasted as long as this one. After 10 years of boom, can we say the real estate market has shifted — and will it bust?
It was right about Easter weekend in 2022 when showings on for-sale properties dropped off rapidly. After enjoying historically low mortgage interest rates for years, rates ascended quickly, decreasing the homebuyer’s purchasing power. As rates rise, homebuyers considered offering home sellers less in order to offset the increased payments due to the higher rate. However, it takes a much lower price to keep a mortgage payment the same if the rate has gone up, even only 2%, so it is difficult to balance out. One thing that has been a constant about interest rates over the years is that they climb swiftly and tend to drop slowly. When rates rise fast, buyers hesitate and hope that rates will go down. That happened in the ‘80s and rates didn’t go down for a long time.
Let’s take a closer look below at Boulder County market indicators from 2022 based on the annual real estate report by Todd Gullette, Managing Broker of RE/MAX of Boulder.
Showings on active listings
Showings dropped off dramatically at the end of April 2022 as rising interest rates forced many buyers out of the marketplace.
Supply of homes
2021 had the lowest supply of available resale homes in the last 20 years. In May 2022, inventory rose above the 2021 inventory level and stayed above the 2021 level for the rest of the year. 2022 was still the second lowest level inventory in the last 20 years.
Percent under contract
Using 50% as a balanced market, all market segments above went from over 50% under contract in 2021 to under 50%. This indicates a softening market.
List price to sales price ratio
The sales price to list price ratio remained about 100% in all market segments listed above. This indicates that the market is still strong.
Months of inventory
Months of supply available increased in all market segments listed above, but not to a tipping point towards a buyer’s market. Above 3 months supply would be an indicator that the market is leaning towards a buyer’s market.
Days on market
Some market segments went up in days on market and others down. There wasn’t a significant amount of change either way. Ninety days usually indicates a balanced market and the days on the market are still well below that. Another indicator is the market that still has strength.
Direction of average and median prices for single family homes
Average and median sales prices increased in all categories from 2021 to 2022, but generally not as fast as a few years prior. Given the fact that all the numbers are increasing in the positive direction, the market still shows strength.
Other trends indicating a “calmer market”
When a housing market calms down, a few other indicators are observed. Since houses in general aren’t selling as fast, the number of Realtor® open houses starts to increase. Sellers become more open to inspection and a variety of other contingencies. There might be listings that still get multiple offers, but not as many offers as the recent past.
Remember, all real estate is “local,” right down to the specific street sometimes. Be sure to consult your Professional Realtor® regarding how market shifts affect your property.
By Duane Duggan. Duane has been a Realtor since 1982. Living the life of a Realtor and being immersed in real estate led to the inception of his book, Realtor for Life. For questions, e-mail DuaneDuggan@boulderco.com, call 303.441.5611 or visit BoulderPropertyNetwork.com.