To figure out trends in the marketplace I like to look at Absorption Rates. I do this on a quarterly basis. The Absorption Rate is the number of months that it takes to sell the CURRENT inventory at the present rate of sales. This, of course, assumes that there are no new listings coming on the market, not a very realistic assumption. In today's market, pricing and condition of a property is very important. For the quarter ending December 2009, there was 6.6 months of inventory for single family homes. A rule of thumb is that anything less than 5 months is considered a sellers’ market, over 7 months is a buyers’ market and 5 to 7 months is a stable market.
Months of Inventory by Area:
Suburban Plains 9
Suburban Mountains 14.7
Focusing on Attached Dwelling which includes condos and townhomes, average prices vary substantially from area to area:
Boulder +1.1% -5.9%
Louisville -3.5% -2.4%
Lafayette +1.9% +.9%
Longmont -8% +.2%
Suburban Plains -9.4% -24%
Superior +26% -1.2%
Broomfield -1.2% -8%
There are striking differences for Absorption Rates based upon price point. The overall inventory for Boulder County is 7 months. However, for those priced between $100,000 and $200,000 there is a little over 4 months of inventory. For those over $1 Million, there is 17 months of inventory.
Inventory by Area:
Suburban Plains 5.6
As we move on in 2010, statistics will show a normal seasonal decline in the number of sales in January. If RE/MAX of Boulder is indicative of the rest of the market though, we will be experiencing a very good first quarter. In January, RE/MAX of Boulder had a 100% increase in contracts written over a year ago. We continue to see too little inventory in the lower price ranges leading to multiple offer situations. It really is a tale of two markets with plenty of supply of inventory over $500,000 and too little inventory in the lower price ranges.
With interest rates at historical lows, around 5%, it is a great time to buy, no matter your price range. Your buying power is significantly enhanced with low interest rates. As an example, a payment on $200,000 at 5% is $1073.64 a month. At 6% that same payment is $1199.10. Another way to look at it is that for every 1% increase in interest rate you can afford 10% less when you have a 5% interest rate.
And remember, to take advantage of the homebuyer tax credit, you must be under contract by April 30th and closed by June 30, 2010.
Call us today at 303.449.7000 or 800.825.7000 or visit http://www.BoulderCO.com