The Boulder area real estate market received a holiday surprise in the way of improvements – though some were slight – in both year-over-year and month-over-month sales in December.
Single-family home sales increased 8.6 percent in December compared with a year before, 264 units versus 243 units, respectively. And three more units sold in December compared with November, a 1.1 percent increase.
Sales of condominiums and townhomes saw a significant 28.2 percent increase in year-over-year sales, with 109 units selling in December 2014 versus 85 units in December 2015. And its December sales were in line with November’s, with one more unit selling in the last month of the year.
Ken Hotard, senior vice president of public affairs for the Boulder Area Realtor® Association, says the market made “solid gains” year over year in both markets, proving a strong demand for homes remains in the face of significant inventory drops.
The inventory of single-family homes for sale fell 8.1 percent year over year and 19.6 percent month over month in December, and the attached-dwelling market saw inventory decreases of 15.5 percent year over year and 26.9 percent month over month.
The fourth quarter of 2014 witnessed sales of single-family homes dip a barely perceptible 0.035 percent compared with the fourth quarter of 2014, while the sale of condos/townhomes increased 30.1 percent compared with the last three months of 2014.
“There’s very strong demand in the market,” Hotard says. “Pricing is reflecting that demand and available homes are in short supply in most of the markets.”
Nearly every community saw median and average home sales prices increase for both single-family and attached dwellings in December.
Hotard says some new home projects are coming on line in 2015, but he doesn’t expect them to solve the inventory issue.
“We need to see stronger movement in the resale market in inventory,” he says. “New construction can only do so much.”
About 30 percent of buyers are first-timers, and that percentage will not likely increase much as long as wages remain stagnant and significant student loans burden many potential buyers, Hotard explains.
Job growth is definitely turning in the right direction to bring more buyers into the market. However, an anticipated rise in mortgage rates in mid-2015 may discourage home owners with existing low-interest rate mortgages who might otherwise list their homes, because they will not want to buy their next home at a higher interest rate.
Sellers will be reluctant to enter the market if they have to give up a low-interest mortgage for significantly higher financing costs, Hotard says.
“That’s is one downside of our historically low interest rates; they have the potential to chill the market,” he says. “The refinance market will tighten quickly when rates go up, as well.”
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