The Boulder-area real estate market offered no surprises as 2012 came to a close, with sales and prices increasing in general year over year but falling – as expected – compared with the previous month.
“December was pretty straight forward,” says Ken Hotard, senior vice president of public affairs for the Boulder Area Realtor® Association.
The sale of 235 single-family homes in the Boulder-area market represented a 15 percent increase over a year ago, and the sale of 84 condominiums and townhomes was an increase of 16.6 percent compared with December 2011.
However, single-family home sales fell 21 percent in December compared with November, and attached unit sales fell 5.6 percent.
Overall, the market did as it usually does in the middle of winter: incremental dips in month-over-month sales volumes, though the fact that sales volume improved year-over-year is a positive sign going into 2013.
“There are consistent signs of improvement,” Hotard says. “You’ve got really low interest rates out there, year-over-year sales volume increases, stable and improving prices, and the economy growing steadily though not really running away.”
The Boulder-area market’s biggest weakness remains its lack of homes on the market, he notes. In comparison with November, the single-family inventory was down 20.5 percent and the condo/townhome inventory fell 16.4 percent. Year over year, Boulder-area single-family homes for sale dropped 27 percent and attached unit inventories “plunged” 36 percent compared with December 2011’s inventories.
“Inventories continue to show weakness not only hear but nationwide,” Hotard says. “I think we’re starting to hear a lot of things that housing is turning a corner, about to take off and that kind of talk … but the underlying economy remains weak.
“We’re hearing a lot of cheerleading around the positive side of housing. I’m trying to suggest a more modest and realistic view of a more sustainable housing market.”
Hotard points to several factors that suggest a more cautious optimism is in order, including $16 trillion in national debt.
“Unemployment is still high and job growth is very modest,” he says. “We’re expecting reasonable job growth in Colorado this year, somewhere in the 42,000 (jobs) range, but last year we gained more than 47,000 jobs. There are significant numbers of home owners who are under water on their mortgages and others who do not have enough equity to move up. These folks are not going to enter the market until home prices rise significantly.”
On the bright side, all but two Boulder-area markets saw increases in their average single-family home prices in December and only one of those (Broomfield) saw a decline in median home prices. And even condo/townhome prices increased in the majority of Boulder communities.
“Home prices are still looking positive,” Hotard says. “That is largely driven by historically low inventories.”
Hotard described 2012 as a “decent year in the housing industry. We should all be grateful for what we’ve got. I do agree by a large measure that we’ve turned the corner; I don’t see signs that suggest we will have a downturn of any significance in the foreseeable future,” especially with the Federal Reserve keeping interest rates low.
“There’s no reason that 2013 can’t look a whole lot like 2012,” he adds, noting sales improved every month in 2012 compared with 2011.
Conditions should continue to boost home sales and prices for both the single-family and attached-dwelling markets, Hotard suggests. The most market changes will occur in the rental industry, as the Boulder area is approaching 1,000 rental units approved or under construction, Hotard says.
The most significant market changes in 2013 are likely to occur in the rental industry, as the Boulder area adds a significant number of new units to the market, he says.
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