March home sales signal the start of the buying season
The spring housing market has sprung in the Boulder area, with both single-family and the condo and townhome sales in March showing significant improvement over the same month last year.
“The pattern we started late last year, coming into 2013, is continuing through March,” says Ken Hotard, senior vice president of public affairs for the Boulder Area Realtor® Association. “We’re seeing increased sales volume year over year, and it’s fairly healthy increases.”
The 315 single-family homes that sold in March represented a 16.7 percent increase over the 270 that sold in March 2012; and the 110 condominiums and townhomes that sold in March was 25 percent more than the 88 units that sold a year ago.
But it was the jump in sales from February to March that deserves note: 47.2 percent more single-family homes sold in March than the 214 homes that sold in February, and 53.7 percent more attached units sold in March than in February, in which 73 units sold.
“We really sprung into the spring buying season month over month when comparing March to February,” Hotard says. “The spring home buying season looks like it really launched in March.”
However, while the number of homes on the market increased slightly – 11.8 percent for single family and 9 percent for condos/townhomes – in March, inventory was down 26 percent and 27 percent, respectively, compared with March 2012.
And the first quarter 2013 sales still pale in comparison to the fourth quarter of 2012, with single-family home sales dropping about 14.1 percent and condo/townhome sales falling 7 percent, Hotard notes.
“We finished 2012 strong, exceeding expectations,” he says. “We were looking for downward seasonal adjustments in activity but instead saw a strengthening market.
“I think inventory has been the challenge and continues to be the challenge. It’s partially responsible for the quarterly declines in sales volume. If we had the inventory, with the demand that’s out there, we could have met or exceeded the 2012 fourth quarter numbers.”
While there have been modest month-over-month improvements in inventory from December through March, Hotard says, they haven’t been strong enough to overcome year-over-year declines in inventory.
He believes the same dynamics are holding people back from putting their homes on the market: many still owe more than their house is worth or don’t have enough equity to come up with a down payment on next their house; uncertainty in the job market remains with a 7.5 percent unemployment rate; and the economy and jobs are just not growing fast enough to move the market forward.
Hotard says new home construction is picking up and banks are reportedly releasing more of their foreclosed properties, so the inventory of homes for sale should improve heading into late spring and summer.
While the Boulder-area market experienced its 14th straight month of year-over-year home sales volume increases in February, record-low inventories are holding back a stronger recovery.
“Inventories continue to be the story,” says Ken Hotard, senior vice president of public affairs for the Boulder Area Realtor® Association, noting that fewer homes are available than what is necessary to meet the demand expressed by buyers.
The 1,141 single-family homes for sale in February was 26 percent fewer than the 1,547 homes for sale in the same month in 2012, and the 368 condominiums and townhomes for sale in February represented a nearly 30 percent decrease.
Despite year-over-year inventory declines, the number of homes on the market grew for the second consecutive month: the number of single-family homes for sale in February was an increase of 9.3 percent compared with the 1,043 homes on the market in January, and condo/townhome inventories grew 10.5 percent from the 333 on the market in January.
While a positive sign, that’s not enough to “catch up” with growing demand, Hotard says.
On the bright side, sales continue to increase year-over-year: the 214 single-family homes that sold in February represented a 24 percent increased over the 172 that sold a year ago, and the 73 condos/townhomes that sold in February represented an 18 percent increased compared with February 2012.
The sales versus inventory statistics “highlight the challenges for buyers in our market areas to find appropriate properties to fill their housing needs,” Hotard says.
The lack of inventory poses a challenge, but one Realtors are willing to meet.
“I think there are a lot of the creative Realtors out there,” Hotard says. “When they have a buyer for whom they can’t find an appropriate property, they are going back to their former clients whose properties meet the needs of their clients to see if they’re ready to sell.”
They also look to previously listed property that didn’t sell to see if owners are interested in putting their homes on the market again, he notes.
And the lack of inventory is likely a contributing factor in the improved average and median sales prices throughout the Boulder area.
Nearly every Boulder-area community saw gains in both average and median sales prices for single-family homes in February, and all but three communities saw increases for condo/townhome average and median sales prices, as well.
“In some areas we’re seeing properties that are in very good condition and priced right getting multiple offers,” Hotard says, noting in some cases, perspective buyers’ first offer is above the asking price for a home.
While prices and sales are improving, moderately priced homes are selling at the fastest pace, he says.
Of the 214 single-family homes that sold in February, 186 of them were priced below $700,000, and 64 of the 73 attached units that sold were priced at $400,000 or lower.
“The attached market has stabilized,” Hotard says. We’ve had a lot of new rental units come into the market that have been a more cost-effective option, but as rents increase, buying has become more attractive.
“We’ve also seen modest improvement in mortgage lending; however, credit worthiness and credit scores remain a challenge for some.”