For the first time this year, year-to-date sales of Boulder County condominiums and townhomes dropped 2.0 percent through November 2015 compared to the first eleven months of 2014, with 1,483 units sold versus 1,531.
However, single-family sales in the Boulder-area continued to show strength with a 10.2 percent increase through November 2015 compared to the same period in 2014 – 4,489 homes sold versus 4,074.
The year-to-date decline in attached-unit sales “probably signals that Boulder-area sales will finish the year slightly behind last year or close to even,” says Ken Hotard, vice president of public affairs for the Boulder Area Realtor® Association.
Typical for the season, month-to-month sales decreased in the single-family and attached housing categories.
Single-family sales in the Boulder-area dropped 29.3 percent in November compared to October – 282 units versus 399.
Month-to-month sales of condos/townhomes sales declined 24.6 percent in November with 92 units sold versus 122 sold last month.
Hotard notes that inventory continues to decline and he expects it to be an ongoing issue. Single-family home inventory in the Boulder-area decreased 25.0 percent in November with 732 units for sale, down from 976 units in October.
Inventory of Boulder County condos and townhomes also dropped, declining 26.5 percent in November with 86 units available for sale compared to October’s 117 units.
“We're not seeing new attached housing come online,” Hotard says. He cites construction-defects litigation as one cause of the lack of new building of condo and townhomes.
“Builders face significant challenges in insuring product because of the potential cost of litigation. It also feeds into why we see more units built for rental as opposed to ownership in the attached categories,” he adds.
Colorado lawmakers tried to reform Colorado's construction-defects law in the 2015 legislative session, but those efforts failed. Hotard expects 2016 will bring another round of legislative reform aimed at reducing builders’ legal liability exposure.
Pricing in Boulder-area real estate continues to show strength in all housing categories, though buyers are becoming more price sensitive, according to Hotard.
“We shouldn’t be overly focused on rising prices. However, we should take steps to diversify the housing stock and provide consumers more choices, whether it is for rent or ownership,” he says.
Some options Hotard suggests that could be helpful in the Boulder Valley markets are rethinking occupancy limits, allowing more accessory dwellings, splitting some lots and building several smaller homes instead of a single larger home, and encouraging mixed-use development in appropriate locations.
In economic news this week, the Federal Reserve made their long-anticipated rate hike, raising interest rates by 25 basis points.
“The increase has by and large already been built into mortgage interest rates, which have pushed a little higher in the last month, but nothing dramatic. They are still historically low,” Hotard says.
Lawrence Yun, chief economist of the National Association of Realtors®, says that an uptick in short-term rates shouldn’t have a big effect on those looking to borrow in 2016. With rates going up by such a small amount, the Fed’s move could serve as a stimulant to the economy, Yun adds.
Looking ahead, Hotard expects 2016 to bring continued strength in Boulder County real estate, though he suggests more caution than some economists. A “headwind” on the economy could modestly slow the growth rate of the gross domestic product and jobs.
“I think we’ll see a good start to the year,” he says.
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