Though sales, prices improve in May, they fail to meet expectations

Posted by DB Wilson on Tuesday, July 12th, 2011 at 2:17pm.

Although the Boulder County real estate market statistics showed month-over-month improvement in May, they weren’t what was expected or hoped for at the start of the buying season.

Boulder markets saw 299 single-family homes and 99 condominiums/townhomes sell in May, compared with 257 and 75, respectively, in April. And the month’s sales were slightly higher than those of the last home buyer tax incentive-free year, 2009, when 249 single-family homes and 96 condo/townhomes sold.

In May 2010, when first-time and move-up home buyers were drawn into the market by tax incentives closing on their new mortgage loans, 362 single-family homes and 134 condos/townhomes in the Boulder-area market sold.

“We did increase month over month, which really is a positive sign,” says Ken Hotard, senior vice president of the Boulder Area Realtor Association. “We continue to lag behind the tax-incentivized 2010 period, but we are still seeing gains over 2009 numbers, which are more reflective of natural market conditions.”

Hotard says the market is improving “slowly but surely” with modest gains in job growth statewide, including as many as 2,000 construction jobs added in May signaling improvement in new construction activity.

And while other parts of the nation that experienced big price and sales declines are now undergoing “serious market corrections,” the Boulder area markets have shown bump ups in both sales and prices over the last four months, he says.

“While we’re not immune to the economic pressures across the country, we’re much more stable than most areas,” Hotard says. “That tells me that reading the national headlines doesn’t give you a good picture of what your local market is doing. Local statistics continue to show Boulder area markets are healthy relative to most other U.S. markets.”

Every Boulder market community showed increases in both average and median sales price of single-family homes in May with the exception of the city of Boulder, which saw only a 0.9 percent decrease in single-family average sales price, though its median price jumped 1.9 percent. Townhome/condo prices, however, continued to struggle, with average and median prices falling or remaining the same in the majority of Boulder-area markets.

The downside to May’s statistics is that the job growth is not as robust as needed to move the market forward and credit remains tight, keeping many qualified borrowers – especially first-time buyers who are unable to come up with the big down payments necessary to buy a home – out of the market, Hotard says. These factors are resulting in lower-than-expected and hoped-for sales at the start of what is generally known as the home-buying season.

“Most of the problem here is the uncertainty that is in consumers’ minds,” he says. “If we could finalize the mortgage financing rules and regulations and people knew what they were, I think we’d see buyers who are able and willing to adjust respond to those new requirements to make their home ownership dreams come true.”

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