The final numbers are in for 2015 and I thought for this month, I’d review how last year went and make some forecasts for 2016. To start, here are ten vital stats I keep my eye on throughout the year for single family homes. .
The first comment I would make about this chart is that every change except one benefitted the sellers with increased price appreciation. 2015 was a great year to be a seller and a challenging year to be a buyer.
The first entry defined our market last year and I expect will define the market in 2016 as well. We have an amazingly small number of homes actively for sale on the market. The good homes that do come onto the market are absorbed almost instantly and the available listing number stays doggedly tight. As we’ve discussed here, with ever decreasing buildable land in Boulder County, I don’t see this low supply issue changing dramatically in the near future.
The number of listings sold increased in 2015 showing stronger demand which, coupled with the very low supply, led to our strong price appreciation. Many people have asked me if we’re starting to experience a bubble. The less than 9% uptick in sales tells me we aren’t. If sales we’re dramatically increasing, I would be much more concerned about a bubble. This level of sales increase isn’t enough to absorb the population change for the area and with our relative lack of new building, we’re still seeing more in-migration than sales.
The Average and Median Sales Price are up 10.1% and 8.9% respectively. Good strong appreciation that quickly makes home buyers safe in their new homes even if they have to sell quickly. In one year, you’ve appreciated enough to absorb transaction costs and still gain some equity. Because of this, foreclosure levels in Boulder County are near to all-time lows.
Average Sales Price to List Price ratio also increased last year to 99.2%. We never see this ratio drop too low as this is a measure of last MLS price to sales price, but I’ve seen it as low as 96% during some of our downturns. If this was a measure of first listed price to sales price, we would see this ratio vary much more during periods of differing market strength.
Average Market Time dropped to 33 days in 2015, a 19.5% improvement over 2014. This number is the number of days till an offer is received and can be affected by new construction homes that sometimes are in the MLS for the construction period before they are marked as under contract. In my experience, many homes are going under contract in the first week of being on the market.
Number of Expired Listings improved by 2.3% to only 129 homes that didn’t sell in 2015. This number surprises many sellers who think that every home sells the first weekend. Even in strong 2015, we did have some homes that wouldn’t sell. Homes still have to be priced well and in good condition even in this strong market. Homes that are overpriced or need major remodeling can sit on the market and possibly not sell.
The stats gurus at NAR tell us that 5-7 months of inventory represents a balanced market where neither the buyers nor the sellers are in control. The 1.88 months of supply we currently have in Boulder County puts us strongly into the seller’s market territory. Amazingly, in some of the attached dwelling markets, the months of supply numbers are less than a month.
With 42.2 % of the homes on the market under contract as of Jan. 7th, 2016 has started strongly, even more strongly than 2015 did. With this level of properties already under contract and our low supply numbers, buyers should expect to continue to see multiple offer situations with buyers competing for properties.
All of these numbers are averages for all of Boulder County. There are some areas and price points doing much better and some that aren’t performing as strongly. Generally, the areas closer to Boulder and in the lower price points are experiencing the strongest market conditions.
The one line on this chart that possibly could be interpreted as a threat to the market strength and price appreciation is the mortgage rate comparison. At the start of the year, mortgage rates had bumped up a touch from the start of 2015. The expectation is that rates should continue to rise this year. To everyone’s surprise and consternation, so far they have actually dropped. With a very complicated global economy, many forecasters and the Fed can’t quite agree on where rates are headed, but many experts think we could see 5% this year. I hope everyone has a great 2016