I’m seeing an interesting pattern develop in the Percent of Single Family Homes Under Contract across all of Boulder County. In a typical year, we hit the low point in the seasonal cycle sometime in late summer or early fall and then start moving upwards towards the high point of our seasonal cycle which usually occurs late spring or early summer. Also, in a typical year, we have a small dip in this number right at the first of the year when many listings expire or get re-listed.
This year has been different. We started with the typical rise from last year’s bottom and had our typical New Year’s dip. What’s been unusual is that now, since mid-March, we’ve been wobbling around 65% under contract at a time when we should be going straight up.
Couple of possible explanations for this atypical pattern. Since mid-March, mortgage rates have risen dramatically. Another possibility is that we’re at the very upper end of where this metric has ever been. When you’re flying in thin, rarefied air, stalls are more likely. This is one metric I’ll be keeping a sharp eye on. If it starts dropping instead of wobbling, that would be a signal of a change.
What makes this changing pattern harder to decipher, there are so very few homes for sale right now. As you can see in the chart below, we have never seen such low numbers of homes for sale in the last 17 years I’ve been tracking these numbers. In our most recent “new normal”, 2013-2020, we were seeing around 1,000 single family homes for sale at the end of April. During our last poorer market period, 2005-2011, we were seeing maybe 2,400 homes on the market towards the end of April. At the end of this April, we had 402 homes for sale in Boulder County. Always disconcerting when you run a search and don’t receive any results. Do you have a criterion wrong or is there really nothing for sale?
Anecdotally, I’m hearing the market has decelerated since mid-April, but so far not seeing much confirmation of that in the stats. As always, I’ll keep watching the ebbs and flows in the numbers and the metrics.
Hoping for a wetter May!
This should be the last of my slightly delayed looks at the 2021 market numbers. Here I’ll be looking at the percentage of homes selling for asking price or better and how that metric has trended over time. The data I used for this chart has had any sales concessions deducted from the sales price and is for the ratio of last listed MLS price to sales price, IRES only data for Boulder County. Original listed price is not a downloadable field from IRES and there’s too much data to try and hand scrub through it all and find original listed prices, so I’m stuck using last MLS asking price.
The Boulder County market apparently hasn’t noticed that we remain in the midst of a global pandemic and the strength of the 2021 rebound in this metric is stunning. Of course, any local buyers and their agents are all woefully familiar with this phenomenon. For an annual average of 67.8% of all Single Family properties to sell for over asking price is stunning and higher than we’ve seen since I began tracking this metric back in 1997. Also interesting, for the first time, more Single Family homes are selling for over asking price than Attached homes.
When I pull this over asking price data, I look at the sales price to asking price ratios and how those ratios change depending on how quickly the home goes under contract. As you would expect, the more quickly the home goes under contract, the more likely the sales price was at or over the asking price. The 2021 Single Family numbers were substantially stronger than the 2020 numbers, with almost 62% of the homes going under contract in the 1st week and more homes selling at greater premiums over asking price. Almost 87% of the Single Family homes that went under contract during their first week on the market ended up selling for over the asking price. The over asking price numbers were so strong that I needed to create a new table to show the strength for over 105% over asking price sales.
|2021 Single Family Homes||Week 1||Week 2||Week 3||Week 4||Week 5||Week 6+|
|% of all Sales||61.92%||11.32%||6.43%||4.46%||2.68%||13.20%|
|Asking or better||86.84%||51.36%||42.58%||40.69%||29.89%||41.96%|
|<80% – 95%||1.94%||7.34%||13.88%||10.34%||18.39%||29.84%|
|95% – 97%||1.79%||8.42%||10.53%||15.86%||22.99%||19.11%|
|97% – 99%||4.07%||20.92%||22.49%||22.07%||19.54%||19.81%|
|99% – 100%||5.37%||11.96%||10.53%||11.03%||9.20%||9.09%|
|100% – 102%||23.89%||27.99%||27.27%||27.59%||21.84%||16.08%|
|102% – 105%||16.74%||7.61%||9.57%||5.52%||3.45%||3.73%|
|100% – 105%||40.64%||35.60%||36.84%||33.10%||25.29%||19.81%|
|105% – 110%||21.61%||7.88%||4.31%||5.52%||2.30%||1.63%|
|110% – 115%||14.46%||5.16%||0.96%||0.69%||1.15%||0.23%|
|115% – 120%||6.01%||1.63%||0.00%||0.00%||0.00%||0.23%|
|120% – 125%||2.98%||0.82%||0.48%||0.69%||1.15%||0.00%|
|125% – 130%||0.65%||0.00%||0.00%||0.69%||0.00%||0.00%|
|130% – 135%||0.25%||0.00%||0.00%||0.00%||0.00%||0.00%|
I also take this same data and plot it in separate colors denoting the week in which the property went under contract. This was another chart that had such strength that I had to change the scale on the horizontal axis. I used to end this chart at 120% or greater over asking price but I was getting a misleading spike there with my old axis. Now I go out to 135% or greater over asking. The blue spike has lost much of its height compared to 2021, but has made up for it with much more mass to the right with solid sales numbers, over 50 sales, all the way out to 113% over asking price. Also amazing, no matter what week the home went under contract, the most common outcome was an at asking price sale. In prior years, in weeks 2 and beyond we would see the largest number of sales in the below asking price range.
Now, let’s look at these same stats for Attached Homes. Just a touch softer than the Single Family home data, but a very strong year with almost half of the Attached Homes going under contract in the first week and of those homes, almost 84% selling for asking price or better. The strength over asking price didn’t extend as far above asking price as it did for Single Family homes though and I probably could have kept my original horizontal scale and ended the table and chart at 120% or greater over asking price.
|2021 Attached Homes||Week 1||Week 2||Week 3||Week 4||Week 5||Week 6+|
|% of all Sales||49.75%||11.61%||6.86%||4.39%||5.02%||22.36%|
|Asking or better||83.93%||57.93%||46.39%||37.10%||47.89%||38.61%|
|<80% – 95%||0.28%||2.44%||4.12%||3.23%||1.41%||6.96%|
|95% – 97%||1.14%||5.49%||0.00%||11.29%||5.63%||9.49%|
|97% – 99%||3.27%||10.98%||14.43%||20.97%||21.13%||21.20%|
|99% – 100%||4.84%||12.20%||24.74%||14.52%||16.90%||13.92%|
|100% – 102%||35.56%||43.29%||38.14%||29.03%||42.25%||39.56%|
|102% – 105%||26.03%||11.59%||10.31%||16.13%||5.63%||5.70%|
|100% – 105%||61.59%||54.88%||48.45%||45.16%||47.89%||45.25%|
|105% – 110%||18.78%||10.37%||3.09%||1.61%||2.82%||1.58%|
|110% – 115%||7.11%||1.83%||4.12%||0.00%||2.82%||1.58%|
|115% – 120%||2.13%||0.00%||0.00%||0.00%||0.00%||0.00%|
|120% – 125%||0.43%||1.83%||1.03%||1.61%||1.41%||0.00%|
|125% – 130%||0.28%||0.00%||0.00%||1.61%||0.00%||0.00%|
|130% – 135%||0.14%||0.00%||0.00%||0.00%||0.00%||0.00%|
Here again is the plot of the above data. The blue spike in the 1st week being more dominant and extending further to the right than the 2020 chart. Same pattern as in the Single Family chart, the highest number of sales in every week was at asking price.
While the strength of the 2021 market was stunning, the strength we’ve been experiencing so far in 2022 is even more surprising with the locally impactful Marshall Fire, rising interest rates and a Russian war further disrupting international markets and supply chains. Someday, hopefully soon, I want to be writing about a boring market! Be well everyone.
Mike Malec – RE/MAX of Boulder, Inc. – 303-588-5716
Time to take a look back at the 2021 sales numbers for the Boulder County real estate market. As is usual, these stats are IRES data only and may miss sales only attributed in REColorado and any sales not reported to the MLS system such as some new home construction sales, for sale by owner, off market sales, etc. Due to the duplication problems between the MLS systems, I am not including any REColorado data and remain hopeful that someday we’ll be able to reliably include that data.
An interesting drop in sales in 2021. A year that saw an incredibly frenzied market, but a distinct lack of sellers. That lack of product to sell, did result in over 400 fewer single family home sales in Boulder County. Attached homes logged an extra 13 sales from the year before. Last year I was watching a tick up in years-end sales numbers during COVID and thought that may have been the start of a new upward trend and the drop in sales squashed that notion. We’re still wobbling around 4,600 total annual sales and have been since 2012. Sales so far in 2022 are below the 2021 numbers, so maybe this year is the confirmation of a downward trend in sales or maybe just more wobbling? We’ll keep watch on this as the year progresses.
Sales may be down as we start 2022 due to the fact there is very little to sell. As you can see in the chart below, we’ve hit new historic lows in the number of homes available for sale and not under contract. This remains the metric I watch most closely. If we see this number start to climb, that would mean we have worked through the buyer demand out in the marketplace. From what I have seen and heard so far in the first two months of 2022, that isn’t happening yet! With all of the cash buyers competing over properties, I’m not sure the increased mortgage rates are going to provide much drag. Hard to believe that in 2022, the ongoing COVID global pandemic is down the list of top worries for our market. Mortgage rates and Marshall Fire effects seem to be playing larger roles so far in 2022.
More 2021 stats review next month. The percent of homes that sold for over asking was staggering and yet that appears to being outdone by this year’s activity. Lately the local real estate market has seemed to say, “You thought that was crazy, here, hold my beer!” We’re all waiting and watching for the next development that we never thought we’d see. Be well everyone.
One of the dilemmas with writing an article a week or so before publication is that you can say things or use a jocular tone that later on becomes painful to read due to intervening events. Last month’s article was one of those for me due to the Marshall Fire happening after I sent my article to BOLO and you reading that article in mid-January. I lost my home in the fire and feel for everyone else that has lost their home as well as everyone that has homes still standing but damaged in the fire. For this article, I want to briefly touch on the real estate market effects I expect to see from the fire. We’ll get to looking at year end 2021 facts and figures in future issues.
To me, the first overall effect is that we had around 1,100 homes removed from the roll of homes in Boulder County for the next 2-4 years with an unknown additional number of homes temporarily removed due to fire damage or smoke impacts (I’ve heard estimates ranging from 150 to 600 damaged homes). Let’s call this 1,500 households, with multiple people per household, with an immediate need for replacement housing. This new group of tenants has had a major impact on the rental market, absorbing most available rental properties, Airbnb’s, VRBO’s and hotel rooms within a 30-minute commute and the majority of these people will be in those rentals for the next 2-3 years. Rental lease rates will rise and vacancy rates will remain very low. We may see people who initially travelled further away to find a replacement home try to make it back closer as the rental market opens up more in the summer. Hopefully the isolated cases of rental price gouging are prosecuted and remain a small aberration in the market.
The resale market effects of the fire break down along the lines of three groups that I think exist amongst people directly affected by the fire. The first group is, I believe, a relatively small group. These people have the personal or familial financial resources available that allow them to immediately go buy a replacement home to move into while their burned/damaged home is rebuilt/repaired. This group is already having an impact on our showing traffic and added an extra boost of buyer demand to an already competitive, very low, available inventory start of the year. I would expect the impact of this group to be a relatively short-term impact that maybe lasts through summer 2022.
The second group, of which I am a member, is the largest group. We lost our homes or have heavy damage and are mired in the middle of a long process of insurance compensation and eventual rebuild, remodel, and/or repair. Being a member of this group, I can personally say that this group has very little idea of what we are doing for the immediate future. We’re just starting to figure out what insurance proceeds we’ll receive and how far those proceeds will go towards our recovery process. Whether we eventually move back into our recovered homes or decide to sell them, the impact to the market is at best, 24 – 36 months away from today.
The third group, which I fervently hope is very small, contains people that will not be able to recover from this fire financially or emotionally. This group will be taking the pitifully small insurance payouts being offered, opting not to rebuild and walking away with losses in the hundreds of thousands of dollars. Some members of this group will have such small payouts that they will not be able to pay off their mortgages and bankruptcy/foreclosure will be their sole relief. Eventually the properties of this hopefully small group will be sold as vacant lots which will be rebuilt upon. A really good developer, with existing plans and a network of sub-contractors, may be able to have a finished home to add to our market as available inventory 18-24 months from now.
So, my thinking is that we’ll see tight rental market conditions for the foreseeable future. We’ll see a short-term boost to the resale market and then longer-term effects almost two years out where maybe we start seeing new, rebuilt homes adding to our inventory levels above and beyond other market trends.
Stay strong everyone. Our area has a long road ahead with insurance and rebuilding issues but we will come out the other side stronger and better!
Welcome to 2022! Hopefully a more normal year in all regards, but we’ll see. I’m writing this the last week of 2021, so no finalized data yet for last year.
Let’s take a quick peek at the 2021 data for single family homes in Boulder County compared to the previous year.
This data isn’t final, but safe to say were not going to make huge strides in matching the 2020 numbers during the last 5 days of the year. Single family sales down just over 11% and available single-family inventory down over 58%. I’ll be analyzing all of the finalized year end stats in future articles, and as usual, really digging into the differences that made 2021 unique. One of the things I’ll be looking forward to in 2022 is to not have huge blips in my data and charts from the 2020 COVID shutdown. Hopefully we’ve moved past that and won’t see it again.
And to say goodbye to 2021, I present you with a recent comic that made me laugh out loud from xkcd, a must visit for fellow stat nerds and quants.
Hope everyone had a wonderful holiday season and is off to a great start in 2022!
FHFA released their numbers for their House Price Index for the Third Quarter of 2021 and there were many interesting nuggets.
From the most recent HPI report: U.S. house prices rose 18.5 percent from the third quarter of 2020 to the third quarter of 2021 according to the Federal Housing Finance Agency House Price Index (FHFA HPI®). House prices were up 4.2 percent compared to the second quarter of 2021. FHFA’s seasonally adjusted monthly index for September was up 0.9 percent from August.
“House price appreciation reached its highest historical level in the quarterly series,” said William Doerner, Ph.D., Supervisory Economist in FHFA’s Division of Research and Statistics. “Compared to a year ago, annual gains have increased in every state and metro area. Real estate prices have risen exceptionally fast, but market momentum peaked in July as month-over-month gains have moderated.”
- Housing markets have experienced positive annual appreciation since the start of 2012.
- House prices rose in all 50 states and the District of Columbia between the third quarters of 2020 and 2021. The five states with the highest annual appreciation: 1) Idaho 35.8 percent; 2) Utah 30.3 percent; 3) Arizona 27.7 percent; 4) Montana 26.0 percent; and 5) Florida 24.8 percent. The areas showing the lowest annual appreciation: 1) District of Columbia 8.0 percent; 2) North Dakota 10.5 percent; 3) Louisiana 10.9 percent; 4) Maryland 12.5 percent; and 5) Iowa 13.0 percent.
- House prices rose in all of the top 100 largest metropolitan areas over the last four quarters. Annual price increases were greatest in Boise City, ID, where prices increased by 37.3 percent. Prices were weakest in Philadelphia, PA (MSAD), where they increased by 9.9 percent.
- Of the nine census divisions, the Mountain division recorded the strongest four quarter appreciation, posting a 25.0 percent gain between the third quarters of 2020 and 2021 and a 5.8 percent increase in the third quarter of 2021. Annual house price appreciation was weakest in the West North Central division, where prices rose by 14.8 percent between the third quarters of 2020 and 2021.
Trends in the Top 100 Metropolitan Statistical Areas are available in our interactive dashboard: https://www.fhfa.gov/DataTools/Tools/Pages/FHFA-HPI-Top-100-Metro-Area-Rankings.aspx. The first tab displays rankings while the second tab offers charts.
Here’s a look at how these numbers played out for the MSA’s in Colorado compared to the 257 other MSA’s across the country and how Colorado compared to the other states plus the District of Columbia. Boulder County has lost its top dog spot for annual appreciation since 1991 a couple of reports ago and continues to fall. Interestingly, Boulder County has reversed the trend of being out-performed by the Metro Denver MSA but is now being beaten by the MSAs in S. Colorado.
Here is a graph comparing the annual appreciation rates for the Boulder MSA (all of Boulder County), the Denver MSA (the City and County of Denver, Arapahoe County, Jefferson County, Adams County, Douglas County, the City and County of Broomfield, Elbert County, Park County, Clear Creek County, and Gilpin County) and the US. Quite the spike in the last two quarters of data!
The national map, color coded by appreciation over the preceding 12 months.
Be healthy everyone and finish 2021 strong!
I wanted to give an update on a statistical trend I started to notice last year. The high percentage of the homes available in the Boulder County market that are condos. When I first charted this percentage last fall, condos made up just over 30% of our active inventory. As you can see below, that percentage spiked all the way to just over 37% at the end of last year. At that level, I think we’d need to decipher what had changed in our market. Luckily, I don’t have to decipher that market move as the percentage has fallen ever since and we are down to 27% last month, within the range of long-term normality.
When we see an anomalous movement in a metric like that, I used to always want to know why. The longer I’ve analyzed our market, the more I’ve come to the conclusion that sometimes there are just weird market movements that don’t have any easily explainable causation. Theories I’ve heard, but don’t wholeheartedly agree with, COVID effects, downturn starting with condos, changing market preferences, and not enough single family homes being listed. When there isn’t an easily identifiable cause to a market movement, the most likely cause is probably some very complex combination of the above and other unknown factors. Ultimately, that is what makes real estate different than fungible commodities. An investor or buyer doesn’t care what specific share of IBM stock, they receive, they’re all the same. Real estate though is very specific. Buyers/investors do care about very small, sometimes not easily identifiable differences between property A or property B. Some buyers also will care about a specific attribute of a property while other buyers will disregard that attribute as irrelevant. These tiny differences can lead one home, property type or market area, to far outpace another home, property type or market area. All part of what makes the real estate market so interesting.
Be healthy as we head into the end of year holiday season!
We’re seeing an interesting development in the chart of the Percent of the Single Family Homes that are Under Contract in Boulder County. Every fall, that percentage reaches the bottom of its drop from the summer peak and rebounds, usually climbing through to next summer’s peak. There can be an anomaly each year in January where we see a blip due to the number of listings that expire at year’s end. This year, the overall percentage has been dropping since the end of May and bottomed mid-August. That is an earlier bottom than we’ve seen in most years. I don’t see any consistent trends in this metric when the rebound happens earlier in the year or later.
If this upward change in the data holds through the winter, that indicates to me that next spring should be active. If we see this upward trend reverse before the end of the year, that would indicate to me a less robust spring market. As always, I’ll be watching the numbers and keeping you in the loop of what I see and where I think we’re headed.
Hope everyone has a wonderful Fall!
The question I hear everyone debating right now is when will the “Summer Slump” end or if it already has. Interestingly, I am no longer hearing if the “Summer Slump” will end. Brokers and sellers are debating if the recent upswing in market activity is real or just a couple of atypical data points. So far, it’s fairly hard to point to anything in the metrics I track to come up with a definitive answer.
Looking at the interplay of the number of single family homes Under Contract and Available doesn’t yet show a definitive change, but you can maybe imagine an uptick in UC numbers and a downtick in Available numbers in the last week in the chart below. We would want confirmation of those ticks with another 2-3 weeks of data before feeling comfortable declaring a change. This chart also shows how atypical this year has been when compared to past seasonal patterns, especially in the Available homes line which is 2.5 times lower than the five year average. There really are not many homes out there for sale!
The next chart shows the last 12 years of the Single Family # Available lines instead of showing the five year average. When you look at that mass of data, it is comforting how steady and predictable our market usually is. There are changes in the amplitude of the peaks and valleys, but the general seasonal pattern of how inventory builds in our market is remarkably consistent. Until that is we go through a global pandemic! Here’s to hoping we truly have returned to our predictable seasonal patterns.
If we have returned to “normal” seasonality, the typical fall pattern calls for modest improvement in market activity through mid-November. I think whether or not we see that pattern this fall will tell us a lot about what next spring will look like. If this fall follows the typical seasonal pattern, I would expect next spring to follow the typical frenzied spring seasonal pattern. If this fall is slower than expected however, that could signal a slower spring 2022.
I frequently will feel something in the market and then look to the stats to see if my feeling is confirmed with hard numbers. Lately, it has felt like I’m seeing a lot more price reductions as sellers try to navigate the “summer slump”. Luckily for a little over two years now, I’ve been tracking the New Listings, the Price Changed Listings, the Back on Market Listings, the Sold Listings and the Off-Market Listings for all of the Boulder County properties in IRES.
So, did the feeling of seeing more price reductions show in the data? Yes and a dramatic change in the trend as you can see in the chart below. Price reductions had been very low since December 2020 and then this June, the number of listings with price changes more than doubled and now just over 13% of all Active listings are having a price reduction. If we look back to 2019 as a “normal” year, these higher 2021 numbers are below the gross number of the 2019 price reductions, but due to our much lower Active 2021 Inventory, a higher percentage of properties than at this time of the year in 2019.
Another sign of the summer slump, our Percentage of Single Family Homes in Boulder County that are under contract continues to fall. As you can see in the chart below, many years we have a fall bounce in the UC % and we’ll be watching to see if we get that bounce this year as we exit the “summer slump”. I think how the remainder of this year plays out will tell us a lot about how early 2022 will play out. If we have the typical fall bump, I expect early 2022 to be very active, if instead we just watch market activity decelerate through New Year’s, I could see early 2022 being much slower than the past several years.
Still hearing of lots of people – buyers, sellers and brokers – tell me they are out of town on summer travel, which I believe is a big contributor to this summer’s slump. We’ll be watching to see how that activity resumes this fall when we all get back to work and school.