Boulder County Real Estate Market Update Part 3
In the previous two articles we evaluated the incredible demand in the Boulder County real estate market and what that means to home sellers – green grass! For the second article in our series the perspective of the home buyers was considered, which was much more bleak. The grass from a home buyer’s perspective was shown to be full of brown spots and not much green at all. The reason for such an imbalance between buyer and seller is available inventory. The Denver Post mentioned that during the last housing boom, at the year’s end there were 23,000 homes left for buyers to choose from. Over a 25 year average there were 13,430 homes left at the end of the year throughout Denver for a Buyer to consider. This past year there were only 4,400 homes available at years end, which represents a 67% decrease in available inventory!
This leaves many people asking why inventory is at such record lows. There are many factors at play, but the primary reasons include the inability of new home builders to keep up with demand, the increased population due to net migration as well as homeowners staying in their homes longer than ever. All of those factors play into the lack of available homes to purchase.
The first reason that inventory is so tight includes the lack of new construction. I realize that it feels like everywhere you look people are building new homes. However, it’s important to remember what happened in 2009-2011 when new housing fell with the economy. Builders were going out of business and nothing new was coming to the market. If builders were going to build enough during the downturn to simply keep up with population increases, they would need to construct $1.5 million annually across the nation. However, they stopped building. From the chart below it is apparent that the builders have come back and are starting to build again, but at this rate they are not even touching where we were in 2005 or where we need to be today.
Considering population increases, there are more people moving to Colorado than almost any other state. The Colorado Department of Local Affairs reports that Colorado is second in the nation for net migration. People think that maybe it’s the marijuana industry. The Colorado Department of Labor & Employment confirms that the largest industries providing new jobs are oil and gas companies first and professional, scientific and technical services second.
According to the data tables below from Colorado’s Department of Local Affairs, population has been increasing in Boulder County due to net migration, or people coming to our area. On average over 3000 new residents more to Boulder County annually. The first chart below shows the projected population increase into Boulder from 2010-2040. The second chart shows how much is natural population increases such as the birth of children (in orange) and breaks out the net migration to our community (in blue).
We are not going to be able to stop these people at the gates! It’s time that we start asking ourselves where everyone is going to live. I’m afraid that if Boulder County doesn’t step up and construct new homes that we will force the new residents to live in places like Brighton, thereby increasing their commute times and the carbon footprint of our community. If we make room by constructing new homes that everyone can afford, we can decrease commute times and the communities’ dependency on fossil fuels. Plus, new residents in our communities adds to the tax base for our cities thereby improving our ability to improve schools and provide services. But that is a discussion for another time!
So far we have reviewed two reasons that inventory is so low including builders not keeping up with demand and the increase in net migration to our state. There is a third reason that is being discovered; homeowners are staying in their residences longer than ever before. According to the National Association of REALTORS (NAR) Chief Economist, Lawrence Yun, PhD. how long homeowners occupy their homes is changing. In the past, NAR found that homeowners stayed in their homes for approximately 6 years before moving onto new residences. However, in 2014 that statistic changed to being 10 years on average. Sellers are staying in their homes longer than ever. Especially in the Boulder real estate market, it would seem that potential sellers are afraid they won’t find another home to move into after their home sells.
So when someone outside of the Boulder real estate market looks in thinking that the grass is greener and everything is coming up daisies, it’s probably because they are already an existing homeowner. From the eyes of a real estate professional the market was brutal in 2008 because there were no home buyers. Now in 2016 there are no home sellers. REALTORS throughout Boulder County are working harder than ever to help their homebuyers achieve the goal of homeownership. Hopeful homeowners who are trying to purchase in our area are being forced to bid for homes like its eBay, which is a scarey feeling. Then when the bidding is up there are always plenty of buyers who didn’t win, which is the most heartbreaking feeling of all. So the perceived green grassy meadow in the real estate market is less of a walk in the park and more like a warzone.
In our next article we will discuss the tribulations of the seller in this market. It’s true that the sellers are even seeing their share of trials as the buyers enter the transaction to buy a house with cold feet. I’m saying that even for sellers, whose grass is green and lush, there are still brown spots that they should prepare for.
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Click to learn about Leanne Goff. She has been a Boulder County REALTOR since 2007. Her priority is to help Sellers achieve the highest return on their investments in a timely manner.
Donation made to Douglass Elementary PTO The sellers of 11715 Helena St in Commerce City, Colorado understand the importance of the help from parents in a child's education. Because of this they used their non-profit donation for the Douglass Elementary PTO. As...
Just Sold by Leanne Goff and Drew Smith in Commerce City Leanne Goff and Drew Smith recently sold for their clients 11715 Helena St in Commerce City, Colorado. This 5 bedroom 4 bath home has soaring ceilings in the living room and wide open spaces throughout the main...