In the first five months of 2016, the average sale price of a single-family home in the city of Boulder was $1,018,458, according to data collected from IRES. This is a new high-water mark for Boulder1 and raises important questions for the city’s future.
There are myriad reasons that home prices have risen so high in Boulder, but the bottom line is that there is an imbalance between supply and demand, with far more people wanting to live here than there is housing to support them.
On the demand side, Boulder is well known for providing an unmatched quality of life with plentiful jobs and a highly educated workforce. These forces driving demand seem to only be getting stronger. On the other side, however, many of the features that provide the high quality of life — thousands of acres of open space, restrictive growth and zoning policies, building height restrictions, etc. — are the same ones that artificially restrict the supply of housing and thus drive prices up.
Real estate prices are cyclical, and tend to rise in the first half of the year before subsiding somewhat with the approach of fall and winter, so the historical trends suggest that the average price may fall back below $1 million at some point before the end of 2016. That said, however, the more general trend of rising home prices in the city of Boulder is likely to continue and average prices are likely to be even higher a year from now.
Breaking $1 million is a significant milestone for Boulder property, and not necessarily a good one.
First, the good news. For current Boulder homeowners, this likely means that you have enjoyed hefty home-price appreciation if you have owned your home for any significant length of time. If you have a mortgage, now may be an ideal time to refinance, especially since the Brexit turmoil has resulted in even lower mortgage rates. The next year also likely is a great time to sell your home and capture all of that appreciation.
The bad news, however, comes if you would like to stay in Boulder and join the ranks of buyers looking to purchase a home here. For buyers, lack of affordability and inventory are two major obstacles. Unless something is done to address these issues, things likely will only become more challenging as demand for Boulder housing does not appear to be diminishing.
My current advice for buyers remains the same: Get into the market as soon as you can, if you can.
It appears the robust demand for housing in Boulder will continue unabated, so unless steps are taken to address the issues related to lack of supply, Boulder home prices likely will continue diverging from affordability. While some supply-side obstacles such as Colorado’s condo-construction defects law may not be adequately addressed at the local level, others could be ameliorated locally in ways that preserve Boulder’s charm, character and livability while creating abundant housing and sustainable infill.
As we acknowledge an impressive milestone in Boulder housing prices, perhaps it also is time for more conversations such as the ones that took place in Boulder at the country’s first-ever YIMBY conference in June (see yimbytown.com for more on this).
Jay Kalinski is broker/owner of Re/Max of Boulder. He can be reached at email@example.com.