In 2020, hopes were high for a much brighter 2021. But from the continuing impacts of COVID to the devastating loss of 10 of our cherished community members in a horrific act of senseless violence, 2021 has offered little respite from the trials and tribulations of 2020. And yet our resilient community will continue to endure and overcome. People still need a place to live, and owning one’s home continues to play an integral part in the fulfillment of the American Dream. What follows is an overview of our current market conditions, followed by frank advice to buyers looking to buy a home this year, speaking from experience in the trenches, in hopes that it will help you own your piece of the ever-more-elusive American Dream.
The current landscape
If you are in the market to buy a home, you have likely come to realize that inventory is extremely scarce and the competition is simply brutal at almost all price ranges. On the supply side, our stock of available homes for sale in the Boulder Valley is the lowest it has been since tracking began. At the time of this writing, only 400 single family homes were for sale in all of Boulder County — and of those only 148 (or 37%) were not already under contract (for a population of about 330,000 people!).
On the other side of the equation, the demand is far surpassing the supply of available homes. There are numerous reasons for this, but some of the most prominent are (1) that rates are still near historic lows (often below the traditional rate of inflation) so more people can afford more home than ever before; (2) a far larger percentage of the population is able to work remotely, with people no longer needing to live near their office, and what better place to live than Boulder?; and (3) people are expecting to spend more time at home, and the Boulder Valley offers larger homes with more land than many more urban areas.
The result of this severe mismatch between supply and demand has resulted in many properties receiving multiple offers. In fact, we are routinely seeing well-priced, desirable homes selling 10-to-20% (or more) above their asking prices. Surprisingly, we are observing this phenomenon not just in the “affordable” sub-$500,000 market, but also for homes priced well into the millions of dollars. As one might imagine, this is presenting an enormous challenge for would-be buyers who are dealing with the serious fatigue of writing strong, often above-asking offers on home after home only to lose out to someone willing to pay even more. This is also creating a challenge for appraisers who are asked to justify homes selling for tens (or hundreds) of thousands of dollars above previous sales.
If you are a buyer in this situation, it might be tempting to hit the pause button and wait for prices to fall before resuming your search. In some parts of the country, that could very well be sound advice. In the Boulder Valley, however, I would caution you against giving into that temptation if you are serious about owning a home here. Why? Because unlike other parts of the country, prices are unlikely to “come back down,” but rather are likely to continue to appreciate into the foreseeable future. Why? Many, many reasons. First, the Boulder Valley continues to enjoy one of the highest qualities of life anywhere in the world and people continue to want to live here. Second, we have far more jobs — in more diverse industries — than other comparably-sized cities, which continue to draw people to our area. Third, Boulder County is edging ever closer to build-out, the point at which no more homes will be able to be built here (absent regulatory changes). The inability to build more homes makes the ones already here all the more valuable. Truthfully, there are many more reasons, but the foregoing are sufficient to likely ensure continued appreciation of our housing stock.
As a prospective buyer, then, what are you to do? Don’t give up. Here are a couple of things you can do. First, you can adjust your price search, starting on lower-priced homes knowing that they will be bid higher. You may not get every feature you want, but you will be a homeowner enjoying appreciation and equity-building. Second, you can look for ways to sweeten your offer. There are many ways to do this, such as waiving certain contract rights, increasing your earnest money or down payment, or finding a way to make an all-cash offer (if you don’t have a rich uncle, there are loan companies, including some innovative startups, that specialize in this). The best way to navigate this is to work with a qualified Realtor who can advise you on your particular situation. Good luck!
Oh, and if you are a homeowner reading this and considering selling, this is definitely the year to do it!
Jay Kalinski is owner of ReMax of Boulder and ReMax Elevate.