RE Conference: Residential, commercial brokers expect robust 2022
BOULDER — Whether it’s residential or commercial, industry experts expect that tailwinds will outperform headwinds in the coming year.
Todd Gullette, managing broker of Re/Max of Boulder; Lynda Gibbons, president of Gibbons-White Inc. commercial realty; and Gregory Glass, senior broker associate with Gibbons-White, delivered the forecasts at the annual BizWest Boulder Valley Real Estate Conference Thursday at the University of Colorado Stadium Club.
Residential
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The residential market in the Boulder Valley — and Colorado as a whole — has been characterized by rapid appreciation, according to Federal Housing Finance Agency statistics shared by Gullette. While Idaho leads the nation with 37.6% appreciation in one year, Colorado ranked 12th with 20.13% appreciation. Among the states, even at the bottom end of the scale, Alaska saw housing prices increase 8% over the past year.
The Boulder market has consistently led appreciation numbers since 1991 but fell to No. 2 this year with appreciation since 1991 at 478%, Gullette said.
“We do peaks and plateaus in this market over the past 30 years, not peaks and valleys,” Gullette said. “My opinion is that it’s inventory [that’s driving the appreciation.] The demand is overwhelming with little inventory,” he said.
The market is dominated by sellers, he said, meaning that buyer offers based on contingencies are not faring well. He said more bridge-loan products may help buyers secure the properties that they want.
Gullette predicted that buyers will see “some interest-rate creep, but we think that will continue to be slow.”
He does not expect the inventory to increase any time soon, and certainly not by spring, which traditionally has been the start of the peak home buying season.
A few specific benchmark numbers:
The median single-family home price in Boulder County was $817,000 in September, up 30% from a year ago. “2020 was a rockin’ year; our numbers have improved even since then,” Gullette said.
The county had 485 active listings in September, down 30.2% from a year prior.
The city of Boulder median home price in September was $1.325 million, up 33.2% from a year ago.
Most communities in the county saw similar percentage increases in median prices, although Superior’s median for single-family homes was $976,700, up 45.8% from the year prior.
Commercial
In the commercial forecast, Glass said that the commercial market has seen great upheavals since the start of the pandemic, but has come through it with in some cases record numbers.
“In one month, April 2020, we lost 20 million jobs [in the nation], all the jobs created since the Great Recession,” Glass said. Normally, industry observers would expect downturns.
The industry experienced a brief slowdown, but it didn’t last.
In the nine months so far this year, $100 billion in commercial loans have been issued, he said, which is equivalent to 2007. In Boulder County, commercial sales have totaled $1.8 billion in the first nine months of 2021, or $2.1 billion in the past 12 months.
Gibbons reviewed a lengthy list of notable commercial development or redevelopment projects, including the Diagonal Plaza workforce housing project; the conversion of the Macy’s retail store to 150,000 square feet of office space; expansion of Ball Aerospace in all three of its Colorado locations including Boulder, Broomfield and Westminster; $624 million in new research funding at the University of Colorado, which has resulted in expansion of lab space; and continued development of a large CU conference and events center coupled with a hotel.
The forced shutdown of offices and retail establishments early in the pandemic has resulted in increased vacancy rates in those sectors, but the gap is closing, Glass said. Lafayette, Louisville and Longmont have seen lower vacancy rates than the rest of the county, he said.
“The basic terms of employment are undergoing a reset” with many workers readjusting their work/life balance, Glass said. “But for many of us, the office is the last physical connection we have left, so we believe there will be a slow and steady return to the office,” he predicted.
The hottest segment of the commercial market is in the industrial realm. “Industrial flex is the crown jewel of product types. Vacancy rates are lower than 2019 across the board, except Longmont,” Glass said.
Gibbons said that life-science uses are driving much of the industrial flex segment in Boulder County.
On the retail segment, “We’re happy to report [that] new retailers have opened in the market. Instead of retail in the toilet, we see a lasting retail rebirth. Not for everyone, but some have developed resilience. Restaurants could be rebounding faster if they could find some workers,” she said.
As for 2022, “We believe the tailwinds will outpace the headwinds.” Then, she quipped, “This happens even in light of the local [city of Boulder] planning department. We know they left the office [during the pandemic] and then they simply vaporized. We hope they come back.”
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