If you’ve been following the real estate market in Boulder County, you know the market has seen large upward swings in the past 10 years with regards to home prices. Demand is high and supply is low making it a seller’s market. Although you cannot predict the future, several indicators tell us that the movement might be plateauing slightly. If you are a buyer or a potential buyer in this market, here are a few things worth considering.
Interest rates may rise modestly
Lawrence Yun, the chief economist for the National Association of Realtors, is predicting that rates will increase to 4.5 percent by the end of 2018, which is about 0.5 percent higher than current rates. This figure could be coming from by tax reform, the country’s economic performance, and other political factors. Whatever the reason, a slight rate increase to 4.5 percent is likely to be in the ballpark.
Translation: While appreciation rates and inventory are starting to move into buyers’ favor, there will be a cost to waiting to enter the market in terms of affordability. The longer you wait, the more you will likely pay for a home and the more interest you will likely pay for it.
Inventory may increase slightly
Since 2011, the inventory of available homes on the market has generally gone down when you compare the total to the previous year. That trend broke in 2017, with available inventory of both single family and attached homes rising above 2016 numbers.
Translation: For buyers, you may have more homes to choose from in your search. For sellers, you may have to be more careful when pricing your home to avoid being rejected by the market.
Prices will continue to increase but possibly at a slower pace
While the Boulder area continues to top the country in total appreciation since 1991 (371 percent!!), we have fallen to number 19 out of the top 10— nationally in terms of one-year appreciation (10.84 percent according to FHFA) However, many structural factors like including low unemployment, strong net migration, and lack of lots to build upon, point to increased upward pressure on home values .
Translation: For buyers, now is a great time to buy, especially if you are in the market for a condo in the City of Boulder. Waiting will likely cost you, but not as much as in years past. For homeowners, if you are considering selling, you have likely experienced an above average appreciate rate, but expect it to taper off a bit.