Over the last decade, buying and selling Boulder County real estate has been rocketed with upside for homeowners – sharply increasing real estate values, unsatiated demand and the lowest interest rates in history, according to Mortgage Professional America (MPA). Then came the latter half of 2022 and the tide turned – rising interest rates put the unstoppable real estate market into slow motion. Yet many still need to buy and sell homes. Here’s a look at what you don’t know – but need to understand – to navigate today’s market successfully.
Real estate is personal for every homeowner or aspiring homeowner, providing a sense of control over two of our most basic needs – shelter and the security that comes with accumulating long-term wealth.
Case in point: Middle-income homeowners nationwide accumulated $122,100 in wealth through 68% home appreciation over the last ten years, according to the Wealth Gains by Income and Racial/Ethnic Group report by the National Association of Realtors (NAR). Locally, Boulder ranks third-best for growth and stability, with home prices increasing 256% between 1998 and 2022, according to SmartAsset’s 2023 report on Best Housing Markets for Growth and Stability.
Fueled partly by the pandemic and a strong economy, recent years delivered sharp gains in real estate prices and a relentless seller’s market.
“The economic expansion over the last ten years was so powerful it brought unprecedented gains to home price appreciation. It was a real estate party like we had not seen before,” says Todd Gullette, managing broker of RE/MAX of Boulder. Sellers ruled as options were scarce and competition was high. Due to COVID-19, favorable tax relief, government stimulus, increased savings and rising wages, the real estate bonanza looked like it would continue indefinitely.
But then came 2022. Housing took an unexpected turn as the Federal Reserve began raising interest rates to stave off inflation. Over the fall season, periodic increases continued. As a result, mortgage rates rose, which meant higher monthly payments for those purchasing homes. Buying power was greatly affected; housing became unaffordable for many, and demand fell.
The roaring real estate market “took a nap” in Fall 2022, according to Gullette. “Now, the market is slowly moving forward. In Q1 2022, Boulder County single-family home inventory was at a record low 307, and 72% of available homes were under contract. One year later, in Q1 2023, the number of homes available for sale rose to 441, while the percentage of homes under contract slid to 40%. Showings fell below the 5-year average.”
Across Boulder County, median existing single-family home prices from January-March 2023 compared with January-March 2022 rose 5.2% to $1,219,687 from $1,159,510 the previous year. Average time-on-market rocketed more than 84%, jumping to 72 days in March 2023 compared to 39 days a year earlier, according to IRES data.
Buying a home has always been the biggest financial decision most people make. As we enter the homebuying season in a fluctuating market, how can a homebuyer, seller, or investor face these significant financial decisions?
“As Realtors, we take market analysis seriously, combining all our agents’ knowledge. Each week we dissect the percentage of homes under contract and the percentage of homes new to the market that are under contract. We discuss how many showings occurred over the weekend and what price points are hot,” says Jay Kalinski, Co-Owner of RE/MAX of Boulder and Broker/Owner of sister office, RE/MAX Elevate.
“I can honestly say that in a market as dynamic as this one, there just isn’t a source for information better than your local real estate agent,” added
RE/MAX of Boulder’s Broker/ Owner Tom Kalinski, noting that your local agent knows the housing market and neighborhoods inside and out. They are tracking the real-time impact on the housing market of higher interest rates, inflation, taxes, insurance and fears of recession.
Like many industries, Realtors have benefitted from technology over the years. Today’s real estate agents leverage videos, virtual tours, Matterport
3D tours, home staging apps and screen sharing
– all tools that enable prospective buyers to see and experience a property without ever leaving their home. From eSignature, electronic lockboxes, and local MLS apps to social media tools and state-of-the-art platforms to add efficiency and speed to marketing, transactions, lead generation, and more, Realtors utilize technology to stay ahead of market shifts and know about new listings and interested buyers quickly.
But for homeowners and sellers, technology cannot replace a real estate agent’s due diligence and deep local knowledge of up-to-the-minute insights into the local real estate climate.
“When it comes to buying and selling homes, one of the main areas unknown to our clients is the extensive preparation and knowledge of the correct documents,” says Jay Kalinski. He points to over 80 forms and nearly 30 disclosures, addenda and hundreds of potential documents involved in real estate transactions. “Not all are used on each transaction, but an expert Realtor needs to help determine which form to use and how to avoid liability for the buyer and seller,” he explains.
Then there’s the mastery of the art and craft of real estate. “Agents live in the same areas as their clients, and they feel the same dynamics. The mastery comes from cultivating real estate knowledge, resources and relationships over the many years of their career,” says Kalinski.
Real estate has always been built on relationships. “In the increasingly challenging 2023 environment, personal relationships have grown in importance, “ notes Kalinski. To make transactions go smoothly and more quickly, a Realtor needs extensive relationships – beginning with their network of clients and friends, and extending to contractors, plumbers, electricians, stagers, title companies, mortgage lenders, CPAs, attorneys, and even Realtors out-of-state or internationally.
The impact of this relationship network shows dramatically. Nationally, the typical home for sale by owner sold for $225,000, which is $100,000 less than the $330,000 selling price for home sales represented by real estate agents, according to NAR.
During these dynamic times, home sellers and buyers can choose agents who are Realtors, members of NAR with a license that shows they subscribe to a strict code of ethics and maintain a higher level of knowledge. Realtors may have additional credentials such as Certified Relocation Professional (CRP), Seniors Real Estate Specialist (SRES), Certified New Home Sales Professional (CSP), and other areas of specialty.
Home sellers need a Realtor who can help position their home for sale at the right time, price and exposure. They need a high-level expert who understands a buyer’s thought process, can evaluate potential objections, and then present the home in the best light. Sound marketing is crucial and can have a dramatic effect on the outcome of the transaction. A good agent must be prepared with documents, before they are required, to simplify the process when the house goes under contract.
Home buyers need a Realtor with access to the most current search tools, and an understanding of critical deadlines and the seller’s process in order to make the negotiation easier and present a more attractive offer. The buyer’s Realtor must understand the most valuable and realistic due diligence to protect the buyer’s earnest money, help negotiate the home’s condition and offer inspectors who can assist in discovering potential issues.
Boulder County is a richly rewarding place to call home. Our decades-long high prices and low inventory make our real estate market challenging. But, if you have access to the right knowledge, it’s a favorable market. Given the demands of today, it pays to know what you don’t know about local real estate and get the needed expertise.
BY RE/MAX of Boulder for At Home Colorado