Turn on the news and the latest real estate chatter is the same across all channels: the skyrocketing real estate market is beginning to make its return to Earth. The combination of demand from millennials (the largest generation of home buyers), the lack of housing supply and the jaw-dropping climb to a 6% interest rate are all causing the market’s trajectory to flatten out. For some, it may feel like it’s time to hold off on any major real estate decisions until the market gains a more stable footing. While this wait-and-see plan may look good on the surface, a deeper analysis reveals that when it comes to Boulder real estate, the best time to strike is always now.
Believe me, I can hear your doubt: “But Sean, why would I buy now in Boulder with its soaring listing prices and the Fed’s current mortgage interest rate?” The key here, my friend, is the future. For over a decade, Boulder has been a hot market – and there are no signs of that changing. Even during the pandemic, when many communities suffered, we weathered the storm with strength and fortitude. During that time, high-earning buyers from both coasts yearned for our laid-back yet sophisticated lifestyle and came with cash in hand. It’s two years later and now that those coastal buyers have settled in, the market is making its way back to a sense of normalcy.
Mortgage rates are entering their historical average range, inventory – while still incredibly low – is creeping back up, and bidding wars are becoming the exception instead of the rule. We spent so long in a frenzied state of mind, I’m not sure anyone remembers what a “normal” real estate market looks like: a six-month supply of active listings, interest rates near 7%, days on market around 90 days and buyers and sellers negotiating.
This return to almost normalcy affords savvy buyers the opportunity to get their foot in Boulder’s door, live its coveted lifestyle, and watch their home’s value appreciate in the process. Current mortgage rates are weakening buying power in comparison to recent years, but buyers can make up the difference in negotiations. Remember the days of buyers and sellers countering one another? Yes, it really happened – and it’s happening again.
A warning to those stubborn sellers who are still pricing their homes with double-digit growth on top of past appreciation: you’ll find your listing twiddling its thumbs with extra days on the market. This new reality is setting in, and a patient buyer will soon be able to negotiate a price that allows the seller a healthy profit while still allowing the buyer room for future appreciation. It’s a win-win, but it often takes time for both sides to realize that the frenzy is fading, and the days of (un)real estate are moving back to a more traditional reality.
By Sean McIllwain. Sean is the founding broker of Mod Boulder Real Estate. Call 720.252.6051 or visit modboulder.com.