It's a Seller's Market on the Hill!

University Hill, Boulder, Real Estate Market Snapshot

There’s good news all around for the real estate market in Boulder’s University Hill neighborhood as we roll into 2015 ... unless you are a buyer trying to find a home here.  I can’t remember a time when it was more of a seller’s market.

Last year, there was a significant drop in the number of homes sold in the neighborhood – only 22 homes sold compared with 33 in 2013. Meanwhile, the median sales price increased by 13% to $871,000, and homes sold very close to their list price. Sales prices ranged from just under $480,000 for a tiny two-bedroom house on 18^th St near Baseline to over $1.6 million for a historic Tudor on the corner of 11^th and Cascade Avenue that had been on and off the market since 2012.

In terms of low inventory and climbing home values, the Hill is trending in the same direction as Boulder, only steeper. Last year, Boulder saw a 13% decline in the number of homes sold and an 8% increase in median sales price.

2015 promises even more price increases as we have high buyer demand and a low inventory of homes for sale. You may see and hear about new developments in Boulder, but most of them are rental apartments and commercial projects with very little in the way of new homes for sale.  Thankfully, there are new home developments in outlying areas like Lafayette, Longmont and Superior adding inventory. But I predict the housing shortage will not ease in Boulder anytime soon.

If it’s such a seller’s market, you might ask, then why aren’t more people selling? The simple answer is that they don’t want to be left homeless. Unless they are moving out of the area, home sellers face the same challenges as other buyers as they try to find a replacement home. Rest assured that I have developed some unique strategies to help get buyers into homes. Feel free to contact me with any questions or for a free market analysis of your home!

University Hill Home Sales	2013	2014	% change
# of homes sold	33	22	-33%
Median $ per sq ft	$323	$323	0%
Median sales price	$767,500	$871,000	13%
Discount off of list price	-3.04%	-2.46%	-19%
Average days on market	60.50	68.00	12%

2014 Home Sales on University Hill

Boulder Home Values Are Going Up - Someone Tell the Appraisers!

What do you do when the appraisal comes in lower than the contracted sales price? This is a question that is coming up more often as prices rise in the Boulder area.

During a recent transaction, a week before closing, the appraisal came in $10,000 lower than the contracted sales price. It also revealed that the home was about 200 square feet smaller than we thought (assessor records mistakenly included the detached garage in the home's square footage).

What to do?

The Colorado contract allows for buyers to cancel at this point and get their earnest money returned. But most buyers don't want to. Typically, this becomes another "opportunity" for the buyer and seller to negotiate on the purchase price.

It's fairly common to "split the difference," but my client felt she had already given plenty of discounts. Through initial price negotiations and inspection repair issues, she had already agreed to lower the price by $13,000. We had lots of logical arguments for why the home was worth more than the appraiser thought it was, but in the end it came down to how badly the buyer wanted it. We settled with my client giving another $2,000 discount and the buyer purchasing the home for $8,000 above appraised value. Thankfully, he had a large down payment, so the lender did not baulk.

The problem with appraisals is that they only look at where the market has been and not where it is going. They are based on comparable sales in the previous six months. But home values are rising in Boulder County. With more home buyers than last year and fewer homes for sale, the good old law of supply and demand dictates that prices will inevitably rise.

In my example, the home was in Lafayette, which had seen a 10% increase in average home sale prices in the second quarter of 2012 versus the same period of 2011. When you think about it, if buyers only ever paid appraised value, which is based on the past, then home values would never be able to rise.

In the end, my client sold her home for much more than she had expected to when she first decided to sell nine months prior; the buyer got a home he loved and that he could afford; and area appraisers now have a good comparable sale to use on future appraisals.

If you are thinking about buying or selling a home, be sure you have a Realtor who understands where the market is going and who can help you negotiate over the many hurdles along the way. Feel free to contact me anytime through my website: www.moniquecole.com.