Market Conditions in Boulder>Question Details

now_a_buyer, Home Buyer in Westminster, CO

Is Boulder on the precipice of a potential housing meltdown? Need honest market analysis. See http://forecastchart.com/estate-real-boulder.html

Asked by now_a_buyer, Westminster, CO Fri Jun 17, 2011

Is it foolish to buy now in Boulder? I would not want to "catch a knife on the way down." Boulder has typically been a very strong market due to building limitations and scarce land, but 187% appreciation in 20 years? See http://forecastchart.com/estate-real-boulder.html Sooner or later the market needs to correct itself!

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Hi Sherry,

I could give you an answer both ways. After seeing what has happened in the surrounding communities and the rest of the country I would say yes. Here are several facts to consider and I'll let you make the call:

1) Rental market is very strong as Sean suggested - Rooms rent out for $700 to $800 per month with rates rising. This keeps investors in the market and allows people to hold off on selling a property in a down market.
2) Low property taxes - compared to East and West coast. A $300,000 house has property taxes of $1500 per year while the same house in Chicago is $6000 and $8000 in New Jersey. This keeps the monthly payment affordable.
3) Land locked - you either in live in Boulder or you don't and the cost to build here is enormous due to government regulation. Think Manhattan (which hasn't dropped much either)...
4) A lot of people are moving here to retire, start families, and telecommute. The quality of life is very high.
5) You still get a lot for your money in the $1.5m plus market in Boulder - much more than other areas of the country
6) Boulder owners and buyers have a lot of cash. Half of the deals I have done over the last few years have been cash or 40-50% cash. This prevents a wave of foreclosures.

Possible problem areas:
1) Almost 20% of workforce is federal government and cutbacks may happen
2) Surrounding areas are significantly less expensive and people are choosing to live outside of Boulder because you get much more house for the price and still live only 15 minutes away.
3) Boulder has already dropped about 5-10% in my opinion
4) Condo market is being decimated by new lending laws requiring complexes to have 50% of the owners live in their units to be a conforming loan.
5) Interest rates will go up from the current 4.5% decreasing buying power

My money says flat, maybe 5% down but that is about it. Most buyers are priced out Boulder and they are renting to live here; if prices drop enough the renters will convert to buyers.
1 vote Thank Flag Link Fri Jun 17, 2011
Hello Sherry!
These are the questions being asked these days.

Boulder has managed better than most areas of the nation. Thank you Sandy Kinslow for that kind mention earlier. I do endeavor to track news in Boulder. This is what I consistently find: Employment is higher than most of the nation. Real estate values have remained steady.

I can appreciate that buyers are wary, particularly about a city that has been an island of tranquility amid a roiling economic sea. How does that city manage to stubbornly hold onto its home values? There are a number of factors and some intangibles that come into play that reveal themselves in an analysis of things like the high visitor rate for the city of Boulder and healthy economic activity. In addition to the great hiking and biking trails here, there are many great restaurants and entertainment options. Over these past "difficult years" I've always found lines at stores and crowded parking lots.

The appeal? People come to Boulder for many reasons. The reason they stay is obvious. It is a beautiful place with many job and recreation opportunities. Also note that the education level per capita in Boulder is among the highest in the world. The people who live here are the healthiest in the nation.

While, I obviously subscribe to the belief that there is something special about this area, it is always healthy from an investment standpoint to be skeptical. Josh Lopez makes the point that people are not deterred by layoffs. They simply go into business for themselves - or, they hunker down until other opportunities appear. In a city that is world-renowned (New York Times) for its entrepreneurial zeal, the wait is not likely to be a long one.

I could sing the praises for Boulder County all day long. The trend toward a high tech, new energy hub has been going on for years. For instance, Louisville will be the site of a new research campus for Conoco-Phillips. NASA has chosen Loveland for the site of a technology park expected to employ 10,000. UQM, a maker of batteries for electric vehicles, has set up business just outside Longmont. There are aerospace companies that have been hiring.

This is not to say the area is immune from what is going on on the world stage. There have been layoffs. Importantly, there has been net job growth, as witnessed by a sharp decline in unemployment this year. That is good news about Google's continued hiring. I've seen the Microsoft job ads, too, in the article that Sandy so kindly provided. Note, too, that the Denver area (including Boulder) is an area that is right up there among leading areas for social networking. These people are mobile and they bring money.

If you're easily discouraged by disruption, this may not be the place for you. Crocs emptied out along its roller-coaster ride. StorageTec was bought out and moved.

There will be government cutbacks as Dave Janis notes. He paints a not-overly gloomy picture. Anecdotally and statistically, Boulder has cooled and it may be a result of wariness. Real estate professionals are working longer hours and larger territories in response. Buyers are looking more to the outlying areas. Welcome to my neighborhood.

You might want to figure into your overall analysis that Boulder is a slow-growth community. Once upon a time, the voters of Boulder decided they wanted to reduce the drama of the boom-and-bust cycle that has been the story of the Colorado economy. While communities like Lafayette, Louisville and Longmont benefitted from the overflow of population, Boulder didn't experience a big drop-off when hard times arrived for the economy. We count ourselves lucky that the local real estate markets didn't catch fire the way Phoenix, Las Vegas and California's metro areas did. Colorado still ranks high in the foreclosure category. But the story could have been far worse.

Desirable areas commonly resist economic upheaval. If you look at other coveted areas, buyers who want to live in these places express the same frustration. Why haven't these prices dropped as dramatically - or dropped at all? It seems there are plenty of people who want to run out of their back yards onto a trail that follows a stream or up a steep mountain trail. These areas are more expensive and they have held their value. You might have heard that the wealthy are skating through this recession. It seems anomalous that a home could sell for $100 million in this economy, but it is happening.

The headlines don't tell the whole story. There are good fundamental reasons for a stable economy here.

If you look at that 187 percent appreciation against the same 20 years of inflation, though, that number doesn't appear to be out of sync.

There was a downturn in the 1980s owing to the exodus of energy. The big difference now? Migration is headed in this direction.

If I can be of further assistance, please call.

Best,
SuZ
PML of Longmont, CO
720 810 0683
bouldersuz@gmail.com
1 vote Thank Flag Link Sat Jun 18, 2011
Hi Sherry:

Everyone has their own opinion about Boulder and there are some folks who would just like to see the Boulder home market suffer. But Boulder is unique and shows no signs of becoming less so. During the worst parts of the housing crisis, Boulder prices were never off on year-over-year basis by much more than 3 percent (this is comparing the trailing 12 months to the same period before that). For the year ending in May, the YoY figures show average sales prices down just under one percent and median prices up 1.9 percent. You can't beat that considering what many other areas have reported. If you watch the stock market you probably have seen that some companies hold most their value even during a recession that plays havoc with the prices of most companies. I think you get the analogy. Though no one knows the future (myself included), when one in investing, one can sometimes use history as a guide, then look for reasons that historic trends will not hold up in a particular instance. I would suggest that you take this approach when looking at any housing market, including Boulder's

Kind regards,
Ron Rovtar
Prudential Real Estate of the Rockies
Days: 303.981.1617
Evenings: 303.473.1926
ron@rovtar.com
http://www.rovtar.com
1 vote Thank Flag Link Sat Jun 18, 2011
Hopefully Suz from Boulder answers your question. She knows Boulder very well. I am a Denver Realtor and not on top of the Boulder market but you may want to read this article about Google and Microsoft. It sure sounds like major expansion. Expansion should mean jobs. With high paying jobs, usually comes higher priced homes. I don't know how many jobs are coming but I heard it's a lot and that their average pay is $80,000 to $120,000.

http://www.coloradodaily.com/business/ci_17131625#axzz1PaV1S7J3

Sandy Kinslow
The Kinslow Team LLC
Coldwell Banker Residential Brokerage
kinslowteam@aol.com
1 vote Thank Flag Link Fri Jun 17, 2011
I can't see Boulder having a meltdown due to several key factors:

1. College town
2. Slow growth initiative
3. Appreciation in the bubble years was never out of control as compared to towns that are now see huge declines
4. Tech savvy/outdoors oriented community that is drawing more and more growing companies

I once heard that, until they move the mountains, Boulder will always be a desirable place to live. I couldn't agree more.

Thanks!
Sean
Web Reference: http://www.modboulder.com
1 vote Thank Flag Link Fri Jun 17, 2011
This is an older question, but going back and taking a new look sometimes is useful.

So far the Boulder real estate market has fallen off no precipice. And it does not look like this will happen any time soon.

We were interested to read this morning that on the national level prices for all types of housing were up substantially in November and have been rising continuously for the last nine months.

In Boulder, the average house sale price was up 1.5 percent for the third quarter on a year-over-year basis. The median price was up 4.1 percent during the same period. The number of homes sold jumped 16.5 percent while the days-on-market figure fell 29.1 percent to 56 days. Sounds pretty healthy to me!

We also read that energy prices should stay moderate or decline next year and that nationally, economic growth during the third quarter was better than previously reported, all of which is good for the economy in general.

The only cloud in this morning's financial reporting seemed to be uncertainty about a "Fiscal Cliff" deal in Washington DC. And we think we can assume that something positive will be accomplished in the nation's capital, if not before Jan. 1, then shortly thereafter.

So, assuming our politicians are not totally self-destructive, it looks as if the indicators are telling us that the economy is improving in several ways. This bodes well for housing in all areas, including Boulder, which has been a strong housing market for many years simply because so many people want to live at the base of the Flatirons.

Kind regards,
Ron Rovtar
Prudential Real Estate of the Rockies
303.981.1617
info@rovtar.com
http://www.rovtar.com
0 votes Thank Flag Link Thu Dec 20, 2012
If we were going to have a "meltdown," it would have happened during the recession. Our market is not boom and bust -- it's been fairly gradual for the past 10 years with fluctuations of 1-5%, up or down, year-to-year. Prices are kept steady by the building limitations and scarce land that you mentioned (I compare it to real estate on an island), but also by the University of Colorado, federal labs and other large employers and high salaries. Census figures of median incomes per household are skewed by our large student population (some of those students have parents who are very well off and buy expensive homes for their children). There may be a slowdown of sales when interest rates increase because that will affect affordability. But demand will always be high because of the natural beauty here and the university, and supply will always be limited.
0 votes Thank Flag Link Mon Dec 3, 2012
|| UPDATE Aug. 2012

Thanks for a posting a follow-up, now-a-buyer. The market was, indeed, very different when you posted your question.

There was fewer buyers a year ago and now the floodgates seem to have opened.

Your question received so much attention, though, because it is a good one.

I'm probably not the only Realtor who has praise for the way Boulder and parts of the county avoided a devastating drop in prices. The people behind Boulder's slow-growth policy look very smart today. They were likely motivated by wanting to avoid urban sprawl and armed with the knowledge that Colorado economies often move under different influences than what is happening in the rest of the nation. High tech and energy seem to be especially cyclic. So, whether intended or not, the effect has been to blunt setbacks like the energy crisis of the 1980s and the Storage Technology bankruptcy that followed.

The upshot is the city of Boulder economy has managed to remain stable.

Thanks again for posting your question.

Suz
0 votes Thank Flag Link Fri Aug 17, 2012
Hi now_a_buyer:

I thought this might be a good time for an update. The most recent figures from the Boulder Area Realtor® Association show that the price of the average house sold in Boulder fell less than one percent on a year over year basis. The median home price climbed 5.1 percent. The average house price during the second quarter of 2012 was $649,785. The median for the same period was $560,000. Compare these numbers to the averages for all of 2007 and 2008 (respectively $662,642 $656,383) and the medians for the same years ($550,500 and $538,000). At least so far, it looks like we are navigating the housing crisis pretty well!

Kind regards,
Ron Rovtar
Prudential Real Estate of the Rockies
303.981.1617
info@rovtar.com
http://www.rovtar.com
0 votes Thank Flag Link Thu Aug 16, 2012
I realize that the market has changed significantly. I posted that question over a year ago when things were looking much worse!
0 votes Thank Flag Link Sun Jul 22, 2012
|| UPDATE July 2012

Despite all the scary headlines and hand-wringing, buyers in Boulder County and the rest of the greater Denver area have slammed the door shut on this chapter of economic history. Indicators show the downturn is behind us. In fact, the media in recent weeks have been in a near frenzy to report that the housing bust is over.

You can look at your charts another way, Buyer. It just might be recording the changing characteristic of Boulder and the surrounding area.

I have an eye on a handful of factors that have the potential to affect the overall market and Boulder, in particular. Defense spending is a category to watch. In recent action in Congress, the budget ax was poised to hit defense contractors hard. But it turns out that last minute maneuvering managed to find another $6 billion for the defense department. A significant portion of the local economy in Boulder is aerospace and high tech. So developments on this front are bound to have a bearing on housing here - though, it could be muted just as the overall recession was.

Examining other data, there are indicators the upward price movements are unlikely to abate. For instance, county officials have said there is a 12,000 unit shortfall in available housing for next year. Even as 30 new building projects come online, the bad news for renters and buyers is inventory will not improve a lot soon.

On another front, the pace of foreclosures has slowed - much to the chagrin of investors. This is another factor that was expected to slow progress toward a recovery. But the much feared impact of foreclosures has been muted. While higher priced neighborhoods have not been spared, the foreclosures tend to concentrate at the lower end. This part of the market is strong this year and showing no sign of letting up.

The luxury market, which is a lagging indicator, makes for an interesting story this year. Healthy signs for a market are usually found at the low end. Could Boulder County's high end signal a changing character of the area? Eighteen home sales in June doesn't seem that many. But when comparing population sizes, it is all the more remarkable that Boulder's 18, which has been a steady number since March, occurs in an area far less dense and far less populous than Denver. My thought: That just might be the attraction. The sweeping views of the mountains are available to a lot of homeowners. What makes Boulder County special is wild development has been reined in. Missing is that sprawl.

The full answer is a complex one. Relative to other highly desirable areas, Boulder County must seem a bargain. Southwest Longmont and Niwot are short commutes into Boulder. When we lived in California's East Bay, neighbors were quick to offer that a commute of 40 minutes is very manageable. Indeed it was. Longmont is but 45 minutes from downtown. Throw in golf courses and quick access to the ski slopes, and the answer becomes obvious why those with high net worth are headed here.

It is an interesting chart, Buyer. The level of education is one of the highest per capita in the world. It's not all that surprising to see the area become more exclusive, is it?
0 votes Thank Flag Link Sun Jul 22, 2012
|||||||||||||||||||||||||||| UPDATE May 2012 ||||||||||||||||||||||

The market was softer when agents responded to this string last year. I'm sticking to my position, though. The larger trend is toward more growth for Boulder for now.

People pay more to live in Boulder. The uncommon beauty of this rare gem of a city is the reason why. Boulder is a slow-growth city. This fact alone does not account for Boulder's exclusivity, but it is responsible for its economic stability. The economy here is more stable because of the large government employers here. The University of Colorado as well as a large federal government employment base, including the National Institute of Standards and Technology, are a large part of the reason economic downturns are not as pronounced here. The latest recession, however, is likely to finally catch up with this sector, too. However, growth is likely to offset cutbacks.

The Denver Business Journal carried a headline recently reporting the luxury market was strong in March. Boulder led the state in luxury sales, recording 19. Twenty-one sales were recorded for Denver and Arapahoe counties, an area with a much, much greater population.

Inventory is down, too. The DBJ noted that the number of available luxury homes is down 42 percent areawide. And, prices are moving up again.

Boulder is a dynamic area that draws entrepreneurs and corporate relocations. The city often finds itself in the national spotlight.

Best regards,
Suz
PML property movers of Longmont
bouldersuz@gmail.com
0 votes Thank Flag Link Wed May 23, 2012
Hi Sherry:

A lot of good answers below. One other thing should be mentioned (or highlighted more than might already be obvious).

Boulder exists at a nexus between the high tech industry and the adventure/outdoor industry (which is in itself very high tech). It is a beautiful city in an extraordinary location. It is one of the few places where one can leave work for lunch, do something like climb one of the flatirons, and be back at one's desk for the afternoon. Some people move here for the high tech, some for the outdoors, some for the beauty, and some for all three.

The city is almost magnetic. It attracts photographers, other artists, retirees, technology workers, athletes, entrepreneurs, financial people and others in numbers that far exceed the vast majority of mid-sized and small towns. As long as this is true, I think you can count on the Boulder housing market to do okay at the very least –– and probably considerably better than most.

Kind regards,
Ron Rovtar
Prudential Real Estate of the Rockies
Days: 303.981.1617
Evenings: 303.473.1926
ron@rovtar.com
0 votes Thank Flag Link Sun Jun 19, 2011
Sherry,

I like your screen name I think that's very funny.

But on a serious note, I understand your weariness. I rented for two years in Boulder paying outrageous rates. I could never figure out how with such a down market how boulder prices were still so high. So I tried to look past the facts and the paper and figure out why?

What i came up with was the people in Boulder have made it that way. They are not people who rely on someone else to hire them. If they cannot find a job or do not like there job they create their own job. It us a place were creativity thrives and it shows. But... this just a theory although, it is something you might also want to consider.

Having said that I do not think that the boulder market will go south any time soon. If it does it will be MUCH less than the rest of the country. But I honestly doubt it will. I agree with Sandy that its a savvy place with an incredible location. (Location location location!)

If you have any questions feel free to contact me.

Josh 3035507588
0 votes Thank Flag Link Sat Jun 18, 2011
If you are questioning Boulder have your consider other communities close to area ?

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes Thank Flag Link Fri Jun 17, 2011
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