Last year, we starting to see multiple offer situations in Louisville, with good properties priced well going under contract in a matter of days. This followed a swift uptake in activity last January, with anxious buyers looking to take advantage of low interest rates but frustrated by low inventory. According to the Colorado Association of Realtors Quarterly Market Statistics Report, while more homes sold in the last quarter of 2012 than the same time the previous year, new listings decreased in most parts of the state. Nationally, inventory at the end of 2012 was more than 21% lower than 2011.
2013 has begun similarly, with buyers who want to purchase still being thwarted by inventory levels. A typical, healthy market has 5-7 months of inventory; Boulder County is currently at about 3.4. I've spent quite a bit of time lately seeking out homeowners who tried to sell in recent years but gave up for various reasons to see if they would be willing to consider selling to my buyers this spring. I've had some success, but not enough to take care of everyone who needs it, especially those looking to buy in Louisville specifically.
Why the low inventory? There are several reasons, none of which will be overcome quickly. Some homeowners are still underwater, meaning they owe more than their house is currently worth. Unless they have to sell, due to a job change, for instance, these sellers will likely wait until home prices go up. Unfortunately, if they wait too long they may see their pool of buyers reduced by rising interest rates.
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| Gentleman, start your engines! |
New construction is down. Housing starts have been at record lows the past few years, but finally saw movement in December, increasing 12% nationwide. Still, there's an obvious lag time for new construction, and not every development is created the same - many are pushing out into more rural areas. There is still a lot of demand for more established neighborhoods and downtown areas with walkability, mature landscaping and public transportation hubs.
Banks are implementing new rules when it comes to processing foreclosures, stretching out the timelines for these properties to come back on the market. Some areas are also seeing an increase in loan modifications, which is good news for the homeowners but again affects the numbers. Investors are still finding great deals among the short sales and foreclosures and picking them up before some buyers may be able to get their financing in order. With higher rental rates, many are choosing to keep the properties as rentals instead of flipping them in the short term.
If you happen to be a renter these days and have good credit, you may want to have a conversation with a lender to see if you can qualify to buy instead. You may be surprised, but you'll want to act soon; small supply will drive housing prices up, and rising interest rates can significantly affect your ability to buy.
image: RiverRatt3
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