What does the housing market is "tight" mean? ...it's complicated ;-)

Below is a cool snip-it from the July 11th Market Briefs newsletter (click to subscribe to Market Briefs for free)

Tighter housing markets generally result in higher seller bargaining power and higher sale prices.

• In this case, the supply of homes (or lack thereof), has been a major factor in the surge of home prices. Tight inventory mixed with rising mortgage rates is a recipe for a complicated market. 

According to Black Knight, housing market inventory is so tight that only 1 of the nation’s 100 largest markets saw a home price decline in May.

• Home prices hit a record high in May.

How about Boulder County? Here too, there are definitive trends that highlight a "tight housing market".

For a combined snapshot, attached (condo & townhomes) and detached (single family homes), there are 19% (146) fewer new listings than this time last year, yet there are only 35 more homes for sale in the county.  Sounds confusing? And, that's 90 fewer homes under contract from last year's peak.

Compare that to 3 years ago (2020)  1008 homes are for sale vs this year 891 homes for sale.  It's like a whole new world!

This month's first big number is:  404 homes sold in Boulder County in July.  Sounds like a lot at first glance, but it's down 16.2% (78 homes) from last year.   Which was down from the year before and the year before that (3 years ago 693 homes sold in July 2020).  That's a big difference ... 289 fewer sales is a whopping 41.7% reduction!

We're currently at an average of 48 days on market.  Compared to our non-normal, insane last few years this may seem huge.  Yet in 2020 we had 42 average days on market. Increasing days on market is an indicator of buyer price sensitivity and reluctance.

Lastly, the average sales price in Boulder County dropped from $1,042,065 to $1,004,878.

Compare this shift to that from June to July in 2022 where the average price dropped from $1,042,065 to $893,381. Diving into the data showed that the price "drop" was due to more expensive home sales in June skewing the data high...

What does all this mean?  Well, there are so few homes on the market, and there have been so much appreciation and interest rates moving up to make those homes even more expensive, that the buyers are waiting for a "good" home (not perfect, but good enough) - those homes that are sitting on the market are overpriced for their location and condition.  The homes that move, and in some cases "the same day" or over the weekend with multiple offers over ask are ones that, well, multiple buyers have been waiting for.

And again, there are so few sales that one or two expensive home sales can really skew the numbers.

To top that off, if interest rates do go up again, that will make those homes even more expensive to buy, which is why homeowners that locked in lower interest rates have no desire to downsize to a smaller home with a more expensive payment. And that means there are still fewer homes for sale.  Today's buyers are planning on refinancing their homes when rates drop in the future.

So that is the definition of a "tight market" not having enough homes to sell. Period. 

Now in talking to our colleagues throughout the US, many are experiencing the same thing. While Boulder may be "26 square miles surrounded by reality" the reality is Boulder area is following many of the same national trends with respect to having more buyers (that are nearly maxed out in what they can afford) than sellers. 

Thank you for reading! We value your feedback so please let us know what, in the world of real estate, you would like to know more about.

We're here for you. Call or text us at 720-295-1604 or send an email to info@homes-in-boulder.com, or let's jump on a quick call to answer your neighborhood-specific questions.