By Ron Rovtar
The K Company Realty
Boulder County CO
Boulder County CO
303.981.1617
Many recent news articles suggest trouble is brewing for U.S. housing markets. One way or another, they suggest the rate at which home prices are rising may soon slow, or turn negative.
CBS MoneyWatch argues that three factors may restrain rising home prices. MoneyWatch is concerned that: (1) Affordability has dropped to a ten-year low. (2) There's been a nationwide decrease in home sales. (3) Young adults are buying fewer than previous generations similar ages.
Another commentary about a slump in homebuilder stock prices suggests Wall Street lacks confidence in the new home market.
And a Bloomberg article says high-end rental markets are experiencing a supply-side squeeze after the recent construction boom, resulting in lower rent prices. If individuals and families find renting cheaper than buying, many will put off ownership, reducing home purchases and, therefore, prices.
And this idea from Fortune: the U.S. economy in for a rough time because unemployment numbers are so good. I can't say I'm on board with the logic. But this is one of many commentaries arguing a recession is near.
Movements in home prices generally follow wider economic trends, making the possibility of a recession yet another factor for homeowners to fret about.
Pessimism about economic factors is rampant. The four contributions above simply scratch the surface.
So, either housing (perhaps the whole U.S. economy?) is in for a rough ride; or maybe we're just "climbing a wall of worry," as stock traders call a disconnect between negative sentiment and a more optimistic reality.
Who knows which is right?
Yet it is hard to ignore this anxious background when discussing trends in home prices.
Boulder is no exception. Like elsewhere, average median home prices continue rising in Boulder, according to numbers from the IRES multiple listing service.
In Boulder, average house prices have jumped from $1,089,741 during all of last year to $1,260,832 the first half of this year. The 2017 median house price was $910,000, compared with $1,072,000 for the first six months of this year. (For the first six months of last year, the average was $1,064,508. The median was $867,000.)
The average price of an attached dwelling in Boulder rose from $467,541 during all of 2017 to $521,144 during the first half of this year. The median in 2017 was $405,000, compared to $450,000. for the first six months of 2018. (For the first six months of last year, the average was $459,732. The median was 444,000.)
Recently released S&P CoreLogic Case-Shiller data confirms continued upward price trends in larger U.S. home markets.
Despite all the commentary about rising housing costs and the wider economy, these recent increases in Boulder should come as no shock. They are a continuation of an ongoing trend.
Yet there do seem to be fundamental factors that might stem the economic recovery and home pricing trends nationally and locally.
It has been a long time since the last recession. Recessions do occur with a degree of regularity.
And current federal economic policy seems a tad unmoored.
As noted in the CBS MoneyWatch piece cited above, affordability has become a major concern. This is as true in Boulder as elsewhere.
Many would-be buyers simply cannot buy at today's prices. Rising mortgage interest rates increase the numbers in this category. Other potential buyers have decided now is a bad time to buy because prices seem too high. Waiting for better prices might be a good strategy.
Meanwhile, some potential sellers have decided not to sell, dreading the prospect of becoming buyers in this tight market. This means supply is dropping along with demand.
There are contradictory factors to consider, making near-term economic predictability very difficult.
But, pundits and news outlets want to predict the next economic turn, if just for bragging rights.
Sooner or later they will be right. The question is ¯\_(ツ)_/¯ when?
The bottom line: don't believe everything you read about housing or the economy until the picture comes more into focus.
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Ron Rovtar is a broker associate at The K Company Realty in Boulder, CO. Please call Ron with all your real estate questions at 303.981.1617. To learn more about Ron, please visit his website. For more about life in Boulder County and nearby, check out our facebook page. Ron Rovtar does business as Front Range Real Estate, Ltd. E-mail Ron.
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