While many U.S. communities are experiencing depreciation of their homes – some even in the double digits in coastal states such as California and Florida – Boulder’s home prices have held steady over the last year.
Recent numbers from IRES shows existing-home prices within the city of Boulder increased 3 percent in the third quarter of 2007 compared with the same period last year. And the latest figures from the National Association of Realtors showed that while the median price of existing homes in the Boulder-Longmont area has fluctuated slightly since the third quarter of 2006, the median price for the third quarter of 2007 remained unchanged from the previous year. The median home price for the U.S. dropped 2 percent in the same period.
Ken Hotard, vice president of public relations for the Boulder Area Realtor Association (BARA), attributed the local market’s strength to the absence of rapid appreciation of home values in past years that occurred along the nation’s coasts.
“We never really did have a bubble,” he says.
Boulder also remains a popular home town, with its location offering a plethora of indoor and outdoor recreational opportunities, open space, federal laboratories and a healthy entertainment environment, Hotard says.
“Basic economics 101 will tell you that simple supply and demand plays a role here,” he says, noting Boulder’s high quality of living makes it a desirable place to live, but it has a limited ability to grow and, therefore, a limited supply of housing.
A recent study of Boulder’s affordable housing by BARA, in cooperation with the University of Colorado Real Estate Center and Leeds School of Business Research Division, showed clearly that the city of Boulder has a wealth-based housing market and local economy, Hotard says.
In other words, the city’s residents’ median income of $80,000 would not support the median home price, he says. In fact, 30 percent of all homeowners in the city of Boulder have no mortgage, which means they either paid cash for their homes or they have lived here long enough to have paid off their mortgages.
Nonetheless, Boulder-area homes are not appreciating as much as they have in years past because of the slower economy and less job growth, Hotard says.
“There’s been some but there hasn’t been like there was in the ’90s,” he says.
From 1990 to 2000, the average appreciation of Boulder homes was just over 10 percent, Hotard says. However, a housing study under way now shows that over the last 25 years, the annual appreciation rate for homes in Boulder city limits is 6.2 percent, and for Boulder County homes it is 4.8 percent.
Hotard says a 4 percent to 6 percent appreciation rate represents a healthy, sustainable market that makes purchasing real estate a wise long-term investment.
A 3 percent appreciation rate, though not as good, reflects a stable market, he says.
“That covers inflation,” Hotard says. “You’re not losing money but you’re not gaining much.”
Hotard predicts that the appreciation rate will remain stable and relatively unchanged until 2009 or 2010 in the absence of economy-impacting positive or negative events.
Once a new president and Congress are in place in 2009, it will take a while until it is clear how those changes will affect the real estate market, Hotard says.
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