First quarter finishes strong with significant improvement in home sales

In like a lion, out like a lion. That was the story of the Boulder area real estate market in March.

The end of the first quarter wrapped up strong, with an 11 percent increase in single-family home sales in the first three months of 2010 compared with 2009. Multifamily sales gained 24 percent in the first quarter compared with the same period last year.

“I think the momentum we started at the beginning of the year has continued and helped round out the first quarter,” says Ken Hotard, senior vice president of public affairs for the Boulder Area Realtor Association. “I’m pretty impressed with the strength of the market as far as sales volume. It will be interesting to see if we can maintain it.”

Hotard attributes the impressive improvement to low interest rates, credit slowly becoming more available, and job growth on a national, state and local level.

“Especially along the Front Range, job growth is contributing to the strength of our housing market,” he says.

However, the housing market will face another “unknown” when first-time homebuyers and those looking to move up no longer have access to $8,000 and $6,500 tax credits, respectively. The incentive ends at the end of the month – meaning homebuyers must have their houses under contract by then – though they have until the end of June to close on their homes.

But Hotard says he expects contract activity may decline some in May with the absence of the tax credit.

“We’ll see if that’s going to be a factor,” he says, noting the market may remain strong if economic conditions and consumer confidence improve and interest rates stay low. “My expectation is this strength will continue into and through the summer months.”

Hotard notes that Congress and the Obama Administration have squashed any hope for the continuation of the tax credit, saying that it has done what it was supposed to, which is jump start the market. Now, he says, the National Association of Realtors has turned its focus to increasing access to credit for qualified buyers.

Many of Boulder’s communities continue to see a decrease in average and median sale prices, some of which is attributable to some homeowners reducing their asking prices to sell, but not all, Hotard says. In other markets, prices have stabilized and some are even improving.

“Buyers are out there, they’re active and deals are closing,” he says, adding that more than one-third of homes under contract at this time last year weren’t closing.

Another factor affecting the housing market, from a political standpoint, is the election year, Hotard says. Those up for re-election will work hard to make sure the economy continues to strengthen through this year.