While economists see improvement coming, real estate lags behind

Economists are touting the end or near-end of the recession this quarter, but the real estate market – which lags the condition of the economy by six to 12 months – continues to reflect the struggles we experienced from the summer of 2008 through early 2009.

Ken Hotard, senior vice president of public affairs for the Boulder Area Realtor Association, says with the delayed summer sales he expected, he thought the July market statistics for Boulder County would have showed more gains than the “modest improvement” from June’s sales they reflected.

“The reality is sales in July are down 10 percent from last year; but month-to-month, comparing June with July, it was stable,” he says. “An additional few homes sold in the market over that period – not a robust market. I expected to see more improvement than that. I’m a bit disappointed that we didn’t see more strength. But we continue to see difficulty with residential lending and the jumbo loans are still very difficult to get at this time.”

The market is still driven by economic uncertainty and tighter financial markets, Hotard says.

“Some folks are adjusting prices to move property but in a lot of cases, there’s only so far you can go,” he says.

Hotard adds, “I think home prices are holding up pretty well in this market. Boulder had only a 2.2 percent decline; given the weakness of the market, that’s astonishing. And its average sale price year-over-year increased almost a half percent.”

While the economy may have hit bottom and is on its way up, it’s going to take some time before the real estate market reflects those improvements, he says. Hotard stands by his previous projection that the housing markets will begin a slow but sustainable growth in the second half of 2010.

“I do think we’re on the bottom and I think we’re going to stay there for a while,” he says. “I don’t see the economic recovery necessary to propel area home sales forward.”

People are still losing their jobs and companies aren’t adding enough jobs to support dramatic improvement in the real estate market, though it shouldn’t get worse, Hotard says.

“I think area housing markets are relatively stable,” he says, noting Boulder is doing well compared with other parts of the nation. “We are fortunate to be here.”

And the market continues to offer as a great opportunity for investment, especially as the fall semester of college gets underway, Hotard says.

“It’s a great time for parents to invest, to provide housing for their student to live in and watch that investment grow over the course of that student’s college career,” he says.