Real estate experts: Boulder housing market improving

By Peter Budoff
Camera Staff Writer
Posted: 11/19/2009 11:14:24 PM MST

The national and local real estate market is showing signs of improvement, but a full recovery will depend on restoring consumer confidence, housing experts said at a Boulder forum Thursday.

Boulder remains somewhat insulated from the national economic struggles, Scot Smith, a broker with The Colorado Group, told the crowd at the second annual Boulder Valley Real Estate Conference and Forecast at Boulder's Millennium Harvest House.

"This is a good place to be," Smith said. "When the full recovery begins, it will probably begin here."

Smith said that the presence of large local companies and continued strength in the energy industry and others will continue to help stabilize the Boulder economy.

Commercial occupancy should increase slightly throughout Boulder Valley in 2010, while the area should remain relatively insulated from the national wave of foreclosures, Smith said. Office vacancies fell to low of 12 percent in 2009, not as high as some predicted.

Smith noted that in addition to governmental agencies -- which were the largest purchasers of commercial property this year -- the Boulder commercial real estate sector has been boosted by an unlikely industry: medical marijuana dispensaries.

"We can only hope marijuana never gets regulated, so it can lead us out of this recession," he joked.

D.B. Wilson, managing broker of ReMax, said the residential housing market through the beginning of 2010 will continue to favor buyers, with affordability at an all-time high.

But prices, interest rates and mortgages are still likely to fluctuate through next year, and true market stability won't come until consumer confidence is restored, several speakers said.

Sharp declines in wealth and increases in unemployment have dropped consumer confidence to near-historic lows, said Patti Silverstein, the chief economist of the Metro Denver Economic Development Corporation.

Confidence should improve as the economy does in 2010, but the improvement will be slow, Silverstein said.

"The recession from a technical standpoint probably ended in the third quarter of the last fiscal year," she said. "We will keep moving out of the recession but at an anemic pace."

Summer is finally here, bringing market improvements and optimism with it

The month of June brought no surprises as far as Boulder area real estate market statistics.

While the overall market is down compared with a year ago, it is starting to make the upward swing that usuaslly arrives in the spring, according to Ken Hotard, Boulder Area Realtor Association senior vice president of public affairs.

"We’re seeing continued growth," he says. "Home prices are holding well, and we’re continuing to see strength building from quarter to quarter."

In the second quarter of 2009, 807 single-family homes sold – an approximately 62 percent increase over the 499 that sold during the first quarter of the year. And the attached-home statistics are even more impressive: 176 homes sold in the first quarter compared with the 329 that sold in the second quarter – an 87 percent jump.

Hotard says that steady prices are a result of lower increases in inventory, supporting continued accurate and appropriate pricing, and the loosening of the lending market is helping the market, as well.

"Lending is opening up a bit and adding to the opportunity for buyers to get into a great market," he says. "I believe we will see strength in sales for the rest of the summer and into the fall."

Hotard says lending institutions are realizing that if they don’t lend money, they can’t make money, so they are becoming more comfortable in assisting buyers who can and will pay their mortgages on time and in full in securing loans. That, in turn, has opened the door to a larger pool of buyers who have been shut out of the market because of uncertainties in those credit markets.

"Rates are great, and home prices are driving buyers into the market," he says. "There’s great deal of opportunity for folks who have decent credit and can get into that marketplace. We’re seeing people get into that, and lenders are helping."

As they should, lenders are making more pragmatic decisions regarding loans and borrowers, and common sense more than fear if playing a big factor in those decisions, Hotard says.

"Data shows across the board the market is improving," he says. "We were kind of expecting that."