It is best to return to basic economics. A buyer’s market is when there is more supply than demand. Some say it is when the inventory rises above a six month supply and there are more homes for sale than there are buyers for these homes. All agree that a buyer’s market has more inventory than demand for this inventory and so buyers are in control. So what this means is that there are typically more homes for sale for buyers to choose from. What it doesn’t mean is that a buyer has total control and can make unrealistic demands on the seller.
If you are a buyer looking to buy in Boulder, you may have your pick of several homes that meet your criteria..and you may not. Revisiting the simple economics and understanding how Boulder’s sustainable growth or housing cap works is an important piece of this equation. Boulder has its own limited supply by historical and ongoing scrutiny with new building permits. This plan started in the 1960s when the City implemented a sales tax increase and purchased greenbelts to remain as such; surrounding the city instead of issuing developers building permits for this space. Currently the idea of quality over quantity is still evident in the “Comprehensive Rezoning Proposal” which addresses both commercial and residential development within the City of Boulder.
I found a very well written case study d on Eben Fodor’s Better Not Bigger if you would like to read more about Boulder’s sustainable growth plan. So even if the national news is telling you it’s a “buyer’s market,” it is best to examine real estate city by city or even better: block to block. Some areas within Boulder and price ranges are definitely taking a hit. The upper end of the market (above $1,000,000) has seen longer days on market and fewer sales in the past 12 months. At the same time, single family homes under $400,000 have continued to sell in less than 80 days on average, some even going under contract the same day they are listed. It just goes to show that homes will sell and not every market is the same.
How about foreclosures or short sales? Buying from a bank has its own set of rules and if you are someone that likes to control situations then this is not for you. It is a game of “hurry-up and wait”. When I was first starting my real estate career, all I did was buy foreclosures and pre-foreclosures. I know from experience it can be a long process. It can take a month or more for a bank to decide whether or not to accept a short pay offer and 80% don’t get accepted. There is no one to call and push along, the person that answers the phone at the bank doesn’t care much if the property sells or not and the listing agent has no control over the speed at which the bank responds. What’s more is because the market is moving in Boulder, there are little to no foreclosures available, even right now.
What else does a “buyer’s market” mean? Currently it means that buyers still have choices and incentives to buy. One of the most popular loan products I have seen is an FHA loan where the buyer only needs to bring 3.5% to the table. You can bring more of a down payment, but 3.5% is pretty stellar. This loan has been a 30 yr fixed with a rate around 5%, depending on the borrower. Also, the federal government has implemented a non-repayable $8,000.00 tax credit to first time home buyers. The terms “first time” are pretty loose as the definition according to the federal housing tax credit website says first time also means that you haven’t owned in the past 3 years. Visit the site to find out if the tax buyer credit will work for you.
And what about if you are a seller? Well, the above incentives for buyers are great because it keeps buyers buying. But sellers are not off the hook yet. Price your home right, stage it
properly and market it effectively. Look for a follow-up post from me on how sellers can reach their goals in a buyer’s market.