Excerpt from The Daily Camera – full article here
For people trying to buy a house in Boulder County’s red-hot market, multiple offers, rising prices and limited inventory make the area one of the toughest areas to compete.
But for those who already own homes here, the market is the best — the best, in fact, in the nation, according to a recent report by personal finance company SmartAsset.
With data from the Federal Housing Finance Agency home pricing index, the analysis ranked Boulder County as the most stable housing market in the U.S. for the second year in a row.
Home prices in Boulder County have grown 308 percent since 1991. “The average homeowner in Boulder haven’t suffered any significant price declines since 1991, and the metro area has the highest average home appreciation of any city in our study,” said AJ Smith, vice president of content at SmartAsset.
Home prices have grown 308 percent since 1991 — more than double the 128 percent national average.
While the average American home gains 3 to 5 percent in value annually, Boulder County house prices grew 14.44 percent last year, according to the FHFA data.
Median List Price – Zillow.com
The area is currently more than three years into a four-year boom cycle typical of the Boulder Valley, said D.B. Wilson of Re/Max of Boulder.
“From 1976 until present, there are really four different high appreciation cycles that have all lasted four years,” Wilson explained. “The first was ’78 to ’82, the second one was ’90 to ’94, the next one was ’97 to about 2001.”
Home prices in the county went up between 51 and 54 percent during each of those four-year cycles.
Despite those impressive gains, none of those high-gain periods were what could be considered bubbles because they never popped.
“Even during the lean times, we’ve not seen the declines many areas of the country has,” Wilson said. “In the Great Recession, on average, (homes in) the U.S. lost about 20 percent (of their value). Boulder County as a whole lost less than 5 percent, and the city of Boulder lost 1.5 percent.”
A study Wilson conducted with peer Mike Malec identified three periods of lost value: The second quarter of 1982, with the largest downturn of 9.7 percent; a 3.4 percent drop in early 2009, and a slight decrease of 1.43 percent in mid-1987.
But those losses were allayed if homeowners were able to stay in their homes for three years, the report found.
The typical American stays in a home for nine years, according to the most recent annual Profile of Home Buyers and Sellers by the National Association of Realtors — an all-time high.
The median tenure in a house used to be five to seven years — the length of time recommended by economists in order to maximize return on investment.
Staying in your house for a decade in Boulder County pretty much guarantees you to make money: SmartAsset assessed the risk of losing more than 5 percent of your home’s value over 10 years as exactly zero.
Factors that impact home value in normal markets — increasing traffic, redevelopment, a suddenly-busy train track or airport — don’t really apply here, said Kyle Snyder of Land Title Guarantee in Longmont.
“In a normal market they have more of an influence because then you have choices: ‘Do I want to buy this house for $200,000 by the railroad tracks or up that to $225,000 and go farther away?’
“But when prices go up to $400,000 and that’s the cheapest thing to buy and you have to buy it, it doesn’t matter.”
One of the biggest drivers of declining home values — overbuilding — hasn’t been an issue here since the early aughts, Snyder said, which will help temper losses in home value during the next downturn.
“There certainly are going to be areas that are going to have price fluctuation,” Wilson added, “but based on the data, the quality of life here, the jobs, the high demand — I don’t see the stability of our market changing unless the Flatirons blow up or something.”