So how do you KNOW you’re getting a good deal?  Simple, work with an agent who really knows the market and has the skills to negotiate a better deal. 

If you think about it, good negotiation requires deep market knowledge.  Without it, you’re shooting blind.  To know the market, start by considering inventory, sales volume, and price trends – in the context of specific locations and property characteristics.  Don’t forget to take into account the regular seasonality of the market, with its fluctuations of supply and demand.  And if the market is a bit irregular this year, pass the imodium because you need to know what’s happening NOW, not last year. 

If you ask just any real estate agent about the market, don’t be surprised to find a bunch of happy talk and hand waiving (as a client recently put it).   If you call us, you’ll discover that our priority is to help you understand the market relative to your specific situation.  We’re obsessive about market conditions because our goal is to help you make a smarter real estate decision. 

Let’s skip to the chase –  current market conditions for town homes and condos in Boulder:

This next chart shows sales volume.   As you can see, the last two months of the year weren’t bad – surprising considering what’s been happening in the traditional house market.  There were only 45 properties that sold in April, down 41% from last year.     

I like to compare what’s happening to a longer term period because one-time events can dramatically skew statistics in a small market like Boulder, leading to the wrong conclusions.     The chart above takes the most recent month and compares it to the average of the preceding four years.    So in April, for example, I’m taking inventory and sales volume from 2009 and comparing it to the average inventory and sales volume of April 2005, April 2006, April 2007, and April 2008.   The red line simply indicates the split between 2009 and 2008.  

As you can see, over the past twelve months sales volume has been much lower than the average.   In some cases, this has been dramatic – such as January when only 6 properties sold (70% below average).     Low sales volume and a very weak economy would lead most people to expect high inventory, but this isn’t the case.   During most of the past twelve months, inventory has also been somewhat below average.  

This last chart shows absorption (sales volume over inventory levels the preceding month).    As the chart shows,  there is a seasonal rise each year,  beginning in February and dropping off in September – about what you’d expect in a University town like Boulder.   April showed a strong dip this year, dropping to below 10% when in a more typical period,  you might have expected something in the range of 15%.   This is inline with the other charts in this analysis, pointing to  more negotiating leverage for buyers and in this type of market, sellers need to be extra diligent on pricing to avoid the walk of shame. 

IS THIS A BUYING OPPORTUNITY? 

With historically low mortgage rates and falling prices, this may be an excellent time to step into the market and look for bargains.  If you look back on past business cycles (of all kinds), the best buying opportunities are generally just before the cycle begins moving upward again (just before the bottom).   The primary risk is that house values will fall further after you buy, a risk which primarily applies to luxury properties and properties in less desirable locations.   You can counter this risk somewhat by purchasing a property you intend to own for a very long time – as your residence or perhaps later, as an investment.  For buyers, the good news is that prices have already fallen and sellers are being more realistic.    

To get the best deal,  work with an agent who knows the market and loves to negotiate.  Your agent should not only help you find a desirable property but also have the skills to open the door (through negotiation) to better pricing.  Finding the right house and negotiating the best possible price for our clients is both an art and a science.  It’s also something we deeply enjoy doing.  

If you’d like to discuss your real estate situation, call me at 303.746.6896.  

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The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties.   We strongly recommend conducting rigorous due diligence and obtaining professional advice before buying or selling real estate.