by Osman Parvez
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It’s nice to see data analysis on Boulder real estate conditions in the Daily Camera. Here’s what Re/Max and DB aren’t telling you: Sales volume for all residential real estate in Boulder during the 2nd quarter fell 14.7% from the year before. 


How’s that possible? Let’s roll up our analytical sleeves and take a closer look. It’s time for a market update.


Take a look at the chart below.  

Limited inventory continues to drive prices.   


Inventory of attached dwellings (i.e. town homes, condos, and duplexes) has fallen almost 10% this year. It’s 46% below 2014 and 73% lower than the last cyclical peak in 2006.  


Inventory of detached dwellings (i.e. houses) has risen slightly this year, up 4% from 2015. It’s 16% below 2014 and is 57% below the last cyclical peak in 2006. 


Let’s break it down further. Here’s the change in sales volume for the 2nd quarter by price range.  

As usual, it’s a tale of two markets. The chart above shows the change in 2Q sales volume from the preceding year. Homes priced below $800,000 saw a drop. Homes above this price saw sales volume increase, with the $1.3 to $1.4MM range doubling from the previous year. 

The chart above shows inventory absorption during the second quarter (based on current inventory levels) by price range. Absorption is the best proxy for demand. The higher the absorption, the higher the demand. No surprise, the greatest shortage is at the entry level where relative demand is more than 3x higher than $800K to $1.4MM.  


During the last downturn, prices were pushed down by a glut of inventory at the top of the market. This time around, it’s driven upward by scarcity, most notably at the entry level.  


The median sold price for residential real estate in Boulder rose 19.1% during the 2nd quarter (compared to the same period a year ago). This is on top of a 17.0% increase the prior year.  

The Bottom Line 
Prices are still rising due to extremely low inventory levels, low mortgage rates, incredibly low yields for assets across the investment spectrum, and a healthy local economy. Yet, the market is also starting to show signs of slowing. Double digit appreciation is not sustainable. Don’t expect it to continue forever into the future. If your Realtor tells you that Boulder real estate never goes down, ask someone who bought at the top in ’05/06 and had to sell before ’09, and then hire a better Realtor.

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