We’re Back!

Hello friends. You may have noticed that I took a little hiatus. These types of breaks happen sporadically throughout the year, typically for two reasons; either we’ve had an increase in business activity (helping our clients takes priority over newsletters and blogging) or I’m on a quarterly vacation. This time around, I was on vacation.  When I returned, there were several projects that needed my focused attention – including new listings, new transactions under contract, and deals that needed some attention to avoid going sideways. 

Why a quarterly vacation? I’ll credit Brad Feld, Boulder’s most well known VC, for this idea. His blog post Discovering Work Life Balance contained the seed for creating my own practice of taking a quarterly break. Some of my trips are now longer than a week, but I’ve been scheduling and perfecting these adventures for many years. They offer a break from my intensive focus on work, and when I get back I usually have a fresh perspective.  

As a side note – my quarterly trips always seem to involve a high level of intensity and physical activity, a.k.a. Type 2 Fun.  It usually doesn’t look anything like sitting on a beach. My Q1 vacation this year was a week of motorcycling, mostly off-road and physically demanding, in Baja, Mexico. I’m working on a video of that adventure, perhaps I’ll share it with you in the coming weeks.
 

What’s New at House Einstein?

Six transactions closed in March and all agents on the team had at least one deal. That’s a pretty strong March. We would have had seven closings, but we pushed one of my deals to April to allow the comps to catch up. That was an unrequested courtesy to a buyer who might have had trouble closing otherwise. Sometimes it pays to think ahead. That deal should close right around the time you read this newsletter. 

I won’t go into specifics on all of our March transactions, but I will note they were at a variety of price ranges and locations in Boulder and Denver, representing both buyers and sellers. Some were first time buyers, others were seasoned real estate investors looking to sell their property via 1031 exchanges and rebalance their portfolios. Some were first time clients, others were closing their third transaction with House Einstein. I’m deeply grateful for all of our clients. Your trust in us means a lot, and I’m especially grateful for the referrals and repeat clients. 

In other news, we’re now publishing on a much more rigorous schedule on our social media, doing high-end videography for the majority of our listings, and beginning to integrate a new CRM. The goal is to organize and improve our systems to (a) better serve our clients and  (b) facilitate growth – in that order. After experiencing growing pains last year, I’m committed to keeping our team running smoothly and that’s all about systems for how we help our clients and agents succeed. It’s how we make our agents more effective, with less stress.  

Note: We don’t anticipate adding any further agents to our team this year. Our systems are starting to run extremely well, but we did some rebuilding in 1Q and the foundation is not quite ready for additional people. If you’re an agent reading this and looking for a brokerage, look me up near the end of Q4.

How’s The Market?

Take a look at the following video from my colleague Anthony Meisner at Land Title. His analysis of data for Boulder County through the end of March is pretty solid. Here’s the LINK.

Note: He misspoke at the beginning of the video (saying we’re rolling into March, not April), but his over all thoughts on the market are useful to buyers and sellers. It’s true that pending sales are down YoY and inventory is up. This could be an early sign of a better market for Buyers this year than last year, and I agree that sellers are wise to move quickly. 

I also want to be clear that I’m not as bullish on the wisdom of overpaying 7% or 8% for houses based on expectations for continued appreciation. While it’s true, both houses and attached dwellings appreciated more than 20% during the past twelve months, that’s no guarantee of future gain. Likely future appreciation will be far more measured. Also, it’s important to not confuse real appreciation with nominal appreciation. I was still playing with toys when the last cycle of inflation occurred in the United States, but my sense is that income and rents lag real estate gains. Now that mortgage rates are around 5%, I expect gains to flatten or even turn negative on a nominal basis.  

If you’re a buyer, the most important thing you can do is to be highly selective on which homes you choose to target for an offer. Not every property is worth a bidding war. If capital preservation is your priority, you are probably better off buying in the best locations than in marginal ones. Marginal locations are more likely to see a decrease in value when the market corrects. That’s what happened in the ’05-’07 downturn. Certain locations saw a massive balloon in inventory and prices fell quickly (but also recovered quickly).  

 I don’t think we’re going to see a correction this year by the way, though the possibility still exists. If you’re waiting for that before jumping in, you could be waiting a very long time.  Price correction comes after inventory swells. There are many factors keeping that from happening anytime soon.