The Silver Fern

Thursday, July 16, 2009

Louisville, an Alternative to Boulder Real Estate? (+ House Tour)

How's the real estate market in Louisville, supposedly the best place to live in America?

Let's take a look.

As the chart below shows, there were 107 homes in inventory in June, 35% more than last year but still a bit below 2006. Overall, inventory levels are slightly elevated. The chart doesn't show 2004 or 2005, which both had higher inventory levels than this year.

The next chart shows sales volume in Louisville. This year started off with lower than typical but June experienced a bit of a spike, returning to more typical levels. 30 deals closed last month, up 88% from May and an 11% increase from last June.

Let's drill down to the market by price range. The next chart shows market conditions over the past twelve months. Sold volume (blue) and withdrawn/expired listings (pink) are compared to current inventory levels. As you can see, the Louisville market is very healthy with sales volume eclipsing inventory levels at the lower end (red circle). There have also relatively few withdrawn or expired listings.

The most robust portion of the market is clearly $250,000 to $350,000, just below the entry level for Boulder. In other words, the entry level house for Louisville is about $100,000 less than the entry level house for Boulder's house market.

If you're considering buying an entry level house in Boulder, you really should consider Louisville too.

So... What can you get for $250,000 to $350,000 in Louisville? CLICK HERE.

You'll find a selection of reasonably attractive homes. Some are ranches, others bilevels. A variety of locations. Zoom in on the map to see locations.

At this price range, houses close to downtown clearly need maintenance/repair (fixers), including 508 LaFarge Ave and 720 West St. But there are better maintained examples nearby, including 209 Sycamore Lane, 248 Sycamore Lane, and 162 S. Carter Ct.

On paper, 248 Sycamore seems to be the most attractive of the bunch. Perhaps an in-person visit is in order. My Saturday morning is currently open. Want to join me?

note: If the links to the listings above are not working, it's likely the property is no longer available.

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Note: Our goal is to provide an exceptional level of service to our clients. The ideas and strategies in this blog are the opinion of the writer and subject to market uncertainties. Silver Fern Homes recommends careful and complete due diligence before buying or selling real estate or other investments. Consult with your professional advisers before making investment decisions. This article is not legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment choices derived from this article.

Wednesday, July 15, 2009

Boulder Market - How Soft?

It's about supply and demand, period. In real estate, inventory represents supply and sales volume is indicative of demand.

You may have read a recent Daily Camera's article, highlighting improving conditions. Our analysis of Boulder real estate paints a less rosy picture.

The following chart shows inventory and sales volume over the past twelve months, compared with the average of the preceding four years. The green bars are sales volume. The white bars are inventory levels.

As you can see, volume was off by over 35% last month. If "not as bad" means improving to you, then yes, sales have been getting better. For the rest of us, sales volume looks pretty horrendous.

Inventory levels are also high, now over 25% above average. Relative to truly distressed markets, that's not a massive amount, but there's still plenty of inventory. How many homes you have to choose from depends on your price range and location.

Download the Silver Fern Report for charts showing prices, days on market, discounts, and much more. The report covers Boulder, Boulder AD, Broomfield, Erie, Lafayette, Longmont, Louisville, and Superior. If you're interested in seeing the client version, which includes a breakdown by price range, just drop me an email at osman@silverfernrealty.com.

Remember, if you're serious about getting a great deal, you need to know real estate conditions relative to your unique situation. We deeply analyze the market so we can better advise our clients. Contact me for a private consultation. ph: 303.746.6896.

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Tuesday, July 14, 2009

Boulder High End Real Estate: Sales Off 44%

Here's what's happening in the Boulder real estate market for luxury, high-end homes (from the Silver Fern Report.)

A few years ago, we developed an index to better illustrate market conditions for Silver Fern's clients. Just like a stock market index, there are criteria for inclusion.

To qualify for the Silver Fern Luxury Home Index, property must be between 3,000 and 6,000 SQFT. It must have 3 to 6 bedrooms and 3 to 6 bathrooms. These properties must also be priced above $1,000,000 (adjusted for inflation, base year 2007) and within the City of Boulder.

Let's take a look...

Sales Volume

The chart below shows annual sales volume from 1997 through today. The last twelve months (LTM) is the bar on the right, past the red line.

As the chart indicates , sales volume for luxury properties peaked in 2006. From there, volume has steadily decreased each year. During the LTM, only 48 properties sold, representing a 44% decline in volume from the peak.

Absorption, Inventory, and Withdrawn Listings

On the flip side, inventory has increased substantially. As the chart below shows, there are over 120 properties listed that fit the characteristics of the index (black bar). With only 48 sales during the past 12 months (green bar), this represents over 30 months of available inventory.

Withdrawn or expired listings (blue bar) are another way to evaluate market conditions. Sellers tend to pull listings (or choose another agent) when their price isn't being met. This is a measure of seller frustration. During the peak year (2006), there were only 81 withdrawn or expired listings but over the LTM, there were nearly 150, an increase of 78%.

Take Home Lessons

Sellers of luxury, high-end homes need to be especially careful choosing an agent in today's market. Well priced, carefully marketed homes are selling but you only have one shot during the first 90-120 days. Much of the work is done before you list the property on the MLS. If you blow it (by mispricing, not having it professionally staged, using lame marketing, etc), you'll end up in a big pool of overlooked/dismissed inventory. That's a direct path to price reductions and the seller's walk of shame.

If you want maximum value and a short listing period, the answer is to get an agent who REALLY knows the market and can employ an effective marketing strategy. This means a deep analysis of real estate conditions. Location, condition, and specifics matter. It also means selective and sometimes guerilla marketing, including specific approaches to handling offers.

Buyers should choose an agent who knows how to find and negotiate a great deal. Some agents may be reluctant, afraid they may offend a seller with a low offer. That's nonsense, especially in today's market for luxury homes in Boulder.

If you're looking for an agent who thrives on negotiation and loves helping his clients find value, give me a call. You can reach me at 303.746.6896 or email osman@silverfernrealty.com.

By the way, there's a lot more information to consider in Silver Fern's Luxury Home Index. Among other things, the client version of the report shows Days on Market (DOM), Median Sold Prices ($/T.SQFT), and Negotiated Discounts. Contact me if you'd like a copy.

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Monday, July 13, 2009

The Silver Fern Report - Market Update

Grab a cup of coffee, there's LOADS of information in this month's Silver Fern Report.

At Silver Fern, we're here to help you make a smarter decision AND get a better deal.

By the way, blog readers can subscribe and receive this monthly report directly via email. Just drop me an email at osman@silverfernrealty.com. Silver Fern clients and friends receive the extra research (as described below).

--- LINK TO DOWNLOAD THE REPORT ---

The Silver Fern Report (PDF) - An analysis of real estate conditions in Boulder and surrounding areas.

--- FOR CLIENTS AND FRIENDS (links deactivated) ---

SF Quarterly Luxury Index (PDF) - An analysis of the luxury home market. Pass the Grey Poupon.

SF Quarterly Home Price Index (PDF) - An analysis of the basic home market. A look at your average house, pass the PBR.

SF Market by Price Range (PDF) - a look at Boulder's market broken out into price tranches, including withdrawn and expired listings (a proxy for seller frustration). This is a road map to the market and in the right hands, information we can use to negotiate a great deal.

SF Foreclosure Update (PDF) - the latest trends in foreclosures in Boulder and surrounding areas. Can you guess where most of them are?

--- BY REQUEST ONLY ---
Analysis and Negotiation at the Peloton (PDF).

I put together this analysis to help a client negotiate the best possible price at the Peloton. It shows discounts and sale prices BY UNIT from pre-construction to today's "special" pricing. To put this together, I assembled a database and literally sat down with the sales staff of the Peloton to confirm sales unit-by-unit. If you really want to KNOW that you're getting a great deal at the Peloton, you'll want this independent analysis. It's up to date and only available for Silver Fern's clients buying at the Peloton.

---NOTE---
This month, I decided to go ahead and skip the delay in publishing this report to the blog. Let me know what you think by leaving a comment.

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Friday, July 10, 2009

House Size Limits Approved by Planning Board

Boulder's Planning Board played to a packed house last night, hearing concerns from 50 residents before passing recommendations to enact new house size limits. I attended the early part of the meeting and tweeted my observations. The approved recommendations included minor changes from the earlier proposed ordinance.

From the Camera:

The final planning board recommendations include all the content from the staff draft issued last week, with the following changes:

Increase the footprint of a home from the recommended 30 percent to 35 percent. This means a house could cover more of its lot on the ground level.

Raise the recommended floor-area ratio of .45 on a 7,000-square-foot lot to an FAR of .5. This means the total allowable square footage of a home would increase on a sliding scale.

Limit any restrictions to the city's Residential-Low 1 district, the city’s largest zoning area made up of mostly single-family houses. The draft included several other zones, including mixed-residential and residential estates. The board wants the city to evaluate after one year whether to include the other districts.

Exempt contributing historic accessory structures from all restrictions. This means sheds or other structures designated a historic landmark by the city would not be included in FAR's or footprints.

Include rules for wall articulation. This would increase permit fees by several hundred dollars and put more restrictions on wall length.

Exempt 150 square feet of covered decks or patios not on front porches from floor-area ratios. The draft ordinance includes provisions for up to 300 square feet of front porches

If the proposed new rules continue to move forward, they are expected take effect in early October.

References:

Planning Board Memo (revised 6/30/09)

City's Pops and Scrapes Page

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Tuesday, July 07, 2009

The Peloton - Market Update

A potential buyer called me the other day, asking about my most recent analysis on the Peloton. He wanted to make sure he was getting a good deal and he wanted independent representation. He asked us to work with him.

For this buyer (now Silver Fern's client), I spent some time at the Peloton today. I updated my analysis with the most recent sales and pricing information. This analysis is now very detailed, showing sold prices for each unit. Importantly, it also shows to what degree individual units have been discounted from preconstruction through several rounds of price reductions.

Armed with this information, my buyer can compare his deal with others. When we're finished negotiating, he'll know precisely how good a deal he's getting. For a buyer that wants to be sure, this is piece of mind.

I can't disclose more specifics about my analysis at this time because we're in the middle of a negotiation. If you're interested in buying at the Peloton, give me a call. Using my independent analysis, I can help you negotiate the best possible deal on a unit in the Peloton.

For the Peloton, the good news is that after a slow period, things are heating up. Their sales team has 8 units currently under contract and ready to close within the next month.

If you want to talk about real estate, email me at osman@silverfernhomes.com or call 303.746.6896.

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Negotiating Rule #2 - Should You Be Mr. Nice Guy?

In this continuing series on negotiation, let's return to Rich Levin's rules.

Rule #2: Don’t let the buyers and sellers come to dislike each other.

You take responsibility for what you convey to all parties. The most frequent reason buyers and sellers come to dislike each other is because the Agent talks about one party to the other. So if you hear your client or yourself beginning to disparage the other client intercede and suggest that whatever the reasons for the Client’s behavior might be, let’s focus on putting together the sale and getting the move complete.

If I wrote this article, my Rule #2 would be "Focus on achieving your clients' goals."

The first step is to help clients determine goals for biggies like price and closing dates. A big part of this is understanding the current market, something that should happen well before negotiation begins.

When I write an offer for a client, I walk through the likely negotiation ahead. We can then adjust the strategy to increase the probability of achieving the goal. Remember, agents undertake and advise on negotation for their clients. Put another way, they shouldn't be working to get a deal "done," they should be working to achieve the client's goals.

"Niceness" may help negotiation go more smoothly but it shouldn't be a rule. For one thing, not being nice on certain issues (strategic friction, if you will) can sometimes further a deal toward the client's goals. In the heat of negotiation, it can be challenging to not take it personally when the other side isn't being nice. This is one of the reasons to use an experienced agent. In negotiation, only carefully considered information (which sometimes, but not always, includes emotional reaction) should be conveyed to the other side.

The article also points out that agents should take responsibility for communication. This really goes without saying. Experienced negotiators know that every word conveyed between parties is part of the negotiation itself. If you're dealing with a good negotiator, keep in mind that even the most offhand information exchanged is seldom accidental. There is intention and often careful calculation behind everything.

At Silver Fern, we help our clients make smarter real estate decisions. For a confidential conversation about your real estate situation, call me at 303.746.6896.

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Monday, July 06, 2009

Like Living with a Peculiar Relative

I hope everyone had a wonderful Independence Day. Here at Silver Fern, our weekend was blessed with the rich experience of being outdoors (hiking and camping) and enjoying the company of good friends.

This morning I came across an enjoyable description of living in Boulder.

From Richard Freeman's Yoga Workshop:

Living in Boulder is kind of like living with a peculiar relative. You get used to it, it seems kind of normal—if not the way things should be—and your life is much more interesting and rich because of it. You have insights into corners of life that others don’t even know exist, and even though sometimes it can grate on your nerves, making jokes about it seems to be enough to make it all seem quite lovely.

Read more on the Yoga Workshop's About Boulder page.

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Thursday, July 02, 2009

Oops, Make that 30% Lot Coverage

From a recent email:

The Planning Board memo that was released on Friday, June 26, 2009 was revised and reposted today on the Compatible Development project Web site. Under the Staff Recommendation for 'Building Coverage' on page 3, the table should have read 30 percent not 35 percent. This error has been fixed and a correct memo has been posted.

The Planning Board meeting, beginning at 5 p.m. on July 9, 2009 will also be televised live on Boulder Municipal Channel 8.

NOTE: If this issue concerns you, ARRIVE AT 4:45PM TO SIGN UP TO SPEAK at the July 9th meeting. The meeting will be held at City Council Chambers, 1777 Broadway, Boulder CO.

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Tuesday, June 30, 2009

Proposed House Size Limit Key Components

The proposed ordinance includes the following key components (attachments linked below):

1. Floor Area Ratio on a sliding scale based on lot size (see Attachment I):

• 0.45 for a 7,000 square foot lot for the RR-1, RR-2, RE, and RL-1 district. In the RL-2 district, the FAR standards apply to lots 8,000 square feet and larger.

• 0.55 for a 7,000 square foot lot for the RMX-1 district.

2. Building coverage on a sliding scale based on lot size (see Attachment I):

• 30 percent for a 7,000 square foot lot for the RR-1, RR-2, RE, and RL-1 district. In the RL-2 district, the coverage standards apply to lots 8,000 square feet and larger.

• 35 percent for a 7,000 square foot lot for the RMX-1 district

3. Bulk Plane - Beginning at the property line, 12 feet in height and then one additional foot in height for each additional foot in setback.

See pages 21-24 of the analysis section for more detail. In the RL-1 zone, the bulk plane standards will not apply to those properties located within a PD, PRD, or PUD. The new proposed bulk plane will not apply to the RL-2 district, which has an existing bulk plane standard.

4. Properties that are individually landmarked or located within a designated historic district would be subject to the new standards but would be able to receive an exemption for bulk plane and building coverage upon approval of a Landmark Alteration Certificate.

5. Variances to the following standards would be allowed through the Board of Zoning Adjustment:

• Bulk plane (Attachment A, Table 7-1)

• Building coverage (Attachment A, Table 7-2)

6. The proposed ordinance would become effective 60 days following City Council approval.

The proposed regulations generally apply to the following:

• All residential uses in the RR-1, RR-2, RE, and RL-1 zone districts.

• RL-2 - Only those properties shown on the project map (Attachment D). Single-family detached uses located in a Planned Development (PD), Planned Residential Development (PRD), or Planned Unit Development (PUD) that have restrictions on house size have been excluded from the regulations.1

• RMX-1 – All single-family detached uses.

Properties that have a contractual annexation agreement with conditions related to house size are excluded from the proposed regulations. In the case of properties subject to the regulations that are part of a PD, PRD, or PUD, the more restrictive provisions will apply.

references:

Planning Board Memo

City Website with Attachments

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House Size Battle Heats Up in Boulder

A storm has long been brewing in Boulder over City Council's efforts to further regulate house sizes. First there was Council's attempt at passing a emergency ordinance. It failed. Next, Council tried a fake public process supposedly to build concensus. It boiled down to several months of pricey consultant led workshops, designed to promote "the problem." It was a solution searching for a problem, masquerading as public process. In the end, Council didn't think the consultant's recommendations went far enough, so they directed staff to take it up a notch.

Only three public hearings are left before a vote and the dark clouds looming over Boulder are threatening to let loose a torrent.

I'm not the only one who has noticed Council's disregard for property rights. Angry residents have organized the opposition. Leave My Home Alone is a grass roots group of concerned residents whose believe City Council is going too far. Check it out.

Leave My Home Alone

Be sure to read the group's position statement.

The next public meeting is Thursday, July 9.

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Monday, June 29, 2009

Negotiating Rule #1 - Choose an Experienced Negotiator as your Agent

Rich Levin writes:

"Most agents have little or no specific training in negotiating yet it is a major component to an agent’s success. "

He's right.

Which is why Dallice and I have spent a great deal of time and effort developing our negotiation skills. Each of our clients benefits from the classes we've taken on negotiation, books we've studied written by world class negotiators, and from our direct experience negotiating countless deals. At Silver Fern, we love to negotiate and when negotiation goes beyond typical, Dallice and I will usually both weigh in. Our clients essentially get a negotiation advisory team on their side.

Today, I came across Rich Levin's Top Ten Negotiating Rules for REALTORS. His article offers good basic advice on real estate negotiation. It's worth a read, but he also strays a little off the mark at times. In this series of posts, I'll add a few thoughts to his negotiation rules.

Rule #1: Do not go back and forth between the Buyer and Seller more than twice or you make them crazy. At and after the third round your chance of making the sale drops dramatically.

If the goal is to make the sale, this makes sense but if your goal is to get help your client get a great deal, there will be exceptions. Contrary to Levin's advice, tough negotiation often involves several rounds of discussion and cooling off periods can be useful after one party walks away from a deal. The key is for the agent to follow up several weeks (or months, or for high end property, even years) after the initial negotiation failed. Unfortunately, most agents don't bother.

It Pays to Follow Up.

Recently I helped a client buy a property with a very large discount by following up two months after the initial negotiation seemingly failed. For obvious reasons, I can't discuss specifics but here are the essential elements.

1. The property had been on the market for many months (well seasoned) and the recorded mortgage suggested room for negotiation. The property was also an investment for the seller (rental history) and thus, they were less likely to be emotionally attached.

2. Working with my clients, we carefully analyzed the market and developed a negotiation strategy. Well before submitting the first offer, I outlined how the negotiation was likely to play out.

3. We wrote an offer which included a market analysis supporting the low price.

4. As expected, the initial low offer was rejected. I had several discussion with the seller, but she was unwilling to make a concession. I advised my clients to keep shopping.

5. Several months later, I followed up with the seller's agent and negotiated verbally on behalf of my clients. Note: in order to negotiate like this, there has to be trust between me and my clients. At a minimum, I needed to understand my client's acceptable price range for the targeted property.

6. As often is the case, the verbal negotiation itself was tense but productive. I postioned my buyers as financially strong (able to close) but not in love with this property (willing to walk). I reiterated my earlier points, stressing the length of time the property had been on the market and that there were several competing properties from which my buyer could choose.

7. The first time around, our offer was rejected. Now, after the cooling off period, the seller was more willing to make concessions. Essential terms of the deal were verbally agreed upon and I wrote up the offer.

8. My clients were thrilled. The deal I negotiated for them was actually below their target range. They got a very good price on their home.

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If you found this post useful, please let me know. In the past, I've shied away from writing about real estate negotiation, largely because it has potential to be counter productive. Many agents in Boulder read this blog and our first priority is to use our skills to benefit clients.

If you'd like to discuss your specific real estate situation with me, please call 303.746.6896 or email me at osman@silverfernhomes.com

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Thursday, June 25, 2009

Correction: SF Report Download Link

Correction: the link to download the Silver Fern Report in my last post was to an older report (now fixed).

Here' s a link to the current month:

Silver Fern Report (PDF)

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Wednesday, June 24, 2009

Download the Latest Silver Fern Report (PDF)

The Silver Fern Report is an analysis of real estate market conditions in Boulder and surrounding cities. Markets covered include Boulder, Broomfield, Erie, Louisville, Lafayette, Longmont, and Superior. If you're considering buying or selling real estate, this report is a good starting place to understand the market.

A link to download the latest report, with data through the end of May 2009, is below:

Click HERE to download the Silver Fern Report (PDF)

General market performance, including year over year (YoY) and month over month (MoM) percent change is in the table below.

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Monday, June 22, 2009

About Jobs and Housing in Boulder

Looking for a job? Be glad you live in Boulder.

The job market is a good barometer for housing (except in areas with a lot of second homes). In theory, when jobs are plentiful and hiring is difficult, housing does well. When jobs leave an area, housing also tends to decline.

Here's some news that might surprise you. Despite the doom and gloom, the job market in Boulder is relatively healthy. Let me explain.

From Friday's BCBR:

In Boulder County, the unemployment rate increased to 6 percent in May with 10,662 jobseekers out of a 178,687-person labor force. The local unemployment rate is up from 5.8 percent a month ago and 3.8 percent a year ago.

As everyone knows, unemployment has been on the rise. Likely you know a friend or family member that was laid off recently. With respect to the Boulder housing market, this increase mirrors what's happening with low sales volume (off 36%) and increasing inventory (up 27%).

The good news is that unemployment in Boulder County is still well below the national average of 9.4% and almost half of California's 11.5%. Take a look at the chart below:

In the midst of this economic downturn, what does relatively low unemployment suggest for Boulder's future?

At times of uncertainty, it's a smart to look to the future. In the long run, because of the enormous wealth of creativity and talent in Boulder, it's likely that the local job market will bounce back and with it, a stronger housing market. Consider that large, technology driven employers like Conoco Phillips continue to cement plans for moving in and, even in this market, local startups like Clovis Oncology are successfully raising capital ($145MM for Clovis).

Recently Richard Florida, author/researcher of demographics and creativity placed Boulder high on his list of best cities to live. He ranked Boulder as among the best places for young singles, the best for mid-career professionals, the best for families with children, and the best for empty nesters.

Congratulations Boulder! We're among the best for a lot of different types of people.

Creativity is closely linked to entrepreneurship and it's an indicator of long term economic vitality. So if you're out there job hunting and not finding any luck, stick around. Things will get much better in Boulder soon. For further reading, I recommend checking out Richard Florida's website: creativeclass.com.

p.s. Florida is hardly alone in recognizing Boulder as a great place to live. Here's a few others that have noticed.

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Saturday, June 20, 2009

Boulder House Tour - Are You Ready?

I've planned our route and tomorrow's house tour is ready to go. The weather forecast for is looking good, and the houses I've chosen should be of interest. It should be fun, so I hope you can make it.

The results of the survey showed more interest in historic properties and fixers. I've chosen the homes accordingly (see below). There will be five houses on the tour.

Those wishing to see my house won't be disappointed. Well, at least you'll get to see the outside. It's the starting location!

The event begins at 10AM. Meet at 285 Martin Drive. Bring water, it could be a warm day. Oh, and obviously don't forget your bike!

Remember, space is limited. First come, first served. We should be finished before 1pm. After the tour, those interested are welcome to join me and Dallice for lunch.

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Friday, June 19, 2009

Boulder Townhome and Condo Market Update

Q: How do you know you're getting a good deal?

A: Know the market.

To help you understand the market in Boulder for town homes and condos, here's an update on real estate conditions (as published in the Silver Fern Report).

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If your goal is to get a great deal, email me at osman@silverfernhomes.com. I can help you learn more about the Boulder real estate market and make an educated real estate decision.

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Sales Volume:

53 condos and town homes sold in May, down 38% from last year. Over the last twelve months, 590 properties sold, a decrease of 19% from the same period a year ago. As the chart above shows, 2009 started off in a typical fashion but sales volume began falling off in April.

Inventory:

This might suprise you. Inventory levels in Boulder are not high. There were 526 properties listed in May, that's just a 1% increase from the same period a year ago.

Sales to Inventory (Absorption):

This charts shows the relationship between sales volume and the preceding month's inventory (absorption). Typically April through August defines the peak selling season for condos and town homes. If you're a seller and you miss the window, the opportunity to get an optimum price declines markedly into the Fall.

Absorption this year is hovering around 10%, rather than a more typical 15%-18%.

Current Conditions Compared to Average:

This chart compares the current year to the average of the preceding four years, for both monthly inventory and sales volume on a percentage basis. As you can see, despite somewhat erratic lower sales volume, inventory levels are low. This points to owners who, sensing a weak market, are willing to hold onto their investments. This must be disappointing for you bears on the sidelines, hoping for a flood of inventory at bargain prices.

Days to Offer:

This charts shows the average days to an accepted offer. It was 118 in May, up 103% from last year. DTO has been up (year over year) for the past 7 months in a row. To understand more about DTO, please click HERE.

Median Sale Price

The median sold town home or condo in Boulder closed at $247,700 in May. For a discussion of prices, please click HERE.

I hope this analysis has been useful to you. To learn how you can use market information to make a smarter real estate decision, call me at 303.746.6896.

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Silver Fern's House Tour by Bicycle is this Sunday, June 21. Click HERE for more details. Click HERE to help us choose the homes on the tour. I hope to see you there!

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Note: Our goal is to become the best real estate resource for Boulder Colorado and surrounding communities. The ideas and strategies in this blog are the opinion of the writer and subject to market uncertainties. Silver Fern Homes recommends careful and complete due diligence before buying or selling real estate or other investments. Consult with your professional advisers before making investment decisions. This article is not legal, tax, or investment advice. Silver Fern Homes will not be held liable for investment choices derived from this article.

Thursday, June 18, 2009

Boulder Builder: Industry Struggling, Misguided To Raise Fees

A few weeks ago, I reported on City Council's intent to massively increase fees on remodeling, new construction, and other types of permits. Yesterday, a friend passed along the following open letter from Jeff Hindman, owner of a local building firm.

It's worth reading.

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All -

According to yesterday's Camera the Boulder City Council will consider adopting a much higher fee structure for new homes and remodel projects in the City. It is amazing to me that at a time when every other governmental agency in the Country is trying to stimulate jobs and bring the economy back to "normal", the Boulder City Council seems intent on damaging the construction industry as much as possible. I personally know of 5 contractors / subcontractors and that have closed their doors and gone out of business. The Impact Fee model is a good way to charge for development impacts, but if it will increase residential permits 11-23% as stated in the article then this is not the right time to switch systems.

Unlike the production home industry, most Boulder projects are done by small to medium sized companies that are run by entrepreneurs and tradespeople that went out on their own. The amount of economic activity and tax / permit revenue brought in the City from these small business and their construction projects is absolutely huge. My company Cottonwood Custom Builders, based in North Boulder, has generated $29,183,492.81 of work in the City and County since January of 1996. We also own our office and pay property tax in the City. This is a small 5-10 person operation and I believe we are representative of many small construction firms that are hugely beneficial to the City's revenue stream.

At a time when the building industry is, to say the least, struggling it is completely misguided to propose raising fees at this point in time. This is on top of the new energy requirements that have increased costs to the owners and the proposed size regulations which may prohibit some good projects. Many Boulder homeowners are hard pressed to remodel their old and leaky homes with today's regulations and fees, let alone changes that further push the ability to upgrade homes to just the wealthiest in town.

This reminds me of past city councils that were against commercial development and creating jobs in Boulder and they chased all the major projects to Louisville and Broomfield. After a couple of years of seriously declining sales tax revenue they woke up and scrambled to attract someone to redevelop the old Crossroads Mall and today we have a major upgrade in the 29th Street complex. This was a big improvement and it could have happened earlier. The old Crossroads Mall sat nearly abandoned for several years due to anti-business city policies.

As evidenced by all the new and proposed requirements for construction and also as shown by the current City Council's denial of the staff approved new building at the site of Robb's music next to the Liquor Mart parking lot, the building industry in Boulder is under attack. Considering the high quality of the vast majority of Boulder projects, this is a complete overreaction fueled by current Council members personal opinions and a small number of vocal NIMBY's that are opposed to changes or upgrades in existing neighborhoods. Are there some ugly remodels and new homes in Boulder? Yes. Have there been projects built more poorly than others and that barely met or exceeded the IECC. Yes! However, new heavy handed regs and increased fees are not the best solution to a small percentage of projects that pose the problems. Would you rather the new half of the house exceed current code v. the whole house staying as is because the new rules are cost prohibitive to the owner?

Is discouraging or further slowing the construction industry in Boulder a high priority for the City in the current economy? I believe it is fair to say that there are many pressing issues that deserve attention more urgently. The headline in today's Camera next to the article about "skyrocketing" fees for remodeling or new homes, was regarding the City Council's proposal to ask voters for tax increases this fall to make up for declining revenue. The irony is inescapable. At a time when they are hurting for revenue, the City Council is proceeding to depress the construction industry further, while simultaneously asking residents suffering from the bad economy to increase taxes so the City can just keep spending. New laws and fees on construction will mean a continuing downturn in a huge revenue stream for the City. It seems that the current Council is oblivious to the potential for negative results from their current policies.

Please consider attending tomorrow's City Council meeting or writing the Council a letter or email and urging them to not further hurt an industry very beneficial to a majority of their constituents, the Boulder taxpayers.

Thanks. If you do not want to be on this list regarding further developments on City of Boulder issues, please reply as such and I will delete your address.

Jeff Hindman - President
Cottonwood Custom Builders, Inc.

Two added notes. Someone called me this morning to say there was a report on 9News last night that the City of Denver is planning to waive all building fees for two months to stimulate construction projects in the City. The are urging homeowners that have been planning or considering a project to do it now and take advantage of this discount for their project. I don't have the details.

Also, the headline in the Loveland Reporter-Herald today is that the City will consider reducing their building and development fees tonight to stimulate projects there. According to the officials quoted, they feel this is a necessary step to make sure projects come to Loveland and not surrounding communities.

I am on the City Council in Berthoud and we reduced our building fees 25% several months ago to encourage builders and developers to start their projects in Berthoud.

In a free market economy that is what businesses do during slow times -- they reduce their prices to stimulate demand! Businesses don't raise their prices when the economy or demand for their product is down.

Boulder officials need to wake up and change their outlook towards building projects in their City.

Thanks.

Jeff Hindman - President
Cottonwood Custom Builders, Inc.

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Broomfield, CO Real Estate Market Update

How's the Broomfield real estate market doing? Here's an update, as published in the latest Silver Fern Report.

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If your goal is to make a smarter real estate decision, email me at osman@silverfernhomes.com. I can help you learn more about the Broomfield real estate market and make the most of your real estate situation.

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Sales Volume:

25 homes sold in Broomfield this past May, 8.6% more last May. Over the last twelve months, 345 properties have sold, a year over year decrease of 5.7%. As you can see in the chart above, sales volume appears to be following a fairly normal seasonal trend. The last few years have seen a small spike in June, an event unlikely this year given the weak job market, tighter appraisal guidelines, and recent rise in mortgage rates.

Inventory:

There were 211 properties on the market last month, 8.6% less than the year before. As the chart above shows, inventory levels are running lower than the last few years. There's some logic to this, given the large employers that Broomfield continues to attract.

Sales to Inventory (Absorption):

The sales to inventory ratio was 12.3% in May, an increase from 10.7% the preceding month and last May's 9.9%.

Current Conditions Compared to Average:

This chart takes monthly inventory and sales volume statistics and compares it to the average of the four preceding years. A picture emerges of sales volume that in some months spikes well above average and in others drops below. Unlike other local markets, the trend for sales volume isn't consistent month to month. Inventory meanwhile has remained somewhat low, but keep in mind that most new construction is excluded. Builders in Broomfield also manipulate available supply as demand dictates.

Days to Offer:

The average days to offer last month was 97 in Broomfield, an sharp increase of 70% from the year before. The last few months have experienced higher days to offer than the preceding years, April remarkably so. If this is your first time reading about DTO, be sure to consider the caveats.

Median Sale Price

Finally, here's a chart showing median sale price. Last month, the median was $295,000, up from $289,000 the month before. It's important to understand what median price changes really indicate, for a discussion, click here.

I hope you've enjoyed this analysis. To have a confidential conversation with me about your real estate situation, call me directly at 303.746.6896.

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Wednesday, June 17, 2009

Choose Your Own (House Tour) Adventure

Our first house tour by bicycle is this Sunday.

Would you like to pick the houses for the tour? Take the poll below..

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