I Have Moved My Blog

Effective February 25th, 2009 I have launched a new blogsite at:

TheBoulderBlog.com

I am really excited about the added functionality of the new site and I hope you come over to take a look. All of the posts from this site have been imported.

The new site features a property search, great local links, my updated statistics, "Image of the Week" and much more.

Please visit and send me some feedback.

See you soon,
Neil

Mortgage Relief Plan Announced

President Obama has been busy over the past few days (not that the President is ever just sitting around). Yesterday he was in Denver signing the stimulus package. He was in Colorado highlighting the green technology movement which is huge here and mentioned that Boulder might be the first "smart grid city" in the nation. In fact Blake Jones from Namaste Solar in Boulder introduced Obama. He also took the President and Vice President on a tour of the solar panel installation on top of the Nature and Science Museum in downtown Denver (photo from the Rocky Mountain News).

Today he was in Phoenix, a city greatly affected by the housing crisis, to sign the "Homeowner Affordability and Stability Plan".

The goal of the mortgage relief plan is to help avoid foreclosures by providing incentives and a framework for refinancing and loan modification for at-risk homeowners. The administration estimates that the plan will offer assistance to as many as 7 to 9 million homeowners.

The first part of the plan is to provide access to low-cost refinancing for responsible homeowners suffering from falling home prices. The fact is that even a well qualified homeowner cannot get a new loan these days without 20% equity in the house. This part of the plan allows for a waiver of the 20% equity requirement if that is all that is holding up a refinance which will lower payments.

The problem I see with the implementation of this first part is that the homeowners who really need the help will not be considered "responsible". Homeowners who have lost their job or those with poor credit will not qualify for this program.

The second part of the program provides a mechanism for at-risk homeowners to modify their mortgage payments to a reasonable level. This provision has some real promise to do some wide-spread good. If it works as written homeowners will be able to keep their homes, thereby reducing the negative impacts of foreclosures.

The goal is to reduce payments to between 31% and 38% of income. The program uses up to $75 billion to pay down, match and provide incentives to mortgage lenders and borrowers. Once a loan is modified the terms must keep the modified payments in place for a minimum of 5 years. For each modification the lender will receive and upfront payment of $1,000. They will also receive a payment monthly if the borrower stays current on the loan (not to exceed $1,000 a year for 3 years). Borrowers who stay up to date will receive an monthly balance reduction that goes straight toward reducing the principal balance on the mortgage loan.

For more complete details go to the following sites:
Plan Summary
Fact Sheet
3 Examples
CBS News Q&A

Overall I think it is a step in the right direction and I hope that the mortgage companies do not drag their feet too much in its implementation.

How Are Prices Holding Up?

I am starting to see more signs of activity in the market. More homes have gone under contract and the number of showings continue to climb. As I study the daily market updates I get at my desk, I notice that most of the activity is in the lower price ranges.

Just this weekend 17 homes went under contract in Boulder County. Fifteen of these homes are priced $335,000 or under. Of the two higher priced sales one is listed for $499,000 and the other is listed for $3,379,000. The later is a rarity. Currently there are 74 homes listed in Boulder County for $2.5 million or higher. Of those 5 are under contract. I have been showing a few of these homes and there are some beautiful homes out there.

I have established that the lower end of the price spectrum is getting most of the activity; but what of prices? I just ran a quick analysis that shows that prices are holding pretty well. I compared the median and average price of homes that are currently under contract to those of homes that have sold over the past twelve months. In order to compare apples-to-apples I adjusted the under contract price by the average negotiation rate for that area over the past year. Here is what I came up with for price change.

• Boulder - Avg. Price - up 3.3% Median Price - up .24%


• Louisville - Avg. Price - up 5.3% Median Price - up .37%


• Lafayette - Avg. Price - down 1.94% Median Price -down 13.9%


• Longmont - Avg. Price - down 5.02% Median Price - up .56%


• Superior - Avg. Price - down .97% Median Price - up 5.9%


• Plains - Avg. Price - up 25.67% Median Price - up 11.88%


• Mountains Avg. Price - down 2.3% Median Price - up 15.11%

These numbers are based on what has actually been selling. In order to get an offer homes must be in good condition and priced about right. Those that are in poor condition or are overpriced do not have much of a shot in today's market conditions. Call me for an honest assessment of your homes current value. Neil 303-818-4055

Realty - Reality

You have probably seen the attached picture before - is it a picture of a young women or an old women? The answer is it depends on how you are looking at it. How you perceive it.

One definition of reality is: "all of your experiences that determine how things appear to you". I agree with this on many levels - I believe you make your own reality and what you know and believe as well as your past experiences effect what is "real" for you. A slum dweller in India has a much different reality than a socialite living in Beverly Hills.

The key word in the definition above is experiences. I submit that this definition is not as true as it once was. Don't worry, I will tie in to real estate in a moment.

In the past (B.C. through the 19th century), reality was based on what one actually experienced. All inputs to opinion were very localized. For example, when there was a famine, chances were that you were hungry. Perceived reality equaled actual reality. There were no outside forces to sway your perception.

During the last century, technology in all of its forms have provided us a wider set of inputs. I guess this is called globalization. We have access to and know more about more subjects. Where we used to just be concerned with our local experience, we now are fed data on an ever-broadening spectrum of subjects. Google (verb) whatever subject you can imagine and have instant access to other's research and opinion's. It is no longer our own experiences that form our perceived reality it is the experiences and knowledge of others.

My point is that our perceived reality may not always equal our actual reality due to the influence of non-localized information. I run into people all the time who can't believe the sorry state of our real estate market. The problem is that they have no actual experience with the market, their perceptions are based on outside information. We are used to making the leap from "the market is bad in Las Vegas" to "it must be bad here as well".

Right now, the media has plenty of negative news to report. There is blood in the water and the sharks are in a frenzy. Foreclosure's in CA, value loss in Michigan, empty buildings in Florida, etc. Bad news all around, a fact. The problem is that people take that news and equate that news to all other areas. The message is that the market is bad, the conclusion is that the market is bad everywhere.

Perception does not always equal reality. While the market in Boulder County is not stellar, it is much better than what you would think by listening to the news. Prices are holding, properties are selling and foreclosures are not a big part of our market. We are very lucky and I'm spreading the word! When you are ready to buy or sell give me a call. I'm here to help. Neil 303-818-4055

Happy Birthday Boulder - 150 Years!

Boulder is celebrating its sesquicentennial this year and today citizens were invited to kick off the extended celebration by ringing a bell 150 times at noon. This was just the first in a series of events to mark the first 150 years of Boulder.


To learn more about the history of Boulder I would recommend the Boulder History Museum and the Carnegie Library.

Here is a timeline and some old photos offered on the Boulder History Museum website.

The best resource for the events surrounding the sesquicentennial is located at http://www.boulder150.com

The Daily Camera has also done a nice job this week in documenting the celebration and the history of our fine city.

Here is a good interactive timeline which gives a good event history with photos. I like the flipbook option.

Here is a video showing the ringing of the bell at the Methodist Church at 15th and Spruce. The Methodist Church was established in 1859, the year Boulder was founded.

Next Tuesday, February 17th you might want to attend the first of six lectures about Boulder entitled Native Americans: the Boulder before Boulder. The lecture will begin at 7 PM at Boulder's Main Branch Library Canyon Theater and is presented by the Boulder History Museum and the Boulder Public Library.

As a Boulder native I am always interested in the changes that Boulder has seen over the years. I love to hear the stories of what Boulder was like when my dad came to town in the 1950's to attend CU. Boulder was a much different place than it is now. One story I especially like is the recollection of horse stables at Chautauqua and riding the horses down Baseline Road to the end of town. The eastern end of town at that time was Broadway, from there it was dirt roads to Kansas.

January Sales Data

Sales of single family homes in Boulder County dropped 28% compared to last January. There were 110 sales during the month. This represents the lowest total since I began tracking this monthly data in 2004. In addition to the single family sales there were 28 attached dwellings which closed during the month.

At the end of the month 13.4% of active listings were under contract. The graph below shows how that compares to the past. But to get the full story you must also consider the number of homes on the market. So let's do some quick math; last January there were 2,011 homes on the market and 17% were under contract = 294 homes under contract. This year there are only 1,637 homes on the market and 13.4% of those homes are under contract = 193 homes under contract. It is clear that our market has contracted. How much and for how long is the question. People are cutting back on major purchases for now and houses are no exception.

Demolition Derby

In my travels during the past few days I came upon the beginning stages of some large projects in the area. These projects are not unlike many others in the Boulder Valley in that in order to begin the new you must first demolish the old.

The students of Casey Middle School began attending Platt about a month ago and I hope they didn't leave anything behind because demolition of the 86 year old school started today. Here are a few photos of the progress. I especially liked to see the sign on the original facade which has been hidden by the addition now being torn down. Actually the south and west facades are being incorporated into the new design, so the street scape won't change all that dramatically.

The demolition of the old is making way for a modern building which I think will give a lift to the entire neighborhood. True to Boulder's heritage it is being designed with many "green" features. The total cost of the tax payer funded project is $31 million. Here is an artists rendering of the new school.

I also noticed this weekend that demolition began on a portion of the Conoco-Phillips site. It is not noticeable from the highway yet but you can see the progress from Monarch High School. We should soon be hearing about the architect of this large project and maybe even see a site plan.

The Arete

The downtown Boulder landscape has changed dramatically in the last seven years. One after another, downtown properties have been torn down and re-born as modern, high-end, multi-use buildings. The buildings typically include commercial space on the street level and luxury condominiums on the upper levels. The first was One Boulder Plaza in 2002 and the latest is The Arete just a block to the west.

It was not too many years ago that the landscape on Canyon Blvd. heading west was pretty shabby and under utilized. From 9th Street heading east there was; a large vacant lot, a restaurant/bar (too many names over the years to name), a parking lot and a one story restaurant/store most recently occupied by Trios. Now you have the St. Julien Hotel, The Arete and 1155 Canyon.

The Arete is the newest building downtown and is slated to start delivering residences this summer. It is being developed by Tebo Development, a leading Boulder commercial developer and investor. In addition to the commercial space on the street level, the building will include 26 condominiums on floors 2 -4. The average price per square foot for all units in the building is $873. The list prices range from $750,000 to $2,875,000. The top floor is made up of 5 units of at least 1,846 square feet. Each of these units is priced at $1,000 per square foot unfinished. I would expect that the eventual buyers would put in $150 - $250 in additional finishes on those penthouse units. This makes the single family homes in the area seem like a bargain.

I have studied this market and have a great spreadsheet of price per square foot for sales over $1.5 million. If you are interested give me a call at 303-413-6624 or send a message to Neil@KearneyRealty.com

Tetherball and the Economy

Beyond sixth grade we don't tend to think about tetherball much. It's a pretty simple game. One of momentum, angles and coordination. Doug White a fellow broker here at Metro Brokers Boulder had a great idea about how tetherball is an analogy for the economy.

First, let's review the basics. Tetherball is played by two people on opposite sides of a pole. From the top of the pole hangs a rope and at the end of the rope is a ball. The goal for each person is to push or hit the ball in a certain direction, either clockwise or counterclockwise around the pole. Before the rope begins to wrap around the pole the circumference of the arc is large and the ball seems to be moving relatively slowly. As the rope begins to wrap around the pole, the circumference becomes smaller and the time it takes for the ball to travel in a circle decreases. As the ball travels around the pole more quickly the players have less time to react. In the end the rope is fully wound around the pole and the ball hits the pole. The game is over and the ball begins to unwind. This is probably more than you ever wanted to remember about tetherball but here comes the analogy.



In our analogy the ball is the economy. On one side of the pole is "Positive Paul". Paul stands for all of the positive forces of the economy. When Paul is doing well the economy is doing well. On the other side of the pole is "Negative Ned" and he represents all that would derail the economy. Since the early 1990's Paul, for the most part, has been been doing well. All of the forces that make Paul work, like job growth, increased productivity, and population growth have been gaining momentum. As a result, momentum builds and companies are created, values on real estate and investments rise. With each arc around the pole momentum builds and the negative forces that slow the economy (Ned) has a harder and harder time even touching the ball. All is good.

During the last decade momentum has built up to a frenzied pace due to increased globalization, easy credit and unprecedented consumer confidence. As of two years ago, momentum had built up to a point where most thought it was unstoppable. The ball was whipping around the pole way out of the reach of Negative Ned. Positive Paul became complacent and cocky and then all of a sudden, just when Paul thought it would go on forever, Ned reached in and stopped the momentum. We are now seeing the excesses of the positive momentum resulting in the economy moving in the other way, quickly. The credit crisis, the housing crisis, unemployment, low consumer confidence; each of these factors is moving the ball in the negative direction. The negative momentum is moving fast since we still at the top of the pole. The economy seems to be unraveling.

Just as the exuberance (bad loans, over hiring, bad personal decisions) of the positive era caused the ultimate downfall of the economy. The correction (layoffs, record low housing starts, increased lending diligence etc.) is resulting in behaviours which will eventually turn it around.

What we need now are forces to stop the negative momentum. In a tetherball game more advanced players succeed because they know how to use angles. The strong hit is not nearly as effective if you hit it right to your opponent. To succeed a player must hit the ball so that the ball is at its highest point right where the opponent is. Right now, I think our overall financial re-trenching is weakening the negative forces, like a boxer punching the gut. What the government is trying to do with the proposed stimulus plan is to change the angle. To make the most of each action. Let's hope they get it right.

Inventory Down in the Boulder Valley

The inventory of existing homes in the United States has reached 11 months. This means that it would take 11 months to sell all of the active listings currently on the market given the sales rate for the last 12 months.

The Boulder area is doing much better than the nation as a whole. In the City of Boulder our inventory is currently at just under 6 months. Louisville is at 3.5 months. The areas with the highest inventory rates are the close-in mountains at 12 months and the suburban plains at just under 10 months. All of these figures are lower than they were approximately a year ago. Sales have fallen but the number of homes on the market have fallen even more. The chart below shows the year-to-year comparison across some local markets.
Just yesterday I spoke with a financial planner from Maui. His client owns a condo in Boulder and he was gathering information about our market so that he could advise her on what she should do with her Boulder investment. As I gave him the details he was amazed by the stability of our market. Steady prices, falling inventory, good rental demand and few foreclosures right in Boulder all pointed toward stability and a quick recovery.

The weather has been great lately and the buyers are starting to come out again. I'm hoping for some early momentum this year to ride us through until the national financial crisis lifts. If you are starting to feel like you want to make a move, don't feel bad. You are not alone. Many people are realizing that this is a good time to make a move. If this is you - I'd be happy to help you. Good information is a great ally in this market and I've got it. 303-818-4055