There are enclaves of relatively expensive and affordable homes throughout our market area, but prices are generally highest in west Boulder, drop as you move from west to east within Boulder, and continue to drop as you move out of Boulder to nearby communities. If you look at our charts on pricing in Boulder neighborhoods, you'll see that homes in east Boulder neighborhoods tend to sell for about 75% of what those in west Boulder neighborhoods do. Homes in nearby Gunbarrel, Louisville, and Superior sell for 65-70% of the prices of Boulder homes, while those in Lafayette and Erie sell for about 55% and those in Longmont, Arvada, Broomfield and Westminster for about 45% of comparable Boulder homes. A twenty minute drive gets you a home for less than half the price. And prices drop still more if you drive 30-40 minutes east of Boulder to communities like Thornton on the east side of I25.

Homes in the rural and foothills areas within 15-20 minutes of Boulder tend to sell for prices comparable to those of Boulder's most expensive neighborhoods. Many people move to the area with a dream of living in the foothills or of having an acre or two with horses on the plains near Boulder. This inevitably puts a lot of pressure on the available housing, which is itself very limited in these rural areas. The rural housing stock is limited, in part, because the cities and counties in the area have purchased much of the undeveloped land as public open space. State and county regulations also place very strict limits on the rights of private landowners to build housing on the land they own. Strong demand and tight supply leads to very high prices.

Sure. If you drive west of Boulder 30-45 minutes into the high mountains of Boulder County, you'll find prices pretty comparable to those you'd find for similar houses in Lafayette, roughly 50-55% of the prices you'd find in Boulder. If you drive a bit south of there to Gilpin County, you'll find pricing similar to what you find in Longmont or Arvada, roughly 45% or so of Boulder prices. With altitudes of 8,000 to 1,000 feet, you'll also find an entirely different climate in these high mountain areas. To find comparably lower prices in the rural plains areas, you'll generally have to drive 30 minutes to an hour east to find more affordable rural properties in the plains area.

In principle, yes. In practice,rarely. While the construction costs involved in building a home in Boulder County aren't dramatically higher than what they would be in areas where home prices are much lower, the cost of a building lot in Boulder County (if you can find one) will generally push the price of a custom built home well beyond what you'd pay for an existing home in the same area. First, most of the towns and cities in Boulder County are at or near build out. There are very few legal building lots available, which puts a very high price premium on the few that exist. And in the mountain and rural areas, regulations prohibit subdividing land into parcels of less than 35 aces. This means that the few building lots that exit sell for roughly what 35 acres would sell for, since both represent a single building lot. To find affordable building lots, you need to go to the same areas where you'll find affordable homes, that is, 30-45 minutes west to the high mountains or to the plains east of I25.

It's commonly suggested that the months of November and December are the best time to buy a home. Since there typically aren't many buyers in the market during "the holidays," the idea is that you're more likely to find a seller who is desperate to sell and willing to drop their price. While plausible, this argument overlooks two factors. First, there are not only fewer buyers in the market in November and December, but fewer properties listed by sellers. Buyers who want to contract on a home in November/December can get at least a desperate as the sellers who have their homes on the market. Second, most sellers anticipate that more buyers will be looking actively in January and February. Since there are very few sellers who can't hold out for a month or two if they think the market will pick up, the panicked November/December seller is not as common as you might think. To the extent that market dynamics influence your decision on "the best time of year to buy," I would suggest buying when lot of sellers are putting their homes on the market which is in the spring and summer months. While there may be lots of competition from other buyers, the larger selection will give you a better chance of finding a home that fits your needs and desires well.

Most agents would tell you that more properties are listing in the late spring and summer than at other times of the year. They will also tell you that there is a dramatic drop off in new listings as the holidays approach in November and December. This is one case where the data actually support popular wisdom. Distributed equally over the year, about 8.3% of properties should be listed each month. For single family houses in Boulder County, only about 1/2 this number are listed in November and December, while in March, April, May, June and July 10% to 11% are listed each month. If you look at the data carefully, you'll see that the same general pattern holds for condos and for houses in the mountains However, there is a tendency for more condos to be listed in the early spring, while listings of mountain properties shift more to the late spring and early summer. More than 1/2 of all mountain listings are listed in April, May, June and July, when the snow is gone, the flowers are out, and the meadows are green.

When a home owner fails to make several payments on a home loan, the bank to which the money is owned will start foreclosure proceedings in the county where the property is located. If the seller fails to either make up the late payments or pay off the loan, the home will be sold several months later by the county at a foreclosure sale. While anyone with cash in hand can potentially purchase the property at the foreclosure sale, the bank will have the first option to purchase, and in our market they generally do. At this point, the bank usually sells the property through the local MLS system like an ordinary homeowner, though they will tend to price the property aggressively in the hopes of generating multiple bids in the first week or two. If the owner had an FHA loan on the property, the property will also be listed in the MLS system, but it will be sold by HUD through their on-line bidding system. In either case, real estate agents can help you make an offer and their commission should be paid by the bank or HUD. HUD actually requires that a real estate agent registered with HUD submit the offer for the Buyer through their system.

The numbers of bank and HUD sales varies dramatically by community and by the year in question. These charts show what percentage of all sales of single family detached homes that were either bank or HUD sales in recent years. Two major points: First, in areas like Boulder and Louisville where homes are relatively expensive and where the market has been relatively strong even in the downturn, HUD sales and bank sales account for a small part of the total market, generally less than 2% of sales. In contrast, in areas like Thornton and Northglenn just east of I25, bank and HUD sales have accounted for 35% to 40% of total single family home sales in recent years, reaching 50% to 60% of sales in 2008. Second, the percentage of sales that are bank sales has dropped off a bit in the past couple of years, while the HUD sales have not.

No. A "bank sale" is a sale after the bank has acquired ownership of the property through foreclosure. A "short sale" is a sale by the owner prior to foreclosure, a sale where the owner is asking the bank to accept less than they are owed on the loan. The bank is being "shorted" on their loan payoff if the sale is made. When a buyer wants to buy a property through a "short sale," the offer is made to the home owner, but the home owner needs the banks approval to make the sale with a reduced loan payoff. Once the owner has an offer, they submit it along with other paperwork to the bank, asking the bank to take the proceeds of the sale, less selling costs, as a final payoff of the loan. The home owner will often accept almost any offer on a "short sale" property, since the bank generally won't negotiate a short sale until the owner has an offer of some kind. The difficult part of a short sale is getting the bank to approve the deal. Getting the bank to review the deal can often take two or three months, which means that closing a short sale will generally take 3-5 months. Do not pursue a short sale if you are under any time constraints. We had one client who waited a full year for the bank's decision on a short sale, only to have the bank turn the deal down and take the property to foreclosure two days later.

Short sales are a very small part of the overall market. From 2008 to 2010, only 675 properties were listed as short sales in Boulder County. Just over 1/3rd of these, 256 properties, had closed by the end of 2010. So from 2008 to 2010, short sales represented about 4.2% of all listings and 3.6% of all sales in Boulder County.

This chart provides a history of price appreciate and depreciation in Boulder County and the Denver Metro area from 1984 to date as compared with that of the state of Colorado and the United States as a whole. Averaged over more than 25 years, these data show Boulder County appreciation rates averaging about 5.2% annually, while those of the Denver Metro area and the state of Colorado averaged about 4.4% and the US as a whole average about 4.2%. But the market experienced by buyers and sellers has been more interesting than that. The chart clearly shows the bust in the Colorado real estate market in the late 1980s associated with the downturn in the oil and gas industry and extremely high interest rates. This was, followed in the early 1990s by a sharp upturn in prices as interest rate dropped below 9% and the state's economy picked up. From 1992 through 1995, prices increased by 10-15% on an annual basis, rates of increase that we saw again just a few years later from 1999 to 2001. Throughout this period, buyers were often competing in "multiple bid" situations for properties and were often under pressure to buy quickly to avoid price increases that seemed to occur on a monthly basis. As this pricing history indicates, because we have a lot of high tech jobs in the area, our market took a hit from the bursting of the "dot.com" bubble in 2001 and appreciation rates have been below historical averages since 2001. In fact, as our data on prices and long term appreciation in local communities and neighborhoods illustrate, prices in some areas have been essentially flat since that time.

Until price in our market flattened out in late 2001, most sellers set their initial asking price by looking at recent sales of similar homes and setting their price near the top of that price range. Depending on how motivated the seller was to get the home sold, they would generally retain that asking price for 2 weeks to 2 months and then begin dropping the price in $5,000 to $10,000 (2% to 5%) increments every 2 weeks to 2 months until they began receiving serious offers. With each price drop, the seller was hoping to get an offer within $5,000 to $10,000 (2% to 5%) of asking price. Rather than accepting an offer $15,000 or $20,000 below asking price, a motivated seller would drop the price another $5,000 in hopes of finding another buyer. As a consequence, most homes sold within 2% to 5% of the asking price. This pattern of seller pricing behavior still dominates sales in our market, but the relatively flat prices in many segments of our market since 2002 has created another common seller behavior pattern that should be noted. Briefly, there are a lot of people who've bought homes in the past decade based on loans of 97% to 100% of the value of the property. Where these properties haven't appreciated, these owners will often price their homes based on their purchase price plus their selling costs (generally 5% to 7% of the price), rather than based on the resale value of comparable homes. Even where the home price is currently out of line with the current market, negotiating off this seller's asking price can be extremely difficult, either because the seller literally can't afford to sell for less than the asking price or because they psychologically can't accept the idea that they've lost money on their investment.

Based on our description of the listing and negotiating behaviors of seller in the prior question, one would expect that most homes in our market sell within 5% of the seller's asking price. As illustrated in this chart, based on almost 21,000 "normal" sales (not builder sales, bank sales, HUD sales, or short sales) from 2008 through 2010 in 7 communities in Boulder County and the north Denver metro area, 80% to 85% of homes do in fact sell within 5% of the seller's asking price. And another 10% to 15% sell for 6-10% under the asking price, most for either 6% to 7% under. The consistency in these data is pretty stunning, given that we're dealing with communities where median prices range from $200,000 to $600,000 and where the percentage of bank/HUD sales range from 40-60% of total sales in some communities and less than 2% in others. Completely different sub-markets, but the behavior of sellers with respect to negotiating off the asking price is remarkably consistent.

Maybe, but not as often as you might think. And the price reduction will probably be less than you might think as well. In our local market, the period from 1998-2001 was one of the hottest markets you'll ever see, with appreciation rates running between 10% and 15 percent annually. In contrast, from 2004-2007 our market was flat or appreciating at sub-normal rates, and from 2008-2010 our market was generally quite weak. This chart provides summary data on differentials between list prices and actual sale prices in Boulder and Longmont during these three periods. In all three markets, most homes (80% to 90%) sold within 5% of asking price. But in the strongest market, 20-30% more homes sold at asking price or slightly above. In the weakest market, 10-15% more sold for 2-5% under asking price and 8-10-% more sold for 6-10% under asking price. But as indicated in this more detailed chart, while many buyers negotiated more off the asking price in the slow market than in the hot one, it looks like the additional amount was generally small, only about 2%. The numbers of buyers negotiating more than 10% off the asking price doubled from the strong to the weak market, but the increase was from 1% to 2% in Longmont and from 2% to 4% in Boulder. Most buyers paid at or near the asking price from boom to bust.

The data, as reflected in this chart, do indicate some increase in the seller's price flexibility the longer the home is on the market. First, note that properties that went under contract within the first 2 weeks after listing were more likely to sell within 1% of the asking price. Thirty percent sold for asking price when the property went under contract in the first two weeks, about 10% more frequently than when the property had been on the market longer. However, consistent with our other data on this issue, most sellers hold out for a sale price within 5% of their asking price no matter how long their property is on the market before it sells. This includes just over 75% of those who had their property on the market for 6 months or more versus 85% of those whose houses took only 2-4 weeks to sell. Still, you are more likely to negotiate more than 5% off the asking price if the house has been on the market a while. Only 8% of sellers dropped the price this far if the offer came in the first two weeks, but 16% did when the property had been on the market for 1-2 months and almost 24% did when the property had been listed for 6 months or more. But again, few sellers dropped their price more than 10%. Only about 1% of sellers who got a contract within the first month dropped their price this much, but only 2-5% of sellers whose properties were on the market more than a month ever dropped their price more than 10% off the asking price.

Let's try to answer this question by looking at the differential between asking price and sale price for the most expensive 25% of homes sold in various communities, as well as the cheapest 25%, and the 2nd and 3rd 25% in the middle. As illustrated in this chart, it looks a bit less likely that the seller will be demanding full price or more if you're buying one of the more expensive homes in the community. Only 2% of buyers of the most expensive homes paid more than asking price in 2008-2010 vs. more than 7% who bought the least expensive homes. Once again, however, about 80-85%% of buyers either paid asking price (20-25%) or 2-5% under asking price (60%), irrespective of whether they were buying an expensive home or a cheap one. If you scan to the left side of the chart, however, you will see that buyers of both the cheapest and most expensive homes were more successful than others in negotiating more than 5% off the asking price. In fact, if we dig into the data a bit, we find that the buyers of homes priced at the top 5% and bottom 5% of the market in each community accounted for about 65% of all sales where more than 20% was negotiated off the asking price and about 43% of all sales where more than 10% was negotiated off. This leaves only about 200 of the remaining 11,600 sales where the seller accepted an offer more than 10% off his asking price.

Yes...and no. As discussed elsewhere, sellers behavior in negotiating price is remarkably consistent from one community to the next across our market. As illustrated in this chart, however, there is more variation if the seller is a bank or HUD, or if the seller is negotiating with their bank to sell the property as a short sale. The most striking difference is that where almost 60% of normal sales sell from 2-5% under asking price, only about 30% of bank, HUD or short sales do. In part, this is because 24-30% of these sales close for 6% to 20% under asking price where only about 16% of normal sales do. But there are also fewer "normal" sales for over the asking price. Where only 4% of normal sales sold for more than 1% over asking price, 19% of bank sales did and more than 28% of HUD sales and short sales did. And where only 1% of normal sales sold for 6% or more, this was true of 8.4% of bank sales and more than 14% of HUD and short sales. These differences are more exaggerated if we focus on properties that went under contract fairly quickly, in 30 days or less. Here again, only about 4% of normal sales sold for more than 1% over asking price, but for bank sales going under contract in under 30 days this number is 30% and for HUD sales it is 37%. And where only 1% of normal sales going under contract quickly sold for 6% or more over asking price, this was true of 15% and 20% of bank sales and HUD sales. There is nothing really surprising in this data. In contrast to the behavior of a normal seller, who sets the price high and slowly drops it over time, the seller in a bank, HUD or short sale typically sets the price below market to draw offers quickly. In many cases, this can create a "bidding war" over the property, resulting in sales pricing well in excess of the asking price. Where this doesn't occur, the seller's motivation for a quick sale in these situations will frequently result in accepting a low offer once the property has been on the market for several weeks or months.

Our data tracking price appreciation over the past 20 years would strongly suggest that the highest priced areas in our market have also experienced the strongest price appreciation over. Medium and small sized homes in the city of Boulder have appreciated about 250% over this time frame, where appreciation of similar homes in the nearby communities like Gunbarrel, Lafayette, Louisville and Superior has been closer to 175%. Further out, homes in Longmont, Erie, Arvada, Broomfield and Westminster have appreciated about 130%. Our neighborhood level data shows similar differences. Neighborhoods in west Boulder appreciated between 300% and 350% over this time frame, where neighborhoods in east Boulder tended to group in the 200% to 250% ballpark. In Longmont, prices appreciated about 200% in the old town neighborhood, while they tend to range between 100% and 150% elsewhere.

It is common to hear that smaller homes will tend appreciate faster than larger ones. Our data on appreciation rates of homes in the various communities we cover don't provide clear support for this notion. It is also commonly assumed that buying a single family house will provide a better return on investment than buying a condo. Our data provides mixed feedback on this question. If you look at appreciation rates from 1991 through 2001, when our market was booming, condos appreciated more rapidly than single family homes in every community we cover. After the market slowed in 2002, however, condos did worse than houses in every community we cover and whether you compare the price performance of condos with small, mid-sized or large houses. The net result from 2001 to 2010 was very mixed, with homes appreciating 15% to 25% more than condos in Boulder, Gunbarrel and Westminster, but with very mixed results in the other communities. Given these data, I would say the best course is to buy the type of property that makes the most sense for your needs, rather than trying to guess which type will appreciate more during your term of ownership.

If you take a look at our chart tracking price appreciation/depreciation data for Boulder County, the Denver Metro area, Colorado and the United States from 1984 to date, you'll see that our local housing markets have never really tracked changes in the national market. And while our markets have certainly weakened in connection with the national market since 2007, our markets were still either flat or showing modest appreciation when the national market hit rates exceeding 8% depreciation in 2008. Moreover, our markets only began to drop below 1% depreciate rates in late 2009, just about the time the national trend began to shift from 8% to 1-2% percent rates. In fact, as illustrated by our stats on prices and price appreciation in our local communities, many of the communities and neighborhoods in our market have continued to appreciation in value throughout the recent national downturn. Much like the weather, real estate markets are impacted by broad seasonal and climactic changes, but they are highly localized.

As indicated in our response to the prior question, real estate markets are highly localized, so the fact that our local markets have never closely tracked the national market should be no surprise to anyone. With respect to the recent downturn in particular, it is important to understand that while many cities in the United States experienced an unprecedented increase in real estate prices in 2004 to 2006, creating a pricing "bubble" that burst in 2007 to 2009. If you look at the the New York Times summary of home pricing data based on the S&P/Case-Shiller index, you'll see this boom and bust cycle in the pricing of cities like Las Vegas, Miami and Phoenix. These saw price increases in the 30-50% range in 2004 through 2005, followed by similar drops in 2007 to 2009. In contract, prices in cities like Dallas and Denver, were relatively flat from 2004 to 2006, a time frame that was followed by relatively flat prices with modest drops from 2007 to 2009. In general, the price increases for almost every city S&P/Case-Shiller data were mirrored by decreases on the same scale from 2007 to 2009. There was in fact a "bubble" in real estate prices in many US cities, but in many cities this bubble neither existed nor burst.