Prices Climb, Days on Market Drop in Boulder
In February, neither the city nor county of Boulder experienced a significant infusion of home inventory. The 68 new, single-family listings in the city of Boulder represented an increase of just one month-over-month. Across the county, 235 homes came on the market in February, compared to 193 in January. Trending in the right direction, yet down by double-digit percentages when looking at the same time last year.
Accordingly, the average price for a single-family home in Boulder increased from $1,607,325 in January to $1,695,885 in February. Looking at the county as a whole, prices also jumped from $1,038,943 to $1,127,438 last month. Homes also sold for just over 106% of their list price in both city and county.
This goes to show that there's never been a better time for homeowners to sell. These sales prices show just over 27% in equity gains year-over-year for both the city and county. That's huge potential for a seller's return on investment.
With interest rates rising and potentially going higher in 2022, another area that changed significantly was days on market for single-family homes.
In February, that time dropped to 39 for Boulder, down by 20 days just compared to January, and down 39.1% year-over-year. Countywide, it was a more modest decrease of 6 days month-over-month—but still 28.3% lower than the previous year.
Inventory of homes still available for sale by the close of the month continues to be an indicator of price and competition levels in the coming months. For single-family properties in Boulder, January's figure was 58. In February, it was 52 and down 60.9% compared to the prior year. Countywide, inventory only decreased by two, but that's also down significantly year-over-year.
Moving into spring, we’re keeping an eye on the ongoing conflict in Ukraine. While interest and mortgage rates have been trending upward, global uncertainty often results in downward pressure on mortgage rates. Thus we saw mortgage rates dip to 3.953% on March 7th, over two weeks into the Russian invasion.
What’s next for mortgage rates is unknown though a continued lack of inventory remains a market constant. Your best bet is to work with a PorchLight agent who can advise you on when to make your move, how to bid strategically, and connect you with the best lenders in the business.
To view our report on Boulder real estate market stats for February, click here.
How to Apply for a Mortgage
If you are planning to buy in 2022, one area where you'll have more control is ensuring that your funds can be verified and loan approved once you've found a home and submitted a successful offer.
While it can be a stressful experience, there are simple steps you can take to improve your odds. Follow these pointers to help you avoid common pitfalls and ensure a more seamless closing.
1. Check and Repair Your Own Credit
Bottom line, the better your credit score the better your mortgage options will be. Pull your free annual report from Equifax, Experian and TransUnion. You can also use a free app like Credit Karma. Follow-up on and fix anything suspicious or inconsistent. See what debts you can pay off quickly, then make a plan to keep revolving credit balances low and reduce overall debt. It may also be smart to tuck away those credit cards and create a workable budget.
2. Lower Your Debt-to-Income Ratio
Lenders pay close attention to your debt-to-income ratio (DTI) —monthly debt obligations divided by gross income. This includes credit card, student/personal loan or child support payments, but not things like entertainment or groceries. Typically, lenders want a mortgage and home costs to be no more than 28% of your gross income. Once everything is calculated, your DTI should be no more than 36%. Fewer debt payments give you greater buying power.
3. Get Pre-Approved by Your Lender
Pre-qualification only requires you to provide information about your finances and credit score. In return, you’ll get a general estimate of how much you can likely borrow. Pre-approval is more in-depth. A lender will look further at your finances and require documentation regarding your credit, income and debts. For your efforts, you’ll know exactly how much your loan amount will be—even get it in writing. You can then search for homes in the appropriate price range.
4. Look Beyond the Home’s Price Tag
Keep in mind that the price of a home doesn’t exactly reflect its true cost. If you’re putting less than 20% down, you’ll likely be required to pay for Private Mortgage Insurance (PMI). Property taxes and homeowners insurance may also be rolled into your monthly mortgage payment. And don’t forget HOA dues or condo fees, plus closing costs that buyers are responsible for such as earnest money, an appraisal and the home inspection. This is a significant purchase.
5. House Hunt with a Real Estate Agent
While your house hunt might begin online, a real estate agent is an invaluable resource when it comes to choosing the right home and neighborhood for your needs and lifestyle. They can also introduce you to areas where your pre-approved dollars will go further and neighborhoods that have huge appreciation potential. Plus, an agent will often know if a community or condo is due for a review of its reserve fund which can lead to higher HOA fees.
6. Gather Your Financial Documentation
Closing on a home loan can be overwhelming. From providing two years of W-2s or 1099s to putting personal information on the table—like proof of child support payments—no rock is left unturned by your lender’s underwriter. So, gather all documentation as early as possible. Have records of your bank accounts, income tax returns, car loans, credit cards, any other debts, plus assets such as investments, other properties and your 401k.
7. Don’t Make Changes to Your Job or Finances
Even after you’ve progressed from approved to “clear to close,” a lender will continue to track your finances and credit score until the day of closing. Keep paying your current mortgage or rent, as well as your bills and credit cards. Don’t close accounts, change jobs or switch to a new bank. And while it may be tempting, hold off on major purchases for your new home, like furniture or appliances. The goal is to maintain the status quo until all paperwork is signed.
