It’s safe to say that word has gotten out about Boulder. The Rocky Mountain foothills. The snow. The bike trails. The trail running. The coffee. The good-natured community. Boulder is the jewel of America. It keeps winning best place to live for a reason.
And the Boulder real estate market? Well, it reflects the value of high quality of life.
Yes, the cost of living is high. Boulder real estate is extremely competitive.
Real estate nationwide is appreciating. But this is nothing new for Boulder. Price per square foot has been steadily increasing for years. But this doesn’t mean it’s impossible to enter the realm of Boulder homeownership.
Here’s the name of the game for Boulder:
The longer your search takes… the more you’ll pay for your home.
Home values in Boulder County increase day by day. Our market has been this way for decades, even (largely) through recessions. It can be difficult to get into the local real estate market, but once you’re there, it is highly likely that your investment will build your wealth.
To streamline your buyer experience, you need to get into a mindset that will lead to getting under contract. Let’s begin by identifying your priorities.
What kind of buyer are you?
- Is it important to you to have a fully updated home with no major work to do? Are you willing to pay more for a move-in-ready home?
- Are you willing to put in effort and time to update your home in exchange for location?
- Are you looking for an investment opportunity? A property you can buy low and sell high?
What to do if you’re a buyer looking for an updated home
In every price range, homes are selling over the asking price. A stylish, move-in-ready home with little work to do is a common desire, no matter the price point. Most buyers would prefer a move-in ready home.
Not everyone is handy with sledgehammers and drywall. And more so, not everyone has the time, money, or mental space for a big home improvement project.
If a fully updated home is important for you, be ready to be decisive. Due to the perennial Boulder shortage of inventory, if you see a home that meets your needs, it is imperative that you be ready to make your most strategically compelling offer to the sellers and act fast. Because if you don’t… someone else will.
One of the agents on our team just successfully helped a buyer get under contract after 15 months of trying. This buyer was no slouch – a scientist who understood that he needed to make strong offers to get under contract. He made 10 fairly competitive offers over the course of 15 months, some 5 and 6% over asking, waiving important contingencies, etc. Due to a shift in his financial picture, he finally was able to get more aggressive and purchased a home that was almost exactly the same size//lot size/location/condition as the first offer he had put in. In those 15 months, the sale price for those equivalent houses increased from $570k ($632/sf) to $735k ($793/sf). This example illustrates why early speed and commitment to getting under contract is critical for buyers who want to limit their expenditure and start capturing our market’s appreciation.
What to do if you value location over anything else
With such a competitive market, many buyers are learning to be pragmatic. Naturally, most homebuyers dream of a home in a great location that requires no updates. But the average home buyer will be forced to sacrifice at least one of those things. Of course, whatever you decide to prioritize completely depends on what’s best for you.
Pros of Prioritizing a Fixer-Upper in an Excellent Location:
- Your remodel can be perfectly aligned with your style preferences.
- You’re more likely to have a greater return when you sell if you’re the one who brings the property up to today’s aesthetic and code standards.
- In Boulder, a location can buy you a certain lifestyle. Investing in a certain desirable location is always a strong bet in Boulder. Past and present buyers have always put a strong value on lifestyle. It is likely that future buyers will as well.
- The buyer pool for a fixer may be less competitive. Fewer people are willing to sacrifice their time and comfort for a large-haul remodel. You may compete against fewer offers.
Cons of Buying a Boulder Fixer-Upper
- The current labor market is constrained. Between sourcing materials and finding an available contractor…it’s unlikely that your remodel will be quick.
- This is a more affordable option. But these homes are still not “cheap”. Prices of fixer-uppers can be shocking to buyers who are new to the area, especially if the property has a view. A+ locations are extremely expensive, even when the home needs to be torn down.
A few other things to know:
- Some homeowners who act as their own general contractors can complete their remodel in just a few months. Bonus points if you already have reliable vendors! If you’re starting as a newbie… it will take longer.
- Some people are surprised to learn that not all updates add value. Consult with a trusted real estate agent before remodeling to make smart decisions that will align well with future saleability. This is an important step to protect your investment, as architects and contractors usually do not advise you against projects that diminish or do not add to your home’s value.
For those that have the patience, vision, and wherewithal, investing in home improvements is one of the best wealth-building opportunities in Boulder.
What To Do If You’re A Boulder Real Estate Investor
The high value of Boulder real estate is no secret. For that reason, investors often come to us from all over the country.
National investors are often accustomed to the classic “buy low-sell high” business model. They dedicate time to study spreadsheets of data. They think they’ll be able to wait and find the right property at a low price.
Here’s the biggest mistake new Boulder investors (and buyers in general) make:
They often spend time studying economic precedent… without paying sufficient attention to current market speed and value. The trick is that in an offer scenario, current market reality trumps recent (but historic) sale precedents every time.
In this market, because of simple (under) supply and (over) demand, there are many buyers for almost every property.
The only properties that sell at a discount in Boulder are severely compromised in some way. Think mold, structural issues, or locations with noise/traffic and environmental and/or visual hazards.
Many investors hold off. They wait patiently to find a value opportunity. In the meantime, the market may rise 5- 10%, making the prices that they were originally balking at look low.
After waiting a year or more looking for the perfect buy-low opportunity, these frustrated buyers usually eventually buy at market value. During the time that they’ve been waiting, they’ve missed out on a year of appreciation. Further, they wind up paying a higher buy-in price than they would have the year before.
Once in a great while, value buyers find an opportunity to buy low in our sellers’ market. The best place to look is at properties that have been sitting for a long period of time. These are usually not super sexy properties – typically they have some significant problem that needs solving or they are in a compromised location. Rarely, there is a great property that was considerably overpriced and thus didn’t sell, which becomes stigmatized by long days on market. Keep your eyes and minds open for these gems.
Here are best practices for today’s Boulder real estate investors
- Understand that getting under contract quickly is the main value proposition in a rapidly appreciating market.
- If you’re able to enter the Boulder real estate market, you will likely see some appreciation even within a quarter after closing.
- If you feel “everything is priced too high right now” and “it’s got to be a bubble,” study the historic Federal Housing and Finance Agency appreciation data for the area and note the 5.6% average yearly appreciation since 1979. Investigate the numerous businesses relocating to the Front Range and Census population growth projections. Come to terms with the idea that Boulder area prices are highly likely to increase further.
- If investing in a real estate market with high-entry prices makes you uncomfortable, consider investing in a different market rather than “waiting it out.” Buying later will not be easier.
- Boulder’s economic climate has historically been very strong through both recessions and thriving times; it does not change quickly.
Classic investing models teach us to “buy low, sell high.” This isn’t the case in Boulder.
Here, adjust to thinking that you may be winning by “buying high, selling higher.”
Entering the Boulder real estate investment market requires a high buy-in. This is no $10 blackjack table. It’s the High Roller lounge in the Bellagio.
But this isn’t necessarily bad news, as the Boulder market grants a more reliable ROI than most other parts real estate markets in the United States. With homes appreciating significantly yearly, Boulder real estate is a formidable wealth-building tool.
Are you a seller looking to update your home before putting it on the market?
Here’s some pro advice. Homes that are selling fastest (and for the most money!) meet these criteria:
- Fully updated.
- Modern farmhouse, mid-century modern and alpine modern are most on-trend in Boulder, followed by craftsman and urban loft styles. Perception of style can sometimes switch easily with a few clever cosmetic updates. Consult a top real estate professional (who clearly sells many stylish properties for excellent prices) to get advice on how to update your home for your best sale price.
- Outstanding views can make properties highly desirable. If your home has views, it will hopefully sell fast and for a great price no matter what. But if you put in some work ahead of time, a little bit of work will go a long way in securing top dollar.
- Across the board, interior finishes that sell well trend toward whites and neutrals with occasional pops of color.
Last month, as part of a contingent offer, we briefly listed a home that illustrates this concept well. At 1,762 square feet, this 1923 home is not large or new. But it sits mere feet away from the entrance to stunning Chautauqua Park. For this reason, the home has a high intrinsic value.
The homeowners updated the home smartly. They used tones of soft white, gray, and blue to complement light-wood floors. The kitchen is light and airy with updated cabinets, countertops, and backsplash. The outdoor living spaces are cleverly hardscape to make an average-sized lot feel extremely spacious. Every inch in the home and yard is now super well-executed, creating a luxurious and accommodating not-so-big home in a compelling location.
Between appreciation and the smart updates made to the home, the value of this home has increased more than $400,000 in 4 years.
The Bottom Line for Boulder County Real Estate in Today’s Market
Once you’re clear you want to own Boulder property, get under contract. Fast.
The longer your search takes the higher your buy-in price will be. List-to-sale price ratios are tight. You’re better off buying today. Prices will increase by tomorrow.
Boulder buyers need to be decisive. Do you want to get into the market now? Or in six months… after six months of appreciation?
In our current market, there is very little nuance. Real estate economics are based on simple supply and demand. Currently, supply is scarce. And there are plenty of buyers. It’s unlikely that this will change anytime soon. The best course of action is to prepare yourself for the purchase process in advance, then commit to getting under contract sooner rather than later.
Finally, submit backup offers! Colorado has a higher than normal rate of contract failure, as the CO real estate contract is incredibly forgiving to buyers. There is probably a 20% chance that your backup offer will convert into the primary offer.
If you have any questions, reach out to a professional who deeply knows the local market for guidance.
Catherine Burgess is founding real estate agent of Burgess Group/Compass Boulder.