Real estate market restricted by lack of homes for sale

What a difference a year makes.

At this time last year real estate in Boulder was booming. The word on the street was “real estate is back.”

The market appeared to be bright and the mood upbeat. Homes were selling at all price points, except at the upper end. Days on market were dropping rapidly and discounts being offered were declining. In a few short months, we moved from excess supply and moderate sales to a more balanced market and then rapidly to a shortage of homes.

By late spring only the luxury segment lagged behind. Luxury inventory was high and sales were sporadic. Then almost overnight, buyers appeared and the luxury segment became more balanced. By the end of 2013 almost all sectors of the market had experienced a good year.

The momentum of 2013 seemed to bode well for 2014. However, in retail sales there is a saying that “you cannot sell from an empty story.” The same is true in real estate; you cannot sell without sufficient inventory.

With only the first quarter of 2014 behind us, it is apparent that the current market is being restricted by a lack of homes available for sale. The unit sales are running 36 percent behind this time last year. The exception is for homes above $1.2 million, which are up 133 percent in the first quarter.

This shortage of inventory has meant that homes are selling quickly and in many cases at or above the asking price. Prospective buyers as well as real estate agents are frustrated by the limited selection and how quickly properties go under contract.

While prices have not dramatically increased from last year, market forces continue upward pressure on home prices. With historically low interest rates and very limited home inventory, prices will continue to increase. If you are thinking about selling, it may be a very good time to put your home on the market.

David W. Scott is a broker associate at Colorado Landmark, Realtors in Boulder. He can be reached at 303-443-3377 or dwscott@coloradolandmark.com.