I want to buy a house in Boulder, CO. Here’s why I’m not

I want to live in Boulder, CO. As an endurance athlete, Boulder, CO is the pinnacle of where my fellow lifetime athletic comrades live. There’s only one financial problem. I’m not the only person that *thinks housing prices are overvalued across North America. This isn’t about how Boulder changed, how Boulder sold out, or anything along those lines. It’s simply about how fast housing prices grew versus historical home price growth. Lets take a look at the following home:

531 Maxwell AveBoulder, CO 80304 Currently listed at $1,675,000 as of 11/14/2018 2:12pm PST

This home has transferred hands a number of times over the last 20 years and gives us a good sense of price appreciation to analyze.

11/2/2018 $1,675,000 +11.7%

6/18/2018 $1,500,000 +24.4%

4/28/2017 $1,206,000 +94.7%

3/6/2010 $619,500 +41.7%

12/3/2002 $437,100 +77.7%

5/30/1996 $246,000

Lets talk about some of these sale points.

  • In the first sale 2002 we see a growth of 77.7% over 6 years of ownership. An average of 12.95% per year appreciation.

  • In 2010 we see a growth of 42.7% over 8 years of ownership. An average of 5.4% per year appreciation.

  • In 2017 we see a growth of 94.7% over 7 years of ownership. An average of 13.5% per year appreciation! Our largest per year appreciation yet and very impressive!

  • Not to be outdone, in 6/18/2018 we see a growth of 24.4% of appreciation in ONE YEAR. A new record for this house.

  • If you thought 24.4% appreciation was impressive, only five months after its most recent sale the home is now listed for an 11.7% appreciation. Putting it in line for a 23.4% appreciation over 12 months.

When we break this down to simple terms. Boulder home prices have increased from 2010 to 2018 by 279% (1.28% per month) and in the last 19 months by 39% (2.05% per month).

I don’t know what a safe home appreciation amount is, but if we base the time from 1996 to 2002 as a norm at 1.07% appreciation per month we are currently moving at double that growth rate, which is flat out laughable. What’s not laughable is how desirable Boulder has always been. People like to say how attractive a particular place has “become”, when in reality these great places have always been great.

financeDaniel ScarberryfinanceComment