For real estate “we can always see a silver lining” – BizWest

BOULDER – Todd Gullette says he wants 2025 to be free of challenges for the housing market.

“Next year I’d like to stand in front of you and say something like, ‘Phew, we got away with one,'” Gullette, managing broker of Re/Max of Boulder, told the packed house during a BizWest Boulder Valley real estate conference last week at Embassy Suites in Boulder.

After years of a red-hot real estate market, the Boulder Valley is seeing a slowdown in sales activity and appreciation, but Gullette said that just means the market is ripe for opportunity.

“There are some offers,” he said. “Any time you have an environment like this where you have some downward pressure on prices, there are a few offers. Remember back in 2021 when there were maybe 20 offers on a property we looked at? This is so inconvenient for a buyer. So I think we can always see a silver lining. There may only be a few of them, but this is one of them.”

That downward pressure, he said, comes despite the fact that 10% of Boulder County homes for sale, including one in four in the city of Boulder, are listed for $2 million or more.

“Sometime in June 2022, the Federal Reserve decided to combat inflation by raising interest rates. “That domino that was toppled spurred most of the problems we have now,” Gullette said. “On the buy side, we have the double whammy of higher interest rates, but we are also coming out of this hangover of really extreme appreciation, one of the strongest economic recoveries in the country. Essentially, what was really hard to do before is now really, really hard to do.”

Still, the Boulder Valley is technically in a “seller’s market” but “on the path to a balanced market,” Gullette said. “But as of 2021, it definitely feels like a buyer’s market.”

President John F. Kennedy said 63 years ago that the United States chose to go to the moon “not because it is easy, but because it is hard.” Although Gullette didn’t mention JFK, he made the same analogy about real estate.

“The idea that the ease of the market creates a good time to buy is actually the opposite,” he said. “A difficult time to buy is when you create a buyer’s market. A discouraged group of buyers who don’t enter the market brings back competition, and then you have your bargaining power. That puts downward pressure on prices and the ability to look at a home that doesn’t have a few offers on it yet.

“So that’s pretty nice,” Gullette said. “Maybe we’ll look back and think, ‘We should have bought then.'”

He urged real estate agents in the audience to remember that “high interest rates also affect sellers, especially sellers who later become buyers.”

“They’re going to sell their house, but we forget that it’s not easy for them either,” Gullette said. “They might trade a 3 or 3.5 percent mortgage for a 7 percent mortgage when they buy. That’s definitely one of the things that might deter sellers from selling.”

However, he added, “A market downturn is actually a good time for a seller to increase the price and improve the quality of your home.” So if you have a $500,000 home that’s down 10% , and you look at a million dollar house that lost the same 10%, the math works. You can move and benefit from the $100,000 price reduction.

“This idea of ​​’buy low, sell high’ may be a bit of stock market ideology, but in real estate it’s OK to buy and sell sideways,” he said. “You can withdraw your money from a home where you may have lost it, and it’s OK to just leave it in the property and move back to another home. As a seller, you don’t feel like you’re suffering a loss.

“To our clients who are sellers,” he urged brokers, “explain to them that it may not be a loss; it’s an opportunity. If you feel like you are losing money on your property, the property you want to buy is in the same boat. So it’s worth mentioning.”

There are also ways to avoid interest rate concerns, he said.

“You have customers who say, ‘I’ll buy when interest rates get back in the 3% to 4% range,’ but I’m not sure what it will take to bring those interest rates down,” Gullette said. “Maybe another great recession? I don’t think we’re looking at that. So I think we may see some slight reductions in our interest rates, but I think we have to be realistic about that. We’ve obviously gotten used to that in the past and we can do that again.”

Gullette said he expects the area’s low inventory to remain permanent, noting that up to 90% of the homes destroyed in the 2021 Marshall fire were at least somewhere in the process of construction. “You don’t see rows of empty lots there,” he said.

“Being a realtor requires patience,” Gullette said. “For an agent, the work is a little more difficult. It’s hard to be a real estate agent when you’re chasing the market.”

However, he added: “The shift to a buyer’s market has certainly begun.”

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