Markets & Economy

What hot micro-markets tell us about housing in the U.S.

When a small market is on fire, it has consequences for state and national data
  • Hot micro-markets can generate a very strange picture of average national home appreciation of about 6 percent, made up of many places at zero and a few on fire.
  • Every locality reports low inventory, obviously drawn down in the hot places, but the strangest single phenomenon continues: Where is the new construction?

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No matter how many markets in which any real estate pro has worked, we always know our home towns best. And my market today is in a situation common to most hot markets in the U.S., shedding light on distorted national housing data. The Boulder micro-market Since 1952 (age 3), home for me has been Boulder, Colorado. The town is a few loopy square miles, but the surrounding county is 740 square miles. That’s 473,600 acres. However, half of it is Rocky Mountain foothills, jagged 7,000-to-10,000-foot “hills” unsuitable for development or part of National Forest land. Of the half on the plains, about one-third is permanently reserved as open space (we bought it with tax revenue). Rather suddenly, it seems to us, after the recession-plagued last dozen years, we are out of land. Incredible: 310,000 people, an acre-and-a-half for each, and we’re done. Nothing left to develop. Same for nearby Denver Metro counties. East of the area, we have land -- oh-my, howdy, do we ever -...