There is a suspension of disbelief required when we contemplate real estate prices in Boulder, where rapid appreciation in the past two years has brought the average Martin Acres home to over $500,000.
In other neighborhoods, like Newlands, prices have quadrupled in the past ten years.
Could it be possible that a simple, 1,100 square feet brick ranch with three tiny bedrooms and an equally cramped kitchen could cost $1 million in 2025? Analyzing the data for the past 50 years shows that it is quite possible.
The original covenant for Martin Acres states that “no dwelling shall be erected on any part of the above described real property at a cost of less than $8,000….” Fifty-four years after my simple brick ranch was sold to a post-war family for $13,000 in 1955 ($110,000 in today’s dollars, adjusted for inflation), I bought it for $405,000 – a 6.6% annual growth rate.
The family who I bought the house from purchased it in 2004 for $273,000, an 8.2% annual growth rate from 2004-2009. If I had not completely remodeled the home, it would most likely have sold for $550,000 this year, a 5.3% annual growth rate from 2009-2015.
Martin Acres, the one-time laughingstock of Boulder, now offers a starter home for half a million dollars. Ten years ago, homes sold for a quarter million dollars. So when will these homes sell for $1 million? For a $550,000 home today to sell for $1 million in 10 years, the home would need to appreciate at an annual rate of 6.5%, which would approximate the average appreciation of a Martin Acres home between 1955-2015.
The number seems implausible, but possible. Home prices flatlined in Boulder after the 2008 market crash, but rebounded strongly in 2012. With Google creating 1,500 jobs in Boulder in the next two years, and increasing demand for housing, prices can only increase. It is unlikely we will see the current insanity continue for more than two or three years, in which 40 people show up to see a listing and bidding wars increase the asking price of a home by $40-$100K. But the worst recession since the great depression didn’t see a drop in prices in Boulder.
With income disparity increasing between the wealthiest 1% of Americans and the other 99%, what middle class families will be able to afford a million dollar home? At $5,000 plus per month mortgage payments, a family would need to earn over $180,000 per year for a million dollar home to be in the realm of affordability.
The U.S.now has nearly 10 million millionaires – an historic number. As a hub of venture capital, high tech and entrepreneurship, Boulder will become the exclusive domain of those fortunate or saavy enough to purchase a six-figure home – a home that will most likely be completely gutted and remodeled.
John Joseph is a remodeling contractor in Boulder and owner of Phoenix Remodeling. He tore down a Martin Acres ranch and built a modern two-story farmhouse in Martin Acres inspired by the original Martin Acres Farmhouse. John Joseph can be reached at 720.404.0490 or firstname.lastname@example.org visit his website at boulderphoenix.com.