I’ve finally come to terms with it. The logical market is gone.
If you are someone whose thoughts are dominated by logic… if you are someone who uses deep, thoughtful analysis and caution when preparing an offer… if you are intent on paying less than the last guy who bought a home down the street… you have missed this market.
It doesn't mean you're a bad person. I'm just like you. I am a "high logic" thinker, and if you have ever sat down with me and I didn't (at some point) break out a spreadsheet, consider yourself lucky.
But logic and deliberation are slow, and this market is fast. During the first quarter of 2012, I have written more than a dozen "failed offers", most often the result of using painstaking analysis of past sales and historical trends. The people who are actually getting homes under contract are thinking about tomorrow, not yesterday.
Inventory is down 42% market wide from a year ago, and the number of homes under contract is up 32% from a year ago. Buyers are everywhere and the foreclosures are gone. Short sales are now just 10% of the market. Very few people are moving up because they still carry the bruises of the past six years. Lots and lots of buyers, no sellers.
Do you follow that?
Let me show numbers from the Denver MLS:
Number of homes FOR SALE April 2011: 17,707
Number of homes FOR SALE April 2012: 10,325
Number of homes UNDER CONTRACT April 2011: 5,768
Number of homes UNDER CONTRACT April 2012: 8,374
One year ago, there were 3.44 homes on the market to each one under contract. Today, there are 1.20 homes on the market to each one under contract.
I have used the word “stunning” repeatedly over the past several months to describe this shift taking place in our market. If I had a stronger word to use, I would use it. So I’ll just say again, this is STUNNING!
MSN Real Estate generated some buzz for Denver last week when it reported that the Denver housing market was the fastest recovering real estate market in the United States. Based on what I’m seeing, I don’t dispute that for a second.
Remember that Colorado led the nation in foreclosures per capita in 2005 and 2006, while the rest of the country was still in party mode. Guess what? That first generation of foreclosed homeowners is now cycling back into the market, competing with all the first-time buyers and disillusioned renters who are all looking to lock in a low fixed payment (with rates in the 4's) for the next 30 years.
That's called foresight, not hindsight.
Recovery is here, and it’s now. And it will be totally clear before long that buying real estate in 2012 was a prudent, well-timed moved for everyone with the courage to stop looking backward and start looking forward.