"Are you in, or are you out?"
That's the real question for buyers in the Denver real estate market right now.
I'm sorry to have to go into "tough love" mode, but as a broker, figuring out whether your buyers are contenders or pretenders is one of your primary responsibilities these days.
This past weekend, I wrote an above list price offer on a south Denver home for well-qualified buyers one day before the property hit the open market (yes, I got us in early) and we didn't even draw a counter offer.
The seller chose to sit on our offer until the crowd came storming through the next day. At the end of that first day, the scorecard read multiple offers, cash buyer, game over.
Back to the drawing board.
But at least these buyers are contenders. They wrote an extremely solid offer that would have been a slam dunk three years ago. And even in this hot market, I thought we had at least a 50/50 shot.
But at least these buyers are contenders. They wrote an extremely solid offer that would have been a slam dunk three years ago. And even in this hot market, I thought we had at least a 50/50 shot.
The inventory of homes for sale in Denver now sits below 7,000. In 2007, there were 31,000 homes for sale. In 2010, there were 23,000 homes for sale. In 2013, we peaked at 10,000 homes for sale. As of February 10, the number of homes for sale in the Denver MLS was 6,026.
Why the plunge? As I've discussed repeatedly on this site, it's a combination of no more foreclosures plus limited new construction (especially at the lower price points) plus a large number of "boomerang buyers" (Foreclosure 1.0 people) looping back into the market, coupled with low rates, a rapidly improving economy and massive Colorado population growth over the past five years.
Whereas the market was full of headwinds from 2006 - 2010, today's buyers are walking into a market with gale-force tailwinds.
Buying a home in 2014 bears absolutely no resemblance to the process of buying a home in 2007 or 2010. Sellers (especially at the lower price points) clearly have the upper hand today and buyers who don't realize this aren't really buyers at all, at least as I see it. They are pretenders.
With the median home price in Denver now right around $270,000 and 2013 appreciation of 10%, the median equity gain for homeowners in the metro area last year was $73.97 per day. That's every day. For the past 365 days.
Truth is, for most people at the median price, equity gains more than offset mortgage payments in 2013. Think about that for a moment. Free mortgage payments for a year. That is simply remarkable.
If you are looking to get into the market as a buyer during 2014, you had better have some conviction. Because those who truly want in are running right over the timid when it come to taking advantage of this bright season for housing.
Nothing lasts forever. In reality, those who bought a year ago will do better than those who buy today. Rates are higher. Prices are higher. But the tailwinds are still firmly blowing, and the benefits remaining are reserved for those who get in while time and demographics remain on your side.
