I listed a townhome in Lakewood today for $168,000. Twelve hours later, I have had 22 showings, six offers in hand, several others on the way and a bidding war is in progress as I write this at 8:45 in the evening.
Will it ever end? The shortage of entry-level housing product in the metro area is amazing to behold. Five years ago this week, there were 6,774 homes for sale in the Denver MLS under $250,000. Today, there are 558.
To drill deeper, try this on for size. As I just mentioned, right now there are 558 homes on the market priced below $250,000. There are 660 homes in the Denver MLS priced over $1 million. So there is more million dollar inventory in the Denver MLS than entry-level inventory.
That is simply unprecedented.
Now let’s flip it over and look at homes currently under contract. Below $250,000, there are 1,948 homes currently under contract. Above $1 million, there are just 118.
So while the number of homes for sale below $250k and above $1 million are basically the same, there are almost 17 times as many homes under contract below $250,000 as there are above $1 million.
If you aren’t tracking on this, let me make it simple. There is nothing for sale under $250,000 and there are literally thousands and thousands and thousands of prospective buyers racing around town trying to find something, anything, in this price range.
I listed a home in November for $244,000 in a good part of Wheat Ridge that drew a dozen offers in four days. I listed another sub-$200k home in October that had 34 showings and a top offer $27,000 over list price. In fact, when I list anything below $250,000 these days, I pretty much block out two solid days on my calendar because all I’m going to do is take calls from buyers, answer questions from agents and do my level best to skillfully manage the bidding wars that are almost certain to break out.
Is it all about top dollar? Sometimes, but not always. It's important to know who is in your transactions. That means I want to know who the buyer is, why they have an interest in this neighborhood, how they met their agent, and of course, how much commitment their offer shows.
I want to know about the agent. Does the agent sell homes, or is he or she a part-timer? Can they demonstrate a track record of solving problems? How did they meet the buyer? How well are they educated? Have they written offers on other homes? Are they prepared to waive appraisal contingencies, jack up the earnest money, take the home “as is”, or come up with other ways to make their offer stand out?
Who is the lender? Local? Or some obscure Internet company? You can offer $1 million for my $168,000 listing and it doesn’t matter if it never closes. Show me proven results.
There is nothing about this enjoyable for buyers, or agents. Including the listing agent. About the only ones having fun are the sellers, who are cashing out with big profits and feeling pretty good about the whole thing.
As an agent, managing a feeding frenzy / barroom brawl is hard to do, especially if you are legitimately trying to give everyone a fair chance while doing what it takes to fulfill your obligations to your seller. Namely, to get the best offer from the strongest buyer, ethically, while mitigating risk and protecting your seller’s interests.
Tomorrow, we’re going to sift through a pile of offers and have a series of conversations with agents who are just as tired of showing houses as their entry-level buyers are of chasing after them. Ultimately, there will be one winner and a disgruntled group of frustrated also-ran’s who once again gave it their best shot, only to get nothing.
For prospective sellers, I want to caution you. It will not always be this way.
In fact, at some point a market transition is going to happen. And when it does, I suspect we’re going to see a whole lot of inventory show up very quickly, because when people sense we’re near a top, everyone wants out. I’ve seen it before, and I know it will eventually play out this way again.
If you choose to wait a while longer, you may pick up a few more dollars. But if you overplay your hand, if you want until the market tops and then tips the other way, you will miss the best seller’s market in the history of Denver.
The best time to buy is when no one is buying. And the best time to sell is when no one is selling. End of story.