For all the
great news we keep hearing about the Denver real estate market – and the news
IS great, if you already own something – there is obviously another side to
things.
For those on
the outside looking in, affordability is getting further and further away, like
a train pulling away from the station and slowly disappearing off into the distance.
I ran some
numbers this morning for a couple of my clients who remain on the outside
looking in, buyers who haven’t yet been able to punch through and get something
under contract in Denver's crazy-hot real estate market.
For them,
affordability becomes more of an issue every day, as value becomes harder and
harder to find.
While this
not an exhaustive research piece, there are some similarities between the areas
where they are looking, which are 80214 (Edgewater) and 80228 (Littleton). Earlier today, I pulled all closed sales from
the past 30 days in each of these ZIP codes, and then made a simple slashmark
tally of homes which sold under list price, at list price, and over list price
(with an extra “bonus category” for homes that sold $10k or more beyond their
listed number).
Here's what I found:
80214 – Edgewater
31 Closed Sales
7 Below List
Price (22%)
8 At List
Price (26%)
16 Over List
Price (52%)
10 More Than
$10k Over List Price (32%)
80228 – Littleton
56 Closed
Sales
16 Below
List Price (28%)
9 At List
Price (16%)
31 Over List
Price (56%)
20 More Than
$10k Over List Price (36%)
What you see
in both of these ZIPs is about one-third of the listings are selling for $10k
or more beyond list price. Truth is, in
this sampling there were many properties $20k over list, some $30k over list
and one that was $47k over list price!
Of the 87
closed sales in this sampling, zero were bank owned or short sales. That means all 87 were “retail” sales at
retail prices. And because sellers
clearly see blood in the water, nobody is discounting anything.
What can’t
be known from this sampling is how many of these properties had appraisal
issues. Certainly, you could argue every
offer that’s $10k or more beyond list price is at high risk for appraisal
drama. And with list prices pumped up to
begin with, any property selling over its listed price has legitimate appraisal concerns.
What buyers
need to know is that one-third of all listings in this sample are selling $10k
or more over listed price, and because we are now at all-time highs for values
in the metro area, the people buying these homes are going to the top of the
totem pole in terms of price. And bringing extra cash to closing if the home doesn't appraise.
These are uncomfortable times for buyers, and even more so for those who are accountants, engineers and analyticals. Sellers want
the cash, and successful buyers are willing to give it to them.
