Wednesday, April 20, 2016


What do you say to buyers in the face of multiple offers, bidding wars, cash-rich weed growers and well-heeled out-of-staters overrunning the Denver housing market?

Just keep swinging.

What else can you do?  The numbers in our market today are so lopsided – less than two weeks of inventory below $400k, double-digit price appreciation for a fourth consecutive year, 270 people per day moving into the state, with over half ending up within 40 minutes of Denver – that you either keep swinging or start packing.

I know it’s frustrating.  Believe me, I know.  This past weekend, I wrote offers for four separate clients which all ended up in the recycle bin.  One was $25k over list price.  Another was for a cash buyer, 14 day closing, $7k over list price.  One agreed to pay $5,000 over appraised value.  And a fourth was $11k over list price. 

Zip, zip, zip, zip.

The problem with checking out is that, for the foreseeable future, the median home price value is going to continue increasing by $94 per day.  That’s how much values have gone up in the past year, according to the most recent report from the Denver Metro Association of Realtors. 

That’s $1,000 or so every 10 days.  About $3k per month.  About $34,500 in the past year, according to DMAR.

Are these numbers scary?  Of course.  They are terrifying. 

But you have to pull back and be objective.  You have to trust the numbers.

The ten-year average for listings on the market in the Denver MLS is about 15,000.  Today there are 5,996.  In just the past 30 days, 5,667 homes went under contract.  Overall, there are more than 8,400 homes currently under contract, or essentially 140% of the active inventory.  Historically speaking, that figure should be about 33%.

Economists consider five months of inventory to be a “balanced” market, where buyer and seller demand square up.  Five months is 150 days.  We currently have 14 days of inventory below $400k!  

For bonus points, the unemployment rate in Denver is 3.2%, rents have also been rising at a 10%-plus clip and the Rockies are (however temporarily) tied for first place.  Strange days, indeed.

I’ve never seen a market like this in 22 years as a broker, but then I’ve been saying that for about four solid years.  Denver is not becoming a big city.  It is one.

There are plenty of lousy things about our explosion into a big city metropolis which I grieve on a daily basis.  Traffic, for one.  Homelessness and gentrification, for two more.  Massive and generally thoughtless big box apartment buildings blotting out the skyline.  And schools that are totally unable to keep up with the surging population, especially on the west side of town. 

But it's not all bad news, either.  Anyone who wants a job has one.  The metro area is literally floating on an ocean of equity and cash.  Older neighborhoods are being reborn as homeowners pour significant amounts of money into long-delayed maintenance and home improvements, further increasing area values.  Lawns are green.  Paint is fresh.  The kids are alright.  

If you’re one of those frustrated also-rans in the housing derby, I feel your pain.  Emotionally, it’s easy to think about quitting.  (FYI, this past Monday morning, I thought about quitting)

But if you believe the numbers, this thing is a long way from over.  Demand is so overwhelming in relation to supply that the top of this market is likely years, not months, away.  There is nothing that suggests this trend is reversing any time soon. 

It sucks to lose and lose and lose.  Resilience is a learned behavior.  And right now, you have to be resilient.  Even if it hurts to press on.