There is a
lot of angst in our market right now.
Call them "birthing pains". They
are the birthing pains of higher prices.
And many buyers are feeling them.
We’ve had
1,900 homes come on to our inventory-starved market since the first of
January. We had 1,500 homes (nothing)
listed in all of December. Buyers have
been lined up for months, waiting for something worth buying to come along.
Now here it
is… but wait. That little home in the
older part of town which was worth $215,000 last summer… it’s listed at
$229,000! That one on the ridge, by the park. Sales in that neighborhood were in
the high $200s last year. $324,000??
The tension
that exists in our market is the inverse of the tension that existed in our
market in 2007. The difference is, this
time prices are going up, last time prices were coming down.
In 2007,
there were 31,000 homes for sale in the Denver metro area, and maybe 8,000
buyers looking to purchase in a shaky, uncertain market. Today, there are 8,000 homes for sale and it
feels like there are 31,000 buyers, all looking to nail something down with a
rate in the 3’s. That equals rising
prices.
In 2007,
seller’s clutched their overvalued appraisals from 2005 and lamented as to why penny-pinching
buyers were being so unreasonable.
But in 2013,
it’s buyers who are racing to Zillow, finding archived sales information from
two years ago and lamenting why suddenly greedy sellers are being so
unreasonable.
And so you have come full circle.
Zillow
history from two years ago is just as irrelevant to buyers today as overpriced
appraisals from 2005 were to sellers in 2007.
Just as
sellers in 2007 waved their appraisals and cursed the buyers, today the buyers
are waving their iPhones (open to the Zillow app) and cursing sellers.
It’s called
tension, and it happens when things change.
I talked with
my home inspector yesterday, and he’s feeling it too. He says more and more, he’s seeing the same
buyers turn up at inspection after inspection.
They theorize that they have the power, just as they did in 2007, 2008,
2009, 2010 and most of 2011. They
theorize that if they offer a higher price, they can get it all back by beating
down the seller during inspections.
Many sellers
are folding their arms, backup offers in hand, and saying “Fine, walk away.”
There’s
tension in the market because things are changing. There’s tension in the market because
inventory is at a 20 year low and demand is intense, especially below $300,000. There’s tension because sellers have been
beaten down for five years and the market has finally flipped in their
direction.
Over half of
the listings taken in the Denver MLS in 2007 never sold. And I’m starting to feel that about half of
the buyers in the market today are never going to buy a house.
It’s because
the rules have changed, and if you are clinging to data that’s not relevant in
today’s market, it means you’re not likely to be successful.
