Back in the spring, I counseled many of my first time
buyers to take a sabbatical.
Wait until the fall, I said. From mid-January until the 4th of July, if you're looking for something under $400k and you don't have 20%
or the backing of the bank of mom and dad, you're mostly roadkill.
It will calm down after the 4th of July, I predicted, and
once Labor Day gets here, you'll actually have a fighting chance to get
something nice without having to claw your way past 10 other motivated buyers.
Well, Labor Day has come and gone and the market has indeed downshifted.
The market has thinned out, appreciably, just as it did
post Labor Day in 2013, 2014, 2015 and 2016.
Predictably, the Denver Post has published an article
putting buyers "on alert" that the real estate party in Denver may be
coming to an end. "Time will tell if the dip is seasonal or the beginning of a turning point...."
But let's take a moment to recalibrate here.
The reason I have pulled housing data on a monthly basis
for nearly 20 years is so I have a baseline for understanding what's normal and
what's not. Seasonality it normal. Inventory peaks in August or September every
year, then thins out until mid-November, when the market shuts down for the
holidays.
The real test for our market every year comes in
mid-January, when first-time buyers come out of hibernation and begin swarming when inventory is at its low point for the year.
It's that crazy January through June imbalance - no homes
for sale and thousands of first-time buyers chasing after scant inventory -
that drives the lion's share of appreciation each year.
The disparity between listings and buyers intensifies all
spring, usually leading to such frantic conditions that in most years, sellers
can get away with murder in March and April.
I have written nearly 40 "failed offers" in
2017, and I can tell you for a fact that the spring market nearly fried my
soul. I wrote offers this spring on
homes with 43 offers, 31 offers, 27 offers and several others with 20 or more.
Unless you have cash or are fully prepared to waive the
appraisal clause, why would you even waste your time fighting through that
market?
But every year, buyers are drawn to the spring market
like moths to a flame. And so we write
crazy offers with modified or waived appraisal clauses, "as is" provisions, and
earnest money "hard" up front in a desperate attempt to get
something, anything, under contract.
Why?
The time for first-time buyers is the fall, not the
spring.
I see it in the market already. While there are still some homes drawing multiple
offers, the frenzied season is over.
Call it burned out agents, burned out buyers, shorter days or perhaps
just this region's ongoing obsession with the Broncos, but the buyer pool has
thinned appreciably as the days have started to shorten.
For first-time buyers, the right move was to wait. Some took my advice, some didn't. But the smart move is to get after it now and
try to find something before the holidays, because come January, it's highly
likely the crazy wheel will start up once again.
And at that point, if you don't have the guns to compete, you'll find yourself on the outside looking in once again.
