Offers all in cash. Bidding wars. Offers with indexation clauses without ceiling. Home inspections canceled, except for health or safety issues. Offers sometimes invisible in the minutes following the arrival of a house on the market.
Denver area homebuyers have deployed all of the above strategies over the past few months while trying to land a property in the midst of what can only be described as a sellers’ market on steroids.
âIt’s unheard of in my history on the market. I’ve never seen it like this, âsaid Billy Van Heusen, longtime Denver real estate agent, licensed in Colorado since 1972.â Everything is out of whack and there is no inventory. .
The most recent Denver Metro Association of Realtors (DMAR) report shows just 2,075 active listings at the end of May – a record low and down 71% from May 2020. Average selling prices single-family homes and condos hit a record high of $ 623,279. . And the average number of days in the market has dropped to just 11 days, less than half the time in the market than just a year ago.
Buyers and agents described the market as emotional, frustrating, extreme, and moving at speeds never seen before in the Denver non-coastal market.
âDenver has certainly had low inventory before, but I don’t think it’s ever seen such extreme demand,â said Jenny Usaj, Denver area agent for 15 years and a member of the DMAR Market Trends Committee. . “The demand to live in Denver seems unstoppable.”
Agents also pointed to the extremely low interest rates creating opportunities for first-time buyers and the increased savings levels created by the closure of all travel and group gatherings in the event of the COVID-19 pandemic. There is also a great reluctance for many people to sell their home, fearing that it will be difficult to buy another in this market, which means fewer homes on the market.
Three metro-area buyers spoke to the Denver Gazette about their recent experiences. While two of them managed to get housing, the third is still looking after him after eight months.
âIt’s very hit and miss,â LeAnna Efird of Denver said. âTo be honest, in the last couple of weeks we haven’t watched at all. We are so frustrated and we don’t want to do it now. We just need a break.
Efird, a healthcare worker, is in a unique situation. She and her husband take care of her mother, who has health problems and had to move in with them. They sold his condo in September and tried to find a ranch-style house with a basement, so they could all have their own space. They lived with friends, in an extended stay hotel, and rented a house – which is only available until July.
âIt’s not like we don’t have the money,â she said. âWe are pre-approved and have 40% to deposit. But we still haven’t gotten the best deal. We don’t know what to do.
They lost bids on around eight houses, including when they placed a higher bid but lost to an all-cash bid. They are looking for homes in the $ 500,000 range, but are not prepared to outbid extreme amounts or forgo inspections.
âPeople have outbid the houses so much that we can’t compete,â Efird said. “You have to book sessions as soon as they hit the MLS (Multiple Listing Service) or you won’t get a session.” Many screenings are only 30 minutes long, so you have about 15 minutes to make a $ 500,000 decision. It’s crazy.”
Andrew Malkoski of Denver 100 said that is why it is important to work with an agent who knows how to help you structure the offer while competing with the money.
âBetween things like escalator clauses and valuation spreads, there are plenty of ways to help a loan contingent look more like a strong caseâ rather than cash, Malkoski said. “It’s important for them to remember that the seller has different motives, it’s not always the price. And sometimes we don’t know what it is.”
Usaj advises buyers on the three Ps: âbe prepared, patient and perseveringâ.
âIt changes quickly, so buyers need to be ready to go when they are in the market,â she said. âMake sure the finances are in order. Have proof of funds if you are using cash. If you need to liquidate a 401 (k), do so in advance.
âThis market is not for everyone.
To show creativity
Amelia Abernathy, along with her husband Will and young daughter Haley, are moving from Tennessee to Denver in July due to Will’s job. She is also pregnant with twins and immediately identified with the concept of an “emotional” market.
âIt was pretty brutal,â she said. âThere were a lot of tears. â¦ But our real estate agent (Van Heusen) was super positive and said ‘we’ll find you something’.
The couple, who learned in April that they were moving, made down payments on six homebuilders’ lots in desperation but didn’t really have time to wait for new construction.
âWe had a budget of $ 700,000, but we were looking for homes between $ 500,000 and $ 600,000 because of all the bidding,â said Abernathy, who works for a financial services company. âWe started to consider making a few offers, but we were really hesitantâ¦ we didn’t want to pay $ 100,000 more than asking price. “
Van Heusen usually calls sellers of new homes to see if any offers for homes under construction have failed.
“Some builders have waiting lists of 100 to 200,” said Van Heusen, a former Denver Broncos hitter and receiver in the 1970s. “In that case, Amelia was lucky.”
A buyer had pulled out and the house was about to be marketed. The broker asked how fast Van Heusen can get his clients there. He rushed to the development near Southlands on E-470 and East Smoky Hill Road, accompanied Amelia and Will on a video call. They posted a bond and got the house. It will be finished in July.
Van Heusen and Usaj both said the market did not appear to be hurting economic development efforts as companies continue to move to Denver and hire. They could simply offer longer rent allowances to give new residents time to find housing.
âThe rising tide lifts all ships, as the saying goes,â Van Heusen said. âEven with these prices, businesses and people keep moving here.â
âI haven’t really seen any businesses or businesses hold back or worry,â Usaj said. “Most employees who see an opportunity to move to Denver jump on it.”
Paul Phillips is one of those people. He came to Denver from New York last year to help a friend with a start-up. Despite being a tenant, Phillips decided in December that it was time to invest in the Denver real estate market and reached out to Usaj.
âIt just takes a while,â he said. “The inventory is so low it just takes patience.”
Having lived in markets like New York, Boston and Calgary, Phillips said that “the prices here don’t strike me as that crazy.”
He made a few condo offers, most of them $ 50,000 to $ 60,000 above asking price. When he finally found a condo in Denver’s Five Points neighborhood, he and Usaj moved quickly.
“I saw it on Thursday, gave them the offer on Friday morning and included a clause they had to accept by Saturday morning,” he said. “They agreed … we got the last one.”
It only exceeded $ 10,000 of the asking price of $ 600,000 for the two-bedroom condo. He feels good about investing.
âIn this market, you hardly come in with a what-you-want mentality – you have to be open to anything,â Phillips said.
Usaj sees no relief for prominent buyers.
“It will be a very busy summer,” Usaj predicted. âI don’t see this inventory problem being solved. Last month there were 2,500 on the market. The balance for a market of this size should be 36,000 available – so we’re quite a ways off. “
According to agents, the only thing that could balance the market is if the Fed raises interest rates in the fall. This would create a smaller pool of first-time buyers who would qualify.
âStocks are going to catch up a bit, but I don’t think it has a dramatic negative effect on prices,â Van Heusen said. “With the amount of construction going on and people continuing to move here, the Colorado market is going to stay strong. It’s basic economic supply and demand.”