As we welcome February (January felt like a year), we are sadly not seeing as many homes hitting the market as everyone had hoped. This month we are starting with a record low inventory level with only 1,184 homes listed in the front range. Coupled with an increase in demand, the market is anything but loving right now.
While we usually don’t see a massive spike in inventory this time of year, we’ve seen more buyers entering the market earlier than the previous. With more buyers in the market and extremely low inventory, we are seeing crazy bidding wars on each home. With many properties, even those within the Marshall fire burn area, going as much as 20% over the list.
So what does this mean if you’re a buyer or seller? Two very different situations…
As a buyer, you need to do as much due diligence ahead of time as you can. Understand what you can afford before looking at any homes. What is your list of non-negotiables are. And being prepared to have appraisal gaps as part of the process. Any new home listed will have multiple offers. What can you do to make yourself shine? We are seeing everything from unlimited appraisal gaps, pass/fail inspections, 2.5-week closings on conventional loans, and hard earnest money to sweeten the deal. The level of risk has to make sense for you as the buyer. Understanding what the neighborhood comps are doing is key and what potential appreciation looks like. These are all your ahead of time homework assignments to make sure you are ready to give it your all when it comes time to compete.
Sellers. Man, oh man, are you sitting on the throne. With such a low level of new homes hitting the market, we see crazy activity on new listings. Anywhere from 70+ showings on a single-family home to 30+ offers, this is the time to list your house. Of course, sellers need to do their homework as well. The biggest question is, what’s next? Where do you plan to live? Being a seller is pretty fun; however if you have to enter the buyer pool again, what does that look like? Are your expectations on the new home search aligned with what’s happening? Sellers can ask for rent-backs, which help them find replacement homes, along with pretty much anything else a buyer can muster. Making the right decisions based on the best terms isn’t always the highest offer. You’ll want to make sure you are working with a pro who can guide you through the massive stack of offers, ensuring that you find the right buyer who will actually get to the closing table.
With all this said, the Denver market has proven month after month, year after year, that homeownership sure pays off. With appreciation, in some areas hitting record highs, owning a home is one of the best ways to build wealth. While interest rates are rising, they are still incredibly low. Buy when interest rates are low, now when housing prices are low. Even if you are starting in a condo, your appreciation will be 100% higher than renting.