Mark McClung

9.6% more homes for sale in Denver this September!

Fewer homes for sale and a decrease in buyer activity is what we normally see going into fall. This year, we only have one of the two. While buyer demand dropped 9.6% as expected from August to September, there was an 11.9% increase in inventory that has been long overdue. We haven’t seen this many homes for sale since January of this year! If inventory continues to trend upward, you can expect to see more homes making it through the first week before going under contract — a very welcome relief for buyers.

Want more detailed information about the market in your neighborhood? Please reach out!

Selling Your Home? Consider These 3 Pricing Factors

Thinking about listing your home for sale? Today’s buyers will appreciate more inventory and your home is likely to sell shortly after hitting the market. While it’s easier to get top-dollar for your home in today’s market, setting an appropriate listing price still matters. Below are some tips on how to price your home to sell in any type of market!

The housing market is always changing and it’s important to focus on three things when determining the price to list your home. Please take a SEC (yes, an acronym: Statistics, Environment, and Condition) and consider a few things!

1. Statistics

99.9% of all real estate professionals will check past sales when determining a listing price for a home.

In a fast-paced market, past sales alone won’t cut it, as the data that is available today is most likely from negotiations and deals that were put together over 30 days ago. In addition, your broker will need to look into comparable properties that have recently gone pending and dig a little for info. Fellow listing brokers will usually provide the details on what they went under contract for, how many offers they received, etc. This helps to further refine a listing price.

Lastly, you need to keep an eye on your competition and their pricing. When potential buyers are touring homes they are searching in their desired neighborhood, price range, and home specs (bedrooms, bathrooms, square footage, etc.). If your home is priced too high, it may take longer to sell.

2. Environment

Have you ever seen a listing online and said “WOW, I need to go see this home — I think it’s the one!” Then, you arrive and find out there is a 12-story building blocking the view that they conveniently “shot” around during the marketing process. Environmental factors need to be factored into your list price. Buyers are usually making the most expensive purchase of their life and they are going to notice and analyze everything. Just because you don’t mind the 12-story building, buyers may see it as a negative if your competition doesn’t have the same issue. Some other examples of environmental issues are:

  • Busy streets
  • Interstate noise
  • Distressed neighboring property
  • Loud neighboring commercial property
  • No street parking

Most homes have something environmental that could affect the final sales price.

3. Condition

The condition of your home will have a huge impact on list price. If you are considering making updates or repairs before you list, consult with your real estate broker for sound advice. By taking needed repairs and updates into consideration, you will have already addressed items buyers will most likely push back on. Pricing your home accurately based on its current condition will be apparent when buyers search online. There are a ton of buyers out there that are looking for homes that aren’t updated and are willing to pay a fair market price for them.

In Conclusion

You only have one opportunity to make a good first “pricing” impression on the market! There are a million articles on overpricing and how it’s a bad strategy. Taking a SEC to come up with a solid list price will ultimately net you more at the closing table!

Only One Month of Housing Inventory in Denver!

The story remains the same: no inventory!

When I say “no inventory,” I mean that we are consuming homes as fast as the market is producing them (1,429 new listings vs. 1,416 sold units in August). We typically see a reduction in active listings around mid to late fall but not during the summer months. Active listings for August were nearly as low as what we saw this past May. Buyers who were searching back in May suffered through several offer rejections before they were able to get under contract.

It’s not all doom and gloom though! 30-year mortgage rates continue to decrease, homes are taking a few extra days to sell, and the median price dipped slightly from June’s highs.

Pro-tip to buyers: keep your guard up, and treat every new listing like one that will be gone on Monday. Rely on your broker’s offer recommendations and don’t forget the competitive market clauses as a free insurance policy in the event that the home you are submitting an offer on is “the one.”

Want more detailed information about the market in your neighborhood? Please reach out!

Should I Make Any Home Improvements Before I Sell?

One common question home sellers ask is, “what should I do to get my home ready to sell?” This is a loaded question because the answer depends on their timeline, their budget, and the current market (sellers, neutral, or buyers). The answer for you will also depend on these factors.

No matter how much money you have allocated to get your home ready to sell, it’s your timeline sets the stage for what you are able to accomplish. If you need to sell quickly, forget the major upgrades and try to accomplish as many deferred maintenance items as possible, while considering what refresh items will provide the most benefit. Your real estate broker and their team will be able to help you create a punch list and prioritize the items based on your situation.

There are three areas to focus on when it comes to pre-listing home prep:

 

1. Major upgrades

What they include:

Major upgrades include large projects such as a kitchen remodel, renovating a  master bedroom/bathroom, or adding a backyard patio.

Who should do them:

Typically, these work best for those with a hefty budget and lots of time on their side before looking to list.

Best time to do:

A great time to do any major upgrade is right after you buy the home, especially if you know you might sell it within the next 5-10 years. Who better to enjoy the upgrades than you! If you are going to end up footing 1/2 the bill you might as well get some enjoyment from it!

The ROI:

These types of projects will give you about a 50% return on investment. While it will make your home more appealing and raise the list price, you may end up a little disappointed at closing.

2. Deferred Maintenance

What it includes:

Think smaller when it comes to deferred maintenance. Instead of the “oohs and ahs” that major upgrades provide, these are the little items that show buyers you’ve tenderly cared for your home — leaving buyers questioning less about the condition of your home. (more…)

Is the housing market slowing down in Denver?

The current catchphrase in Denver’s real estate market is “market shift.” While my day-to-day observations agree with that, the statistics aren’t necessarily reflecting a shift!

Denver’s median sale price dropped $10k to $650,000 since June, which could indicate the start of a slowdown or it could be an early seasonal cool-off driven by a super-hot spring and early summer sell-off. Inventory remained unchanged from June, but days spent on the market dipped to 13 — the lowest it’s been since we began tracking it in 2007! One thing to point out is the majority of July’s closings are from contracts that were signed in June, and June was still a super-hot month. August’s numbers should be interesting and we’ll definitely be chomping at the bit to analyze the data as soon as we can!

Want more detailed information about the market in your neighborhood? Please reach out!

Is a contingency to sell your home a deal-breaker to buy in Denver?

We’re sure you’ve heard how competitive and fast-paced the Denver housing market is these days. If you haven’t, we will confirm that it is still crazy, but not as crazy as it was three months ago. In April, the norm was for listings receiving ten or more offers, sales hitting far above list price, and little to no leverage for buyers during negotiations. We’re still seeing sales at or above list price, but now with only few offers and occasionally with some negotiating leverage.

Sale contingency is driven by your lender

If you’re getting your finances in order to purchase a new home, you may run into one common lender requirement (also called a condition): that you must sell your current home prior to buying your replacement property. While selling before you buy is the most common scenario (then removing the condition and allowing you to secure a new home loan), it is extremely difficult to get a contingent offer on a home accepted. On an initial phone consult, most real estate brokers will throw their arms up in submission when they hear you need to sell before you buy. Rest assured, there are ways to accomplish this:

The old fashioned way

The classic way to deal with this hurdle? Negotiate it! There are more opportunities these days to negotiate a contingency into your offer. To be successful in this, you must show the seller that you’re committed and that you aren’t just testing the waters. Having a plan to present to the seller is key. Having your home ready to list and press the “active” button on the MLS helps to convince a seller you mean business. Better yet, have a live listing that hits the market when you submit your offer, or even better — one that’s under contract!

A new option

We recently published an article on ways to sell (or not) before you buy your next home. While those techniques remain great options for accomplishing your next purchase, there’s a new kid (lending product) on the block that we want to tell you about! We’re continually vetting home financing products that would be a good option for our clients, and we were recently invited to use a new lending program that is only offered to a select few brokers in Denver and their clients.

This program essentially turns you into a cash buyer by purchasing the home for you and selling it back to you once you have sold your current home. Sounds too good to be true, right? Well, there is a 1.5% fee for the service, which can be rolled into the purchase price when you’re read to buy the home back. There’s no free lunch, but it is a great service provided to contingent buyers so they can bypass the stress of selling their home until they’ve secured their new one. There are some restrictions on the loan amount, timing, etc., so reach out to us and we can fill you in on all of the details!

 

There are many different ways to sell your home and purchase a replacement successfully. Your first step is to sit down with a real estate broker who is familiar with all of the options and can help you come up with a solid game plan! If you’d like to utilize our expertise on this or for more detailed information about the market in your neighborhood, please reach out!

Denver home inventory ticking up slightly

The average number of days homes in Denver spent on the market in June was the lowest it’s been in the last ten years — 14 days! Available home inventory also crept up ever so slightly to 1.2 months, from 1.1 months in May. It’s not much, but we’ll take what we can get these days. Buyers have been waiting a long time for more homes to hit the market, and finally, they have! The number of active listings increased by 22.7% since last month. On the flip side, over this same time period, buyer demand increased by 11%. If interest rates start creeping up, buyer demand will begin to wane and we’ll likely see a small surge in new listings from those who have been on the fence to sell. If you’ve been waiting to list your home, now is the time to take advantage of our hot market before it cools off.

Want more detailed information about the market in your neighborhood? Please reach out!

As prices set new records, why aren’t Denverites selling their homes?

The median sale price has hit an all-time high of $653,000 in Denver. Inventory continues to decrease, and 1,464 homes sold in May, which is 6% above the last five-year average. Active listings were also down 20% in May. People aren’t selling their homes. The question is, why?

Denver is becoming one of the most expensive cities in the country. The median sale price has increased by 31% over the last three years with no sign of cooling off. Traditionally, sellers move every few years for various reasons — size requirement changes, a neighborhood change, or a lifestyle or work change. People are now staying put because they cannot afford their next home in Denver or fear being unable to secure a new home.

Want more detailed information about the market in your neighborhood? Please reach out!

Questions about the Denver real estate bubble that keep us up at night

How long will our fierce, low-inventory, deep seller’s market last? Will it slowly ramp down or will it crash overnight? Are we keeping up with new construction? These are the questions that keep real estate professionals and home buyers up at night!

How is inventory looking?

Every day I look over new homes that hit the market for our clients, a task that used to take up the length of a nice cup of coffee. Now, I can’t even finish my coffee before I run out of properties to view! Over the last seven days, there have only been 204 new listings in Denver and 411 have gone pending. Typically, we measure inventory in months, but we are just shy of 40 days of inventory — days! Denver had 318,445 households as of 2019. An average of 29 homes hit the market each day, which means that only .002% of Denver households are hitting the market each month. Things are certainly tightening up.

How are rising interest rates affecting the market?

As interest rates go up, buyers in the lowest price ranges find themselves forced out of the market. As more of a monthly payment goes toward higher interest rates and not towards purchase power, everyone is shuffled down the totem pole. This reshuffling will reduce buyer demand, but not enough to reshape inventory and get us to a balanced housing market. To significantly increase inventory levels to quell increasing prices, work must be done on the supply side of the equation.

(P.S. We’ll be keeping an eye on the 10-year treasury rate, which mortgage rates have historically been tied to. Glen Weinberg at Fairview Commercial Lending recently published a great write up on the recent inflation jump reported on this month’s CPI Index report and what that means for real estate.)

Can we turn to new construction?

This is where Denver has a severe disadvantage to other cities where “urban sprawl” is an option. Denver is locked in by other municipalities and unable to develop large tracts of land. We aren’t the only city with this problem; as a nation, home building has dropped significantly over the last decade, from an average of 26.3 million homes built per decade from 1970-2010, to only 5.8 million new homes built from 2010-2019. That’s a 77.8% change in the wrong direction! Denver needs new homes to add to the inventory to supplement existing home sales. The city can’t build out, so we have to build up. Increasing density via high- to medium-rise condominium development and finding a compromise to construction defect laws must happen.

Will the market crash?

Lending practices have been corrected since the great housing crash of 2008 and those buying homes are now generally well-qualified. As interest rates increase, I do believe things will start to slow down, but not crash. I mean, we are living through a pandemic that has rocked the world and our housing market is still going straight up! Now, we just need homes to build upwards as well.

April 2021 stats recap: Denver home bidding wars continue to drive up prices

I recently read an article published online by a Denver television network. It was titled: “Home out of range: 65% of Denver homes sell over asking price.” As I began to read, I didn’t even make it through the first sentence before I was met with disappointment. It started, “Littleton, Colorado…” So which is it, Littleton or Denver? Being a stats geek, I had to find out the actual number of Denver listings that closed at or above list price last month, in addition to pulling monthly stats (see below).

We’ve all heard the bidding war stories that are floating around and I knew the number would be high, but the numbers really were astonishing. In April, there were 1,519 homes that closed, and of those, 1,215 sold at list price or above. That means that a staggering 79.9% of homes sold at or above list price! Let that sink in a bit — now it makes even more sense why the median sale price for single family homes jumped another $20k from March, up to $650,000. 😳

Want more detailed information about the market in your neighborhood? Please reach out!