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The emotional roller coaster of home buying in Denver

Along with every other real estate professional in Denver, for years we’ve been saying, “it’s a sellers market,” “homes are going quickly,” so on and so on. But what does that really mean for a buyer? How do you navigate the current market, let alone the roller coaster of emotions throughout the buying process? Let’s walk through it.

Setting Expectations

It’s important to understand the current market you’re about to throw yourself into. You’ve probably heard home buying stories from co-workers, family, or friends advising on how difficult it is to purchase a home these days. While there’s certainly truth to their experiences, there also tends to be exaggeration (we all want to tell a good story, right?). The best place to start for an unbiased opinion of the market is with statistics. It may not be one of the most exciting parts of buying a home, but it’s one of the most important. It will help you understand the reality of what’s happening in the market, and more importantly, what’s driving it. You don’t need to spend hours doing research, you just need the 30,000 foot view so that you can begin to formulate accurate expectations for your upcoming journey. Luckily, we’ve made that easy for you. Skip the endless Google searches and read our 2020 real estate recap. Before you know it, you’ll be up to speed with the current market. It will be painless, I promise!

Game Planning

It’s important to have an organized plan before you start your search (yes, even your online search). Once you’ve educated yourself on the market, the next step is to make a game plan. Start putting together your advisory team, which consists of a knowledgeable real estate broker and lending partner. These professionals will help to facilitate your planning in each of their prospective areas. A few things to consider while planning:

  • Budget
  • Time frame for purchasing
  • When to start the search
  • Type of financing that is best for you
  • Down payment source and amount
  • Type of home (condo, townhome, single family, etc.)
  • Neighborhood
  • Neighborhood statistics (zoom in from the 30,000 foot view!)

This list is just a starting point. Everyone’s planning will look somewhat different based on their home buying goals. The great thing about hiring a team? You don’t need to reinvent the wheel. They’ll coach you through the process to make sure you’re making the best possible decision for you and your family.

Home Touring

This is the fun part. Once your plan is complete, it’s time to work your plan. In our current market, time is of the essence for touring homes. Traditional pre-pandemic home touring consisted of clustering several homes and viewing them back-to-back in a short time period. Usually, there are other overlapping groups touring the same home you’re looking at. Today, overlapping showings are a no-no, and bookings to view hot listings in desirable neighborhoods fill up fast. It can occasionally take one or two days for a tour slot to become available (picture anxious buyers hitting refresh over and over again). The moral of the story: When a home catches your eye, schedule a tour with your broker. Whether that’s in-person, via FaceTime, a recorded video, or on Zoom, it doesn’t matter. Just get your eyeballs on it so you have the opportunity to compete.

Submitting an Offer (or two, or three)

Now the planning pays off (hopefully). With Denver’s low inventory, you’ll likely be in competition with other buyers for a home. Emotions get high, and anxiety can creep in. Don’t worry. This is normal. The greatest advice I can give you is to trust your broker regarding the value of the home you’re interested in and listen to their negotiating strategy. Remember that they’re on your team, and together, you’ve already outlined the desired outcome in your planning session. I like to call the plan a “guard rail.” It’s outlined before all the craziness begins, and it’s there to keep a buyer from making an emotionally-based, often poor decision. Don’t let the plan fly out the window when things get stressful!

We are in a deep seller’s market, consisting of multiple offers. There can only be one winner per home, and while hopefully that winner is you, be mentally be prepared to walk away when things go awry. Stick to your plan. Listen to your broker’s advice on a recommended maximum price for the homes you are offering on, and you’ll be fine. Your solace in losing will be knowing that someone else overpaid!

In conclusion…

Buying a home can be an emotional roller coaster.The process is filled with hope, anxiety, stress, disappointment, frustration, and eventually joy. To help manage these emotions, set expectations, plan properly, and seek counsel from your real estate broker. These guard rails should soften the blows. Remember that your broker has their head in the game every day, and their years of knowledge can be trusted. Their council, along with your perseverance, will get those keys into your hands in no time.

2020 Denver Real Estate Market Recap

What a year — and that’s just in reference to the Denver real estate market!

Imagine you were flying at 45,000 feet, staring down at a hurricane, with its eye directly over downtown Denver and winds stretching across the Front Range. I know this sounds like a strange analogy for real estate (especially since we don’t have hurricanes in Denver), but bear with me since I majored in aeronautical science and minored in meteorology (think, former professional pilot and weather nerd, turned real estate pro). Back to the hurricane… the wind represents the fast-paced, single-family home market where homes have been selling in days (sometimes hours), prices are skyrocketing, and buyers are frustrated. Then, look over to downtown Denver — where the condo market isn’t fast and furious. Just like the eye of a hurricane, it’s relatively calm and clear. Those who’ve been following the condo market in downtown Denver can understand — it’s been very slow and experienced a price correction in the pandemic.

Alright, enough analogies. On to the stats!

Days on the Market

We started 202o off strong, in the 40-45 average days on market (DOM) range. Then, well… you know. After the pandemic started gaining momentum, inventory started to shrink and buyers that were committed to buying saw it through. The buying frenzy that followed pushed the average DOM down to the mid-twenties for the remainder of the summer, and into the fall.

Inventory

The initial decline of inventory that started in January leveled off, then inventory began to jump in mid-late March when the stay-at-home orders hit.

In fact, it peaked all the way up to 3 months, a level we haven’t really seen since 2013! What was interesting to watch (statistically) in the midst of the media’s doom and gloom, was what happened as-stay-at home orders began to ease. As soon as Governor Polis deemed the real estate transaction an essential service, inventory began to plummet, eventually dipping lower than one by year-end. Yes, less than one month of inventory!

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The real estate market in 2021

Happy New Year! Looking for a quick digest of what’s happening in real estate right now? We’ve got you covered:

National News

+ 27 experts give their take on what the housing market will be like in 2021. Hint… most think prices will continue to climb.

+ Across the country, Generation Z will spending roughly $226,000 on rent before they can own a home, more than any previous generation. In Denver, this number balloons to $320,300. Time to capitalize on low interest rates, if you can!

+ The Case-Shiller U.S. National Home Price Index is showing that home prices have risen 8.4% in the last year, nationwide.

Local News

+ Renofi is projecting that the average price of a home in Colorado will reach $763,309 by 2030, making us the 4th most expensive state after California, Hawaii, and Washington.

+ Denver ranks 8th in cities with the highest inflow of new residents during the pandemic.

+ Local restaurant owner Josh Wolkon shares how you can help save local restaurants.

Financial News

+ Mortgage rates continue to remain near record lows at 2.67%, down from 3.72% a year ago.

+ Not looking to move, but wondering if it’s worthwhile to refinance? Check out Nerd Wallet’s refinance calculator to find how much you can save each month.

+ Forbearances rose for the third consecutive week, as roughly 2.83 million homeowners are currently suspending mortgage payments. Fannie and Freddie announced that multifamily property owners with existing forbearance agreements can extend their agreements for up to three months.

Have questions about what’s happening in real estate in your neighborhood? Let’s chat!

Interested in the Denver real estate market? Subscribe to our weekly emails to get more information like this.

What buying a home will actually cost you

Everyone knows that buying a home costs money. But how much exactly? While the purchase price of the home makes up the largest component, here are other costs homebuyers should be prepared to pay:

Earnest Money

This is essentially a down payment or deposit on your new home! It shows the seller that you are a serious buyer by putting some skin in the game, so to speak. Should you terminate your contract in good faith, you will get that money back. And should you make it to the closing table, the money will go towards your down payment. Earnest Money will typically be between 1%-3% of your purchase price, so make sure you have the funds readily available once you start writing offers!

Home Inspection

This is the time to have a home’s nooks, crannies, roof, sewer, and so on inspected by a qualified home inspector. Home inspection pricing can vary from company to company, but you can typically plan for $300- $1,000 depending on the types of inspections you order (sewer, radon test, general inspection, etc.).

Appraisal

If you’re like 87% of buyers that are financing their home purchase with a mortgage, your lender will need an appraisal (Property Valuation) done on the home. This ensures that they are not loaning you more money than the house is worth. Price can vary depending on the company, but you can typically plan for $500-$750 for the appraisal report.

Down Payment

The amount of a down payment typically starts around 3% of the purchase price and goes as high as you are comfortable spending or can afford. Twenty percent down is the sweet spot, where you’re no longer required to pay Private Mortgage Insurance (at less than 20% down, you’ll pay for this). You’ll want to discuss your down payment options with your lender!

Closing Costs and Prepaids

The majority of your closing costs are charged by your lender for the financing of your new home. Every lender packages their fees differently, so be sure to have them explain every charge in detail to ensure you are comfortable with them. There will be prepaid items that will be required to set up your escrow account (three months of insurance and taxes), so that the account will be solvent to pay the first bills when they arrive to the escrow servicing company.

And Of Course, Commission

Your real estate broker should disclose their commission amount and how it is paid before you submit any offers. In Colorado, it’s pretty common for the listing broker to negotiate a commission with the seller, and then advertise a co-op fee to pay the buyer’s broker’s commission. In those instances, the amount you go under contract for is the amount you pay at the closing table. Your broker’s hard work will be rewarded from the closing proceeds and reduce the amount paid to the seller.

Budgeting for closing costs is an important part of your home purchasing game plan. Unanticipated expenses right before closing is never a fun problem to deal with!

Looking for more info about buying or selling a home? Please reach out, and subscribe to our weekly emails to never miss a beat about Denver real estate.

Denver buyer demand sets records

I guess November didn’t get the memo, because buyer demand is supposed to slow down! In Denver last month, there were 1,417 closed transactions recorded. To give a little context, the 10-year average for November is 914 closed transactions — buyer demand is up 55%! Couple that with active listings being down 19% from November 2019 and we have a whopping 1.1 months of inventory. Folks that are touring homes and getting their offers trumped know what we’re talking about. Being a buyer in Denver (with the exception of the downtown condo market) is tough, really tough. With low inventory, high buyer demand, and all-time low interest rates, buyers have to bring their A game!

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

Home prices see greatest gain in over 6 years as mortgage rates hit 50-year low

Looking for a quick digest of what’s happening in real estate right now? We’ve got you covered:

National News

+ Home prices across the U.S. are seeing the greatest gain in over six years.

+ A report from the National Association of Realtors found that the pandemic has increased the percent of homebuyers looking for a multi-generational home, that the average purchase price jumped from $270,000 to $339,400, and that a growing percentage of buyers are headed to the suburbs, while less are heading to small towns.

+ Curbed came up with a list of 21 of the easiest home projects to tackle while you’re hunkered down at home this winter, without buying anything new.

+ With the continued presence of COVID-19, outdoor kitchens are growing in popularity.

Local News

+ 30% of Denver homes sold for more than list price (more than 22% nationally), adding nearly $16K to the sale price on average.

+ Josh Gould, VP of Stantec believes there are 5 reasons Denver will be a post-pandemic winner.

+ A new Stay In Place Program has been created to help West Denver homeowners that are struggling to pay their mortgages.

+ Pitbulls are getting a new lease on life in Denver, after voters passed Ballot Measure 2J to repeal the more than 30-year-old breed specific ban.

+ Rental platforms are facing fines as Denver cracks down on unlicensed short-term rentals.

Financial News

+ 30-year mortgage rates have fallen to 2.72%, the lowest rate in the last 50 years. Average rates have been below 3% for 17 consecutive weeks.

 

Have questions about what’s happening in real estate in your neighborhood? Let’s chat!

Interested in the Denver real estate market? Subscribe to our weekly emails to get more information like this.

Afraid of being homeless after you list your home?

As we all know, for the last five years, Denver has been deep into a seller’s market in the single family home category. The problem isn’t selling the home, it’s finding a replacement if you plan on staying in Denver. The Contract to Buy and Sell doesn’t have any built-in contingencies for sellers to back out of the sale, unless your real estate broker has negotiated them into your contract. In fact, the buyers are in complete control most of the way to the closing table.

There are several strategies your broker can contractually negotiate on your behalf to reduce the stress of being homeless after the sale. Every situation is unique, so make sure you communicate your concerns, expectations, and the best-case scenario for your move to your broker prior to listing your home.

Price is only one piece of the puzzle.

Bidding wars end all the time with offers that are not the highest price submitted. The key to coming out on top is asking the right questions to find out what in the transaction is most important to the seller. Working with buyers who also understand this concept is key, as they typically ask questions and shape their offer accordingly.

Contractually, what does this mean?

Here are a few techniques to increase the success of a smooth transition into your new home:

  • Seller Replacement Contingency – Written correctly, this allows the seller to terminate the contract within a certain period of time prior to the negotiated date, if they are unable to find an acceptable replacement home. Be prepared to reimburse the buyer any hard costs incurred during this period (think home inspection, appraisal, etc.).
  • Post Closing Occupancy Agreement – This is a fancy term for a seller rent back (sometimes free) from the buyers after closing. You can usually ask for up to a 60-day rent back (sometimes more) after closing to allow more time to purchase your replacement property.
  • Buying first, selling second – Sounds easy, right? Well, the tough part is getting a seller to accept your contingent offer to buy their home before you sell yours. The “secret sauce” here is to have everything ready to go on your current home, so the only thing left to do is hit the “active” button on the MLS. Being transparent with the listing broker and implementing some of the strategies mentioned above (i.e. asking the right questions) also helps to get your new home under contract.
  • Bridge Loans – This is a great strategy if you have sufficient equity in your home and you’re okay increasing the cost of your replacement home financing. This allows you to submit non-contingent offers on your replacement home before you sell your current home. There’s also a scenario where you can use this as a contingency and still pull off selling your home and buying your replacement on the same day!

 

While this list isn’t meant to be all-inclusive, it is meant to show you that there are ways to accomplish selling and buying in a super-competitive Denver market. The key to success is partnering with a seasoned real estate professional who can advise you of your best options.

Denver housing market is building on previous highs

There are no signs that the Denver real estate market is cooling. In fact, it’s picking up momentum as we head into the slower months of the year. Sales volume is up, inventory is down, and the result is a 21% increase in the median sales price from October 2019 and a 5.6% increase from September. The biggest news to talk about is the 11.8% increase in median sale price for attached single family properties. In fact, it set a new attached record at $436,000, and it’s only the second time the attached MSP has been above the $400k threshold.  It seems that buyer confidence is reducing the gap between attached and detached homes.

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

Real estate news: the pandemic is shaping real estate, but the Denver market keeps speeding along

Looking for a quick digest of what’s happening in real estate right now? We’ve got you covered:

National News

+ COVID-19 hasn’t kept people from moving this year: permanent moves are up 1.94% and temporary moves are up 26.73% since 2019.

+ Families with school-aged kids are increasingly heading to the ‘burbs for larger homes and yards amidst the pandemic.

+ COVID has fundamentally transformed our relationship to home. Seven months in, find out how the pandemic is reshaping interior design priorities and trends.

+ Nationally, new homes are bigger than a decade ago, but new homes in Denver lost 197 square feet in that same period.

Local News

+ Four Colorado cities are in the top five best places to live in the country according to U.S. News & World Report’s list of 150 best places to live in the U.S. in 2020-21.

+ Homes are selling nearly twice as fast compared to 2019. If you’re looking to buy now, be ready to act quickly!

+ Apartment rents in the Denver Metro area recovered in the third quarter after taking a hit in the early months of the pandemic.

+ Denver Restaurant Week is offering a surprise fall edition from November 13-22. Check out their lineup of dine-in and to-go options to help support one of the 150+ local restaurants participating.

+ Niche.com ranked the 25 best Denver neighborhoods for young professionals in 2020. They ranked the best neighborhoods for families, too.

+ Join us in supporting those affected by wildfires in Colorado by giving to these fundraisers.

Financial News

+ Mortgage rates are holding steady at historic lows. Housing continues to propel growth and is helping to lift construction, manufacturing, and transportation industries that build new homes.

 

Have questions about what’s happening in real estate in your neighborhood? Let’s chat!

Interested in the Denver real estate market? Subscribe to our weekly emails to get more information like this.

Colorado Wildfire Relief

Monetary Donations

+ Denver7 Gives is a fund that passes 100% of contributions to the Denver area community. Select “Help Colorado Wildfire Victims” from the dropdown.

+ Donate to the 2020 Fires Relief Fund through the Community Foundation Boulder County to support individuals, families, and nonprofit organizations affected by the Cal-Wood and Lefthand Canyon Fires.

+ Give to the Grand County Wildfire Emergency Fund. 100% of donations go to support the needs of Grand County residents who have been evacuated, displaced, or have lost their homes during the Grand County Wildfires.

+ Donate to the Larimer County Fire Recovery Fund by United Way to help provide financial assistance to displaced families as they rebuild their lives in the wake of the Larimer County wildfires.

+ Donate directly to families and first responders affected by the East Troublesome Fire on GoFundMe.

Material Donations

+ Grand County Outbreak of Kindness is connecting volunteers and services with those who need them. Please check their Facebook page to see what items are needed and where they can be delivered.

+ Help pets in need by donating to Grand County Pet Pals. They can be reached at 970-887-2988 to find what their specific needs are at any given time. Financial donations can be made on their website.

Fundraisers

+ Buy a t-shirt from Wild Fire Tees, created by Colorado-based designers and marketers. 100% of the profits benefit wildfire victims.

+ Buy a t-shirt from Bonfire to support Colorado wildland firefighters and wildfire relief.

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