If you are buying a home in Denver right now, you already know how tough the competition is. In fact, most buyers have to submit several offers before they finally get one accepted. We’ve been talking (a lot) about our ridiculously low inventory, the increasing home prices, and the speed at which homes sell. It can be discouraging to say the least, but what’s really happening out there? We dove into February’s closings and here’s what we found out.
Median Original List vs. Close Price
We broke down several price brackets to look at the median close price versus the original list price for single family homes (the original list price is the price a home is first listed at on the market before any price adjustments; the close price is what the home actually sells for). It’s not a surprise, in our current market, that every price group sold above its original list price. If you are one of the lucky ones who’s come out on top this year with a signed contract, you’re probably wishing that these median differences were all that you paid over list price! Again, I want to point out this is the median for all sales within a given price range in Denver. This means that the ridiculously overpriced home that sat on the market for eight months because the sellers didn’t want to admit reality is included in that number. If we could pull this statistic for only homes that went under contract in 7 days or less, there would likely be a huge shift upward in these numbers. Sadly, we’ve reached a limitation on the data the multiple listing service will let us pull or we’d show you!
We wanted to dial out our numbers to show what the last six years have looked like. We’ve been in a deep seller’s market the entire time (a.k.a. a market with less than five months of inventory) and the close-to-original-price ratio remained between 92% and 98% the entire time. Right around the start of the pandemic, the chart shows a drastic change. The most surprising takeaway is that homes priced over $1M, which typically offer buyers the most negotiating power, now happen to have the least!
How to Succeed
Like most savvy buyers, you’re probably already aware of the hot market strategies you can employ to help you successfully buy a home. They will work if you give yourself margin. This means you’ll need to leave room to escalate your offer price upward to beat out other buyers. Unfortunately, this also means you’ll need to consider looking at homes in a lower price range than your maximum budget. Developing the right “secret sauce” for your home purchase game plan is crucial to success. While the ratios we shared above reflect Denver as a whole, you’ll want to have your broker share more stats specific to the neighborhood you’re searching in. Or, you could wave the white flag of surrender and have your broker send this text to the listing agent of the house you’re trying to buy:
The choice is yours! 😂