March 21, 2022 | Greater Denver Metro Area Market Update
📈 THE BIGGEST TAKE-AWAYS FROM THE LATEST STATS: Record-high inventory in a February was recorded way back in 2006 when there were 25,484 active listings and an extreme buyer’s market in play. Record-LOW February inventory was set last month, with a meager 1,226 listings on market. Lack of supply coupled with a surplus of serious and qualified buyers caused prices to rise at an unprecedented close-price-to-list-price ratio of 104.75%.
The metro area is set for another year of double-digit appreciation with interest rates rising throughout the year. Yes, it's a tough market right now but waiting will likely cost you more. Want to drill into all the numbers in detail? Go here and call me if you have questions. I'm here to help and would love to hear from you.
🚨 CAUTION, EXTREMELY HEAVY TRAFFIC AHEAD: If you're just getting into the market it's important to understand the current dynamics before jumping in. Typically, new listings go active on Wednesday, start showings on Thursday, and most sellers allow interested buyers to come through all weekend long. Open Houses are making a comeback too, allowing a sea of interested buyers inside, fast. It's common for a new listing to see anywhere between 50 - 100 buyers through during its debut weekend alone.
Anticipating such strong demand, sellers often publish an offer deadline for Sunday evening. Buyers who wish to compete do so on multiple variables including price, financing terms, inspection contingencies, and more. After the deadline has passed, a seller reviews all written offers that came in and signs just one winning contract, usually on Monday or Tuesday morning. Note: In 2022 it has been common for a seller to receive 10+ written offers on a debut listing.
✅ SMART BUYER'S TO-DO LIST: Here are five easy steps buyers can take right now to build a great future this year ...
Act Fast – but RATIONALLY. When a home meets your needs and budget be prepared to present a smart, professional, assertive offer — that you understand and feel good about — quickly. A promptly submitted written offer will show you are serious, prepared, and may provide a competitive edge. BONUS: Submitting your offer before the last minute is more likely to keep you in the communication loop for important updates if/when a multiple-offer scenario evolves.
PRO-TIP: Start your search for your home inspection team right now so you know exactly who you want call when you are under contract later this year. Friends, families and co-workers are a great place to get recommendations. You can find a long list of trusted, tested service professional recommendations on my website too.
Dial in Your Purchasing Power: Work with your lender to maximize and understand your options before interest rates rise. Run the numbers using a variety of down payment scenarios in case you find a home that you love so much that you want put in an offer that includes an appraisal gap.
Leverage Open Houses. These events are always great way to “kick-tires” and get a feel for types of homes and different neighborhoods early in your home search as you get your bearings. But today, on homes of significant interest, they can be a tool to stand out and assess buyer competition as well. Ask the listing broker questions about the home. Spend time on site. Demonstrate motivation, significant interest, and cooperation. Open Houses can provide you an invaluable gut-check on whether you want to jump in and submit a compelling offer – or move your attention elsewhere to a more manageable opportunity. (Your real estate pro can design a professional search to find Open House events that meet your exact search parameters. Just ask.)
Respect Your Time and Protect Your Resources. As long as the inventory crisis is in effect, the unfortunate reality is that buyers must have both the financial ability and emotional willingness to submit an offer over list price backed by a verifiable appraisal gap on any listing that has less than 7 days on market.
One of the biggest and most common mistakes buyers are making in our current market is to voluntarily become the kindle that starts a bidding war. They do so by chasing brand new listings at the tip-top of their budget and submitting offers that have no reasonable chance of winning, but effectively and consistently ignite the fire. This tendency quickly leads to buyer burnout, and distracts would-be and well-qualified buyers from opportunities where they have better chances at success, elsewhere.
If it is important for you to buy a home at a supportable list price with traditional buyer contingencies in place (and frankly, it should be! ) do yourself a huge favor and focus your valuable attention on listings where intense bidding wars are less likely to brew during these extreme conditions. Your real estate pro should be able to build a strategic search tool to focus your efforts wisely. Using it, together you will achieve success ... faster.
Look for Opportunities. They Exist. Properties and fixer-uppers that need more work could be great opportunities for individuals struggling to get offers accepted. Back-on-market listings see much less competition than brand new listings. While most buyers prefer a traditional single-family homes, attached homes (townhomes, duplexes, and condos) are a fantastic way to jump into homeownership, build equity, and enjoy unique amenities and conveniences too. Buyers with more modest incomes might even be eligible for attractive and smart Affordable Housing opportunities. If you qualify, work with your real estate partner to research affordable housing homes in neighborhoods and areas that work for you, and start application processes early.
A ray of hope as spring arrives ... March typically sees an increase in active inventory and the metro market appears to be slowing down, albeit s-l-o-w-l-y. Both of these factors should deliver a bit more breathing room for buyers in the months ahead. Best advice? Keep the faith, invest your time and resources wisely, be realistic, be strategic, and choose your real estate and lending partners exceptionally well.
Your future home is out there waiting for you, I promise. Let's go find it.
Michelle Schwinghammer is a REALTOR®, Certified Negotiation Expert® and Pricing Strategy Advisor® who helps people move forward in Colorado. She currently serves as the West District Director for the Denver Metro Association of REALTORS and is a leader on its Community Alliance Committee.
SCHWINGSTATE, 5440 Ward Road, Suite 110, Arvada, CO 80002
(303) 638-8711, michelle@schwingstate.com
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