Denver real estate market is strong and hot like a cup of coffee. After years of waiting for home prices to rise, the Denver real estate market is elevated. So why are buyers and sellers so hesitant to make their move? Let’s blame it on the media. Screaming headlines make money when the sky is falling.
For those of you who are considering buying or selling a property, understanding the big picture is critical. So let’s take a look at where in the real estate cycle the Denver market stands.
You may think this tremendous seller’s market and super tight inventory is something new, something that’s going to come to a head and suddenly erupt overnight. Not true. We are FOUR YEARS PAST THE BOTTOM of our last real estate cycle. This is a logical continuation of a market that is reacting strongly to the overselling we saw between 2007 and 2009, and finally bottomed out in 2009. It’s doing exactly what real estate market cycles do, go up and go down over long periods of time. Remember, over the past 40 years residential real estate appreciation has averaged 6 percent per year and there is no reason to think that is going to change over the next 40 years.
If you think of market cycles in the short-term, spiking and crashing over short periods of time it’s easy to see the sweet meteor of death hurling toward your swing set, but a quick look at the last market cycle shows clearly this is not how real estate works. Real estate cycles over the past 40 years, tend to move in much broader periods, 7-10 years typically. This is why predicting short-term market movements can be very difficult, whereas assuming the market will move in 7-10 cycles is a bit more realistic.
The past four years of the upswing has been largely a sellers’ market. Plummeting inventory, rising prices, nervous buyers often involved in multiple offers, and happy sellers often getting the price they wanted. Buyers can be very nervous, reading news articles, watching TV reports, and figuring the market is teetering on the brink of a crash and being afraid to buy. Rents are skyrocketing, up 8 percent this year alone and renters may confuse the short-term media screeds about this tremendous market with the long-term patterns of market cycles, thinking that the minute they buy a home the market is going to crash.
I don’t see this. And unlike my clients who may buy or sell a home ever 5-10 years, I work in real estate every day. No one can predict the real estate market with 100% accuracy. I can’t, the Federal Reserve can’t, the banks with all the money can’t, no one can. But, understanding how market cycles work, and recognizing how low our current inventory is, I can say with confidence I do not see any impending weakness in the market over the next couple of years. We are four years into what will probably be a typical 7-10 year cycle of low inventory and rising prices. I can’t tell you what the Dow Jones will finish at next Monday. I can’t tell you if the Rockies will win their fifth game of the season. I can’t tell you what the weather will be on June 15th, but I can say with confidence that real estate tends to move over predictable long-term trends, and this market cycle has a long way to go.
How do you do it, oh friends of mine? Vacate your premises in a timely fashion while living your lives, raising your kids, working your jobs and closing your loans. I’ll bet your boxes are properly labeled, too.
I just moved. Or more specifically, some very strong men came to my house, loaded a truck full of my belongings drove them across town and unloaded them in my new abode. I’ve made numerous trips along the same trail with countless loads of boxes, files, photos, artwork and armloads of clothes. It took them about three hours, it’s taken me months. The new house is coming together, the old one is being prepped to sell, and aside from the stubbing of toes I am in heaven…and hell.
I’m a pretty organized person. I know where I put the Phillips screwdriver, keep the chaos at arm’s length and can crush a to-do list with one hand. None of this prepared me for a move.
I started with plenty of time, and then a flurry of good fortune took a hold of my life, leaving me with higher priorities than packing tape and ARC pick-ups. As I chipped away in what little spare time I had, I found little energy for the real task at hand, DECIDING. Every single thing you own must be dealt with, handled, and decided upon: does it have purpose or does it have meaning or does it fit? If the answer is no, pitch it. Easy at the start, but soon enough poof skirts are begging for a comeback and junk drawers scream to be sorted through and that eclectic offering called your stuff becomes a living nightmare of need, prompting the ashram fantasy.
“All changes, even the most longed for, have their melancholy, for what we leave behind us is a part of ourselves; we must die to one life before we can enter into another.”
– Anatole France
As a Realtor I facilitate this transition for others every day, managing the details of the business transaction while they care for the mountain of moving minutia, but it’s a whole ‘nother Oprah when you’re the one moving that mountain. Whether initiated by you or forced upon you, change is always a molecular shake up. No matter how much you anticipate a benevolent future or care to close a chapter of the past, a move holds all the complexities of closure. I am an expert in change; life has thrown me more curves than the Coney Island Cyclone and I’ve gotten pretty good at it. This one is one I have created, and though I have a few ideas about why (urban living, closer to my community, more manageable home, #EastHighSchool) I know there is still much to learn in the process aside from where to put the guest towels. As soon as they find their place, I am receiving.
After you’ve finished your holiday shopping, why don’t we go look for a house?
Winter home buying has its challenges, but winter can be the perfect time to buy a home. As we head toward the snowy months, serious shoppers know their winter home buying power is increased by determination and AWD. Housing market prediction for 2014 is looking good and buying a home this winter might just be the ultimate stocking stuffer.I love me those cold weather clients!
Most people think of buying or selling their homes in the ‘high’ season, and while the balmy days of spring and summer are perfect for cruising open houses and power shopping, they also bring the crowds. In 2013 we saw a big bump in the Denver housing market:lots of buyer activity and low inventory meant happy sellers and buyers who were frustrated by the return of the multiple offer. Even when the market was down the notion that summer is the best time to buy/sell your house is one that is hard to break. After spring break, sellers prepare to list the moment the last school bell rings pushing inventory up and in the seller’s minds prices too. Many of these listings are sellers who want to test the waters, plant a For Sale sign in their yard along with the annuals and see if they get the price they want. But this supply side increase often works in the buyers’ favor or frustrates them when the fair-weather seller lacks the motivation to agree on a fair price. Sellers feel the same when sunny day buyers, indulging in some fantasy house hunting, create lots of traffic and little else.
Cold weather buyers and sellers are serious.
The real estate market is driven by many factors but the first and most enduring one is CHANGE. One of the most enduring reasons people buy or sell a home is because their lives are in transition. Though many plan their home sale or purchase, life happens without regard to season or convenience. Families change, jobs are gained, lost or relocated, promotions happen, marriage, divorce, birth and death– all create someone with a housing need.
Shopping or selling in a Denver winter are obvious– driving in show, slipping on ice, shoveling the walkway, taking your boots on and off so you don’t track sludge into the house, fewer showings– but the buyers are BUYERS and not just lookers. Winter sellers are ready and willing to make a move, and tend to price accordingly from the start. The slower season also means that lenders, title companies and appraisers are not so swamped, smoothing out the process and lowering emotion. And of course, there are fewer people submitting offers on your dream home.
As savvy shoppers know, the post-holiday season comes with plenty of opportunities for a bargain and that includes houses as well. Though we in Denver are beyond the clearance sale in our housing market, home prices are on the rise giving sellers more leverage as well.
Enjoy the holidays, spend time with your loved ones, take a spin around town and take in the lights. Then call me when you’ve got the ornaments put away and we’ll get the ball rolling.
THE TROUBLE WITH FSBO.
There are a million real estate stories in the Mile High City; this is one of them. The story you are about to read is true, the names have been changed to protect the innocent. This is a story of one girl’s nightmare. Me. I’m a REALTOR®. But I’ll try not to let that get in my way.
It was a hot summer in cool real estate market. The rolling boil of winter’s tax incentives had simmered into springtime and left the pot dry. Houses sat for weeks without a showing. Sweaty listing agents tied balloons to open house signs as potential buyers rolled by on fat-tired bicycles. My phone rang. It was the clients I’d put into a downtown duplex some years before; cute couple, new baby, good debt-to-income ratio and a spanking clean credit score. They were smart enough to see it was time for a move up, down to the bucolic suburbs. Interest rates hadn’t been this low since… well, ever.
We set out shopping, searching for nothing less than the dream home: that elusive slice of Americana where you know your neighbors, raise a family. And we found it, love at first sight, a bit like Bedford Falls but in Technicolor. The drawback? It was a FSBO. *bum-bum-bum-bummm*.
Now I’m a kind of do-it-yourself type dame, within reason. I don’t mind doing my nails or washing the dog but I have to draw the line at what I don’t know, like removing a kidney or my taxes. It’s not that I couldn’t do it if I had to, but it wouldn’t be in my best interest. Some folks get all DIY when it comes to selling a house, I mean, how hard could it be, ey? Stick a sign in the yard, a couple snapshots on the Internet, throw some poor schmuck a few clams for an MLS input, then sit back and watch that baby sell.
As my old pal, Joe Friday, once said, “Ah, sure, but just like every other foaming, rabid psycho in this city with a foolproof plan, you’ve forgotten you’re facing the single finest fighting force ever assembled.” REALTORS®
The problem here stemmed from a lack of access to accurate data. Zillow, Trulia and the CMA done by the affable agent who sent the Broncos schedule doesn’t give a true representation of home value. My hunch is that they took the range provided by the neighborhood expert, added 20 to it for ‘negotiation’ and called it a day. They missed the mark in this game of real estate pricing horseshoes. By 35k . When our offer came in at market value and the appraisal backed it up they went into a tailspin, losing sight of the larger goal of selling their house. Every part of the negotiation was tinged with bitterness as dates, deadlines, inspection items; things that are standard part of the deal became emotional and difficult because they had no neutral party working on their behalf. A house is an emotional commodity and real estate transactions are a fine balance of the human and the business transaction. A good Realtor is adept at holding the deal in balance, by being rational, informed and calm. Our high-centered sellers almost lost the sale numerous times because they lacked the two most important things in the real estate process: accurate information and an advocate. Without these things you’re left vulnerable. Very vulnerable. Just like performing that kidney transplant with a Swiss Army knife and a yard of dental floss. It seems like a good idea at the time, but then you realize how much you don’t know.
Statistics show that 81% of FSBOs sign with an agent within 30 days, at least the smart ones. Because not only do you reduce your headache and legal liability with a REALTOR®, you actually make more money. Have I made my point? So if you’re considering a move in this hairy market, do yourself a favor and call a Realtor®, hopefully me, and ask a few questions.
Oh, and that cute couple? They made it to the closing table alright and are happily ensconced in their beautiful new home.