“How is the real estate market?” It’s of course a common question we get as Realtors, right? In this brief post we’ll review the latest Market Report from the Denver Metro Association of Realtors (“DMAR”) and give you 3 high level points about the status of the market. We’ll also give you 3 expectations for buyers and 3 expectations for sellers so both groups can approach the market from an informed and realistic stance. I love to look at the bigger picture market data and see if it jives with what we are experiencing with our own Central Park clients. In this case the data and real world experience very much align.
Raw data person? If you’d like to review the full DMAR Market Report in detail, rather than my high level overview below, you can find it here:
So how is the Market? Here are the 3 Big Take-Aways from the DMAR Report:
- The qualified buyer pool is shallow. I’m leading with this point because it has ripple effects throughout the market for both buyers and sellers. Buyers face lots of headwinds right now including rates in the very high 6%’s and costly homeowners’ insurance, property taxes and increasing HOA dues. Couple the inflation in those housing related areas with overall inflation and economic uncertainty and you have a nervous, oftentimes marginally-qualified buyer pool. Early this spring the real estate market was moving quickly and we were seeing some bidding wars as well as fast moving sales. The economic uncertainty and increase in interest rates since then has pumped the brakes on buyer activity.
- Home inventory is on the rise. How much is inventory rising? The DMAR Market Report shows that at the end of April there were 7,844 active detached single-family listings in the Denver metro area. Compare that to 4,719 at the end of April last year and you’ll see inventory is up 66% year over year! That is a big increase in one year and that definitely has an effect on the market.
- 3) “Days on Market” has increased. “Days on market” means the time from when a home is listed to when it goes under contract. Staying in the detached single family home category, the days on market time period has increased year over year 13% from 30 days to 34 days. (The median has increased 42% from 7 to 10 days). Homes are taking a little longer to sell. This is even more true in the attached home category (think town home, condo, etc) with the average days on market now at 46 days. Not all homes are taking over a month to sell though! Homes with very special and hard to find features, such as a large yard in Central Park where lot sizes are smaller, are still selling fast, often receiving multiple offers and even going over asking price at times. It’s critical to know what’s special and what will receive buyer attention, which makes having a neighborhood expert agent on your side key. We’d love to help and specialize in Central Park if that’s your area of interest. Here are 3 easy ways to connect with us.
Market Expectations for Buyers and Sellers:
As we meet with potential buyers and sellers helping them understand the market conditions early in the process is key. We try to set realistic expectations so buyers and sellers are equipped to know the realistic market conditions, even if it may not be exactly what they want to hear in all cases.
Here are a few common expectations we find ourselves setting lately with buyers and sellers:
Buyers:
Expect to have more home options than you did! The inventory increase we outlined above gives you more options than you had if you were home shopping a few years ago when inventory was at historically low levels. These options give you a little more room to breathe before you make an offer and give you a little more leverage in negotiations.
Expect for the market to be very competitive on special homes. We have seen this play out on our listings multiple times this Spring! Homes with a very rare features like a large yard, mountain view, park-facing home, etc can oftentimes still receive multiple offers. In contrast, a home that doesn’t have any special features may sit on the market for more like 30 -45 days, which is typical. (Remember those average “days on market” stats above). As a buyer it’s key you work with an agent that can read the situation and understand if you need to make a competitive, seller friendly offer to win a negotiation or if you’re in a situation where you can make the more buyer-friendly “I have options” offer. Knowing which situation you’re in is key!
Expect to be able to negotiate, but don’t expect low ball offers to be successful. Yes, you have more home options than you used to, but we’re also not seeing low ball offers work out for buyers. Your agent should help you look at comparable sales and make sure you’re paying a fair market price relative to those comparables, but when buyers throw out low ball offers that aren’t based on any market comparables we haven’t seen those work out.
Sellers:
Expect to be competing with other listings. In all price segments we are seeing buyers having multiple options, therefore its absolutely key your home is priced right and looks amazing (staging is must!). Gone are the days when you can just throw it on the market messy, in need of repairs and with poor quality pics. To standout and be the one that sells you need to be the top choice in your price segment. Your agent can help you watch the market and help you stay the most attractive option in your price segment.
Expect to have to be patient – it will likely take over a month to go under contract. Even if you do all the right things I described above, pricing it right and having it look great, your home will likely take over a month to find a buyer. The average “days on market” (the time from when a home lists to when it goes under contract) is now 34 -46 days depending on your home type. Now that you know it will likely take over a month to find a buyer, we hope that expectation will help you stay the course when showings are slow. I like to think of your home as a product on a shelf in a store. In this store only qualified buyers are allowed in. Right now, there aren’t a lot of buyers in the store, so rapidly decreasing the price of your product (price drops) and announcing the “sale” over the intercom in the store isn’t that effective. The right buyer hasn’t walked in the store yet! In a seller’s market, where there are lots of buyers in the store, a price drop can draw many more showings and offers. In a market with few people in the store that same price drop may not draw any more attention at all. My point is patience is key here and sellers will need to expect the home to be on the market a while. Just because it’s taking a while does not mean anything is wrong with the listing.
Expect to give some concessions and to do some repairs at inspection time. Great, you now have your home under contract! Wonderful. Expect that at inspection time buyers will likely ask for a few repairs or concessions and you’ll likely need to accommodate them to keep the sale moving forward. This all goes back to several market trends I pointed out earlier in this blog post, that there aren’t as many qualified buyers as there used to be and there are more available homes than there used to be. When buyers have options, they are more likely to negotiate hard at inspection time, knowing if the deal falls through they can find another home. We have definitely seen an increase in under contract deals that fall through. From what we’ve experienced and read, we estimate 15 – 30% of all deals in the Denver metro aren’t making it to the finish line, oftentimes due to inspection or buyer financing issues.
Buyers, beware there is a line of reasonableness and if you push too hard sellers will let the deal terminate and move on to a more realistic buyer. Focus on the few most important repairs you want versus submitting a laundry list of items.
Hopefully this post provides some high-level information on the market conditions and what you can expect as a buyer or seller. Real estate is local though and every situation is unique. If you’d like to set up a chat about your potential move we’d love to help! Here are 3 easy ways you can reach us and we’ll connect you with the best agent on our team for your situation. We help busy people in Central Park with their real estate needs, whether they want to buy, sell or need help with property management. Learn more on the Focus Real Estate website.
