Okay, the title of this post may seem a bit drastic but it certainly feels like that is how this real estate market has turned in 2020 for Denver homebuyers. What can Denver homebuyers expect and what is the best approach to buying a home in 2020?

This chart ended up being the holy grail of information regarding the Denver real estate market in 2019. It  helped advise clients on when it was best to buy or sell real estate and help clients make the best decisions. Using the information from this chart, I was able to help clients decide to buy a home in the fourth quarter of 2019 versus waiting until first quarter 2020 due to the power that the buyers had as 2019 ended and knowing we were entering a more competitive marketplace in 2020.

For folks looking to buy and/or sell a home in 2020, there is now an even more comprehensive chart on what to expect to see month by month in the metro Denver real estate market:

This chart is usable for both buyers and seller but this week we will focus on homebuyers and next week, sellers. In my opinion the first row, “Active Count” is one of the most important. Simply put that is the expected number of homes on the market and based on the number, who has the most opportunity. January through April have the lowest count of active homes on the market, therefore, giving sellers the advantage. A low supply of homes will mean thatDenver  homebuyers will find themselves competing for homes and homes will go under contract quickly (reflected in row 6, “average DOM”, and 7, “median DOM”, on the chart).

As the market continues to heat up, Denver homebuyers will start to see multiple offers driving up the price of homes. Row 5, “% of list price to close price”, will show this best. March, April and May show that the sale price is actually ABOVE the list price. Keep in mind, since we are using sold prices for this row, there will be a little bit of a lag since the typical close to 30-45 days. This means the sales number for March will correspond with homes that are listed in January or February, April sales will reflect homes that go under contract in February or March, and so on. What this means for buyers looking at homes currently is that you can expect most homes to go under contract for slightly over the list price.

This is the most impactful piece of information regarding the marketplace currently because we start to see a significant increase in prices in a short amount of time. As buyers bid up homes, there are now more expensive comparable sales for a similar home to warrant a higher price the following month. Then THAT home is bid up more, etc. This compounding effect of prices means that buyers often find themselves at an important decision point over just a few months: increase their budget or decrease their needs/wants in a home.

This sudden change in the market can create a bit of anxiety and confusion for buyers that may have seen a slower market in the fall. Here are a few things that I am often asked and that buyers should consider.

I don’t want to/have the ability to compete and go over my price point.

There are two ways to approach this: start looking below your price point, knowing that the price may need to rise. Or, don’t compete. Even though the market is tight, there are always opportunities. As I always mention – be open to homes that may need a little cosmetic work, homes that don’t have professional photos or homes that have been on the market longer than a week. As a buyer, you will typically have more negotiating power with these homes.

With the market not favoring Denver homebuyers, should I even continue to look?

Yes. Historically, we have seen the market appreciate 10-12% in the first half of the year. As the chart depicts, the second half of the year has more homes on the market, giving the buyers much more opportunity. In the second half of the year, we do start to see price decreases 2-3%. Sure, you may be able to get a home for less than the listing price in the Fall, however, it will still be 6-9% higher than the beginning of the year.

With so little on the market, I feel pressured to make a quick decision for a huge purchase.

I get it, this market is moving quickly and at no point am I saying to settle on a home. However, really try to trust your gut and try to decide on your must-haves vs. wants as soon as possible. What can you definitely have to and what is nice to have but you can live without? Additionally, try to get rid of the preconceived notion that you have a look at a lot of homes to find the one. I cannot tell you how many times, homebuyers have found their dream home within the first few homes but felt the need to look at others. Unfortunately, the market is moving quickly and often time that dream home goes under contract quickly and you spend months looking for something similar (to only face an increase in home prices).

We are in a very competitive seller’s market but there are plenty of opportunities for Denver homebuyers to win. IF you are a buyer that was looking through the fall/winter and now see this sudden, abrupt change in the market, please know this is very typical of the Denver real estate market. The quicker you can wrap your head around the change and set new expectations, the easier the home-buying process will be for you.

Denver homebuyers, feel free to reach out to Liz for a more detailed analysis of the current real estate market.

Liz is  broker and owner of Liz Daigle Realty.

 

Happy New Year!

A new year (and decade) often comes with new opportunities, a fresh start and a desire to change. However, homebuyers in metro Denver might get that that sense as they search for homes for sale.

The last quarter of 2019 looked promising with an increased level of housing inventory, price reductions and homes taking longer to sell. Although, as we approached the start of 2020, we saw a steady decline of homes on the market. From November to December the number of homes for sale plunged 27%. The typical drop for the holidays between November and December is 11%. This 27% drop was uncharacteristic.

Sure, this lack of inventory is not new for Denver. We have certainly been here before but what is different is WHO is driving this lack of inventory. In the past, the lack of inventory has been due to the homes going under contract quickly as buyers compete (very often resulting in multiple offers and driving up the price). Currently, the lack of inventory is truly because sellers are not selling their home. There are no homes for sale.

It is still early in the year to fully speculate what will happen but it is fair to say that with little inventory, the environment can get very competitive (again) for the first half of the year.

As always, we will keep you updated as the year progresses.

 

Liz is  broker and owner of Liz Daigle Realty.

As we approach the holidays, we are seeing inventory tighten and homes that have not sold yet are being taken off the market. Whenever there is a decrease in homes on the market, I always get asked about Zillow’s pre-foreclosures. As you search for homes on Zillow, you are bound to come across a pre-foreclosure. Pre-foreclosures can be a great opportunity are a bit different than an active home on the market.

The best away to explain these pre-foreclosures is to understand the foreclosure process in metro Denver. Arapahoe county has a great timeline of the foreclosure process here. The process may differ from county to county but this is a great visual of the process.

When the homeowner’s mortgage becomes delinquent, the first step to start the foreclosure process is for the Lender to file a Notice of Election and Demand. This notifies the homeowner the mortgage is delinquent and they have until a certain date (110-125 days) to bring it current or foreclosure proceedings begin. This is when it becomes public record and is updated on Zillow. Therefore, when you see it on Zillow it is not on the market, the homeowner has just been notified that foreclosure proceedings make start if the mortgage is not brought up to date.

If you are interested in a pre-foreclosure home, there are a few things to note:

• These homes are not on the market and to view on of the homes, your agent needs to reach the homeowner directly. This might be accomplished by a card, knocking on the front door, etc.
• This can be a very emotional process for the homeowner. Typically, an unforeseen situation has occurred to get to this spot, such as, losing a job, medical bills, etc.
• This process can be VERY competitive. Pre-foreclosures can be very appealing to investors trying to make money on flipping the home. You may find yourself competing for the home with investors that are willing to pay cash and provide a housing solution to the homeowner once they sell (hiring a moving company to move the homeowner or even paying for a year’s rent for them).
• The process is not the shortest. Often, homeowners in this situation will attempt to avoid it for as long as they can. The lender and the county will not want to foreclose and the homeowner has up to 15 days before the foreclosure sale to “cure” the mortgage and pay what is due.

As you can see, pre-foreclosures are definitely different from a home that is listed actively on the market. Pre-foreclosures can be awesome for someone with a flexible timeline and someone who doesn’t have a lengthy list of criteria and can be open to location. To win at pre-foreclosures, it is best to keep very broad search criteria and be patient. Be sure to chat with Liz further about pre-foreclosures.

 

Liz is  broker and owner of Liz Daigle Realty.

 

 

Are you considering buying new construction? Building your own home is a great way to ensure you get the EXACT home you want. However, there are a few things to consider to determine if buying a new home is the best route to go for you.

Contract. If you decide to buy new construction, you will be signing a Builder’s contract. Unlike pre-existing homes, a builder’s contract will greatly favor the builder rather than the buyer.

Earnest money. Typically, the earnest money will go “hard”, what this means is the buyer leaves the contract, the Builder will keep the earnest money. You will want to make sure this is the right decision before signing the contract and handing over earnest money.

Timeline. Whenever you are buying new construction, the builder will give you an expected delivery date (this is when they think the home will be completed). However, unless the home is already drywalled, the timeline will be just an estimate and the timeline can be delayed. Weather, subcontractors, the city, permitting may be just a few items that could delay the completion.

Design Center. All those upgrades that you love could get pricey. Often times the first Design Center appointment can be sticker shock. However, it may take a few compromises to stay on budget.

Appreciation. Keep in mind when you buy a new home, you are paying top dollar for a brand new home. This is not a bad thing but it can take longer to see your home appreciate especially if there are more new homes being built. Brand new homes are a longer term investment and you should buy a new home if you plan to stay for five years or longer.

Builder: Every builder is different in quality, communication and timelines. Make sure to do research on the Builder or ask your real estate agent.

With so many new communities being built in metro Denver, building a new home is a great option. If you have a flexible timeline and plan for this to be a longer term home, building a new home is an excellent option. Be sure to chat with Liz about new home communities that might fit your needs!

Liz is  broker and owner of Liz Daigle Realty.