The latest data shows the Colorado real estate market continues at a heated pace, with the majority of house buyers in Boulder and Denver Counties paying a premium to the list price. From when I last analyzed the market, about a week ago, the median premium paid has increased in Denver by about 0.26% but is essentially unchanged in Boulder.
The chart above shows the distribution of premiums, or discounts paid to the list price on the Y axis. The x axis is the final sale price. The time period is April 19 to April 27, or roughly the past week.
The median premium in Denver County during this time period was 7.22%. In Boulder County, the median premium paid was 7.50%.
Note: This data is preliminary because it takes a few days for most Realtors to update the database. If we waited for the data set to be more complete, it would be less actionable, so I'm publishing it now.
To better understand the market, the table above breaks down premium (or discount) paid by tranches. A sizeable number of buyers are successfully purchasing at the asking price, or below, but the vast majority are paying a premium.
Buyers paying 20% or more over list price remain relatively rare, but if you compare this table to a week ago, you'll note that this tranche has grown dramatically. In Denver, buyers paying this oversized premium grew by 1.5x. In Boulder, that category has expanded 3.8x. When buyers pay that sort of premium, it's should be done with extreme caution. We typically advise our clients against offering that high, unless they're comfortable with leaving large sums on the table.
As before, you can read the table like a probability chart when considering how much to offer. Anecdotally, we're seeing that play out on the ground too, as direct participants in recent bidding wars in Denver, Boulder and Louisville.
Keep in mind there is more than price involved to crafting a successful bid. Sellers want certainty and the more risk you can remove from the contract, the better your chances of landing the deal. This is why it's important to not only understand key contingencies of the contract, but clearly communicate how they're being curtailed. For buyers, it means taking additional risk and conducting maximum due diligence prior to submitting your offer.
Although the current market is challenging, it's not impossible. At House Einstein, my team currently has more deals under contract and more listings coming to market than we've ever had at this time of year. The secret sauce is deep, up-to-date market knowledge and savvy negotiation tactics. For those of you winging it, good luck out there.
p.s. If you're a data nerd (like me), you're probably wondering how those tranches are structured. 0% to 5% is actually 0% to 4.999%. The next tranche is 5% to 9.999%, and so on. It's rounded for easy visibility. Don't worry, I'm not double counting.
Osman Parvez is the Founder and Employing Broker of House Einstein. Originally from the Finger Lakes region of New York, he lives in Boulder with his wife and their Labrador Retriever. He has been a Realtor since 2005.Osman is the primary author of the House Einstein blog with over 1,200 published articles about Boulder real estate. His work has also appeared in many other blogs about Boulder as well as mainstream newspapers, including the Wall Street Journal and Daily Camera. For more information, click HERE.
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The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties. House Einstein strongly recommends conducting rigorous due diligence and obtaining professional advice before buying or selling real estate.
