What's Happening in Local Real Estate?
And the 2022 housing race begins...
I had just completed writing my annual forecast for the market and out shooting photography, when the Marshall Fire broke out. The following week was largely consumed helping our clients, tenants, friends, and general community. Our generators and emergency heaters were loaned out to keep homes warm, and my attention was completely focused on this horrific event.
As a consequence, I didn't published the analysis. I'll share it with you now. Here's a link to my 2022 Crystal Ball.
Several weeks later, I believe my analysis holds up for most of the Denver metro area, with one glaring exception: Boulder County. Because nearly 1,100 homes were lost, there is now an unexpected influx of renters and buyers in the market. This is occurring at a time of record low inventory, not just for the year, but for at least the last 20 years (as long as I've been tracking the real estate market).
A portion of those who lost their homes will be (a) morally opposed to renting and (b) have the resources to immediately purchase a home. They view renting as throwing money away, and given the timeline to reconstruct (2-3 years), they've entered or will soon enter the market as buyers. If I had to put a number on it, I would venture it's close to 30%. If true, this means over 300 new home buyers have or will soon enter the market in Louisville, Lafayette, Superior, Longmont, Broomfield, Boulder, and Westminster.
To point, we just represented buyers in a bidding war for a townhome in Longmont. Based on the comparable sales and market trends, we believed our offer was competitive and would win. We were left in the dust. The winning offer was about 34% above the sale price of the best comp, an identical unit that sold just nine months before.
Is a 34% premium rational? It might be if you just lost your house in the Marshall Fire.
What Does the Future Hold?
I believe for at least the next few months, and until rates begin to rise, "sexy" houses are going to draw exuberant prices. What are "sexy" houses? These are homes that sparkle and pop off your screen, with updated finishes, designer fixtures, and a color palette that is currently in vogue. See 2609 Curtis Street below for an example.
If you happen to be bringing one of these homes to market right now, congratulations - you're likely guaranteed a high number. Just be sure you and your agent have an agreed upon strategy to negotiate with multiple parties. When you're on the sell side of a bidding war, it's critical to leverage competition to reduce contingencies and drive the price upward. Otherwise, you could be dealing with buyers who treat their offers as no-cost options to buy, instead of serious purchase agreements. We've seen that story before.
Remember: a no cost option to the buyer carries an extreme cost to the sellers. Don't be fooled by the high price on the contract. It's avoidable, if you know what you're doing and have experience managing bidding wars.
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. image: Braden Collum
