The NYT shared this article last month that was printed in the Times on July 4th. The article shows 5 charts that showcase:
1) Housing inventory
2) Income requirements to purchase
3) % of new builds coming to market
4) Increasing Rents
5) New homes that are completed, but not yet sold
It’s worth the quick read.
In dialogue with fellow brokers over the last few weeks the word “weird” has come up a lot when people are doing their best to describe what they are seeing in the field. I’m right there with them.
Two weeks ago, we had a townhome sell for $19,500 over list price with 7 offers in less than 72 hours on market and we priced the home fairly without undercutting what we felt was fair market value. Meanwhile over the last 7 days as of 5pm on Friday 7/5, the 6 metro counties that make up metro Denver have seen 1,020 price reductions from active listings. Through my broker conversations I have distilled the key reasons for this fickle condition down to the following:
* Buyers are ULTRA sensitive to deferred maintenance and outdated design. If a buyer walks into a home and sees chores and projects they’ll have to take on after acquisition, they get queasy.
* There’s a gap between cost and buyer expectations (a combination of size+location+condition).
* Sellers that have a nicer than average product are still able to push the margins of value. The most recent DMAR report shows the median and average sale price of single family homes is UP from this time last year.
* Sellers that try to get an above average price for a less than average product with hopes of not leaving any money on the table (totally reasonable) are just sitting with little to no showing activity and certainly no reasonable offers. With this in mind the mentality of “let’s start high and back the price down later” strategy simply isn’t working.
“…Hardly anyone expects prices to collapse. The millennial generation is in the heart of the home-buying years, meaning demand for homes should be strong, and years of under-building mean the country still has too few homes by most measures. And because most homeowners have plenty of equity, and lending standards have been tight, there isn’t likely to be a wave of forced sales as there was when the housing bubble burst nearly two decades ago.”
The market is weird… stay smart out there and surround yourself with people who are dialed in. Let us know if we can help.
