DENVER — The number of homes in the Denver metro area continues to sell at an unprecedented rate as homebuyers and investors engage in bidding wars to find the perfect property, and that doesn’t take into account the area’s summer real estate market.
However, real estate experts say homebuyers shouldn’t give up hope just yet, as they predict a tipping point is coming soon that will eventually mean longer-lasting homes on the market, more supply, and perhaps less competition.
Denver7 sat down Thursday with Jeff Tucker, a senior economist at Zillow, who says homebuyers looking for a home not only shouldn’t give up hope, but should also consider all of their options when looking for a home. This interview has been edited for brevity and clarity.
Q: I’ve always heard that if you want a new job, make it a second job to find one. Is finding a house a second job when they’re disappearing from the market so quickly?
Jeff Tucker: That’s a good way of putting it. It takes a lot of hard work to buy a home now and actually complete it — the typical Denver home is pending in just five days. So in many cases we look at this turnaround of houses that list on Wednesday or Thursday and the seller has usually accepted an offer by Monday or Tuesday.
This really means that every weekend someone house hunting has to go out to view a fresh crop of houses, probably pre-inspect them so they’re able to forego that inspection contingency, and then have to cross over her fingers and hope that her offer will be accepted.
It’s exhausting, it’s hard work. And it’s emotionally draining for people to have their hopes for a home and then dashed them when their offer isn’t accepted.
Q: Do expectations need to be lowered, especially when renovations are required?
JT: I think part of being successful in buying a home right now is anticipating some of that competitive margin upfront.
So, if a home is listed at a price that’s at the absolute peak of your budget and you can’t pay a dime more, then it might not be worth spending this entire week working on a listing for that home while you’re missing out on some others, maybe in a more affordable part of town, or maybe a smaller size that’s comfortably within your price range. So there is definitely something to be said for considering all available options. And… this competition, you really have to expect it at this point and then adapt accordingly.
I think the other thing people really need to do is just adjust their budget for rising mortgage rates. For example, if you could afford a monthly mortgage payment of $2,000, there wouldn’t be nearly as many home purchases in April today as there were two or three months ago. So it’s really important to talk to your lender, think about financing first, and think about how much house I can afford to balance those budget expectations with reality.
Q: Do you see people moving further and further away but still working in a place like Denver?
JT: Yes, it’s kind of a classic ‘drive until you qualify’ story, and it’s become very true during the pandemic – many people have shown a much greater willingness to drive farther and farther away from the central core of one Country metropolitan area, in the midst of the pandemic, whether that’s because they don’t bother with the social aspects and, you know, restaurants etc. of downtown, or in most cases because they might not need to at least go to the office , they no longer have to sit in their office chairs 9-5, 5 days a week.
So, even if someone has to come to the office, sometimes they still work in the center of the region, maybe it’s not five days a week, and that really changes the calculus of enduring that long commute when it’s just a sometimes thing.
Q: This is going to sound weird, but I took Zillow as my doom scrolling device. Like driving past the house, ‘Oh, how much do you think that costs?’ and then look at it and be sad. do you ever hear that
JT: We’ve seen a tremendous increase in traffic to our website and app over the course of the pandemic and through this hot run of the housing market. A bunch of them are really people looking for a home and like you said looking for an apartment is now like a second full time job.
But I can definitely say that a lot of it is just people watching and just in awe of what’s actually happening out there in the market and using it as a way to keep up to date. And I also think that for some people it’s really almost a form of entertainment at this point.
Q: But still you say hold on to hope.
JT: We’re definitely seeing more homes coming onto the market. I can’t guarantee that, and in fact I doubt that prices will actually fall and actually become more affordable for buyers.
But it definitely means having more options to help people find the right fit. And I’m sure we’re going to see fewer of these very intense multiple bid situations. As we move further into spring and even summer, the market will look a little less competitive in the coming months.
Q: This doesn’t just happen in Denver, right?
JT: It’s part of a national trend. Denver really made that transition from being a relatively affordable part of the heartland at a bit of a premium because it was near the mountains, you know, maybe 10 or 15 years ago, and just jumped that path right into the field of sort of more expensive Coastal city, and that’s one of the reasons I think it really reflects the reality for Denver locals to take a step back and feel like this has been an extraordinary ride in the housing market. That was a really remarkable kind of transition that Denver went through, and now it’s just so high up the league of very expensive American cities.
What are companies doing to help buyers and sellers in this crazy real estate market?
Philip Kranefuss, head of Homie’s Colorado real estate division, says his company wants to empower both homebuyers and homesellers by making real estate affordable, accessible and equal for all.
His company charges a flat $3,500 listing service fee for the Colorado market, which he describes as “one of the most economical ways to sell your home.”
On the other side of the coin, the company gives a 50% discount on a commission that buyers can use for closing costs, post-mark installments, upfront payments, and so on.
“I think there have been a lot of buy-side challenges, and given what’s going on right now with the rate hikes and the lack of affordability, especially in a fairly heated and competitive market like Denver, I think we’re starting to see that.” have an impact and that will slow things down,” Kranefuss said when asked where the housing market would develop in the next few months.