Not sure if you’ve noticed, but the real estate market resembles an all out brawl. Year to date, we have done a little over 30 transactions. All of them, except 2, have been multiple offers, competitive bids, and above the listing price…like, way above the list price…to the tune of $30,000 – $50,000. So what’s up with this crazy market? Denver has reached a point in real estate that it has never seen before. But why?
Most economists and agents will rant about metrics, data, charts, graphs, historical trends, blah, blah, blah. Here’s the deal: Super high demand. Super low supply. Damn if we didn’t learn that in 8th grade eh? Ms. McCloud…she was a real piece of work…but it appears she was right…So why the high demand? And why the low supply?
Number 1: We are being invaded.
Denver has traditionally been known as a “cool” city with a great lifestyle. That has been the main attraction point for years. But just recently, Denver has reached a new point of maturation as a city. There are now very significant financial and economic reasons to move to Denver, not just a hip lifestyle. For example, last year Denver had the highest paying wage on average out of college. So, if you were graduating college in 2014 and thought to yourself, “Where would be a really awesome place to live, AND could give me the highest starting pay of any city in America?”. Answer: Denver. Bottom line, people are moving here in droves. Lifestyle, sunshine, infrastructure, popularity, and now, jobs and economics. Simply put, there is massive demand for housing in Denver.
Number 2: Toilet seats.
People like equity, and its expanding rapidly. What the heck does that mean? It means that lots of homeowners (maybe you’re one of them??) are neurotically clicking “refresh” on their browser to update their home price, which is rising about as fast as my wife’s temperature when I don’t close the toilet seat. If you owned a stock, and it was increasing in value daily, would you sell it? Homeowners don’t want to sell right now because their home value is rising very fast, which causes a collapse in inventory. Currently there are only about 5000 properties on the market for sale (homes, townhomes, and condos). Normally there are about 30,000. Simply put, there aren’t a whole lot of properties on the market….like barely any.
Number 3: Why sell when you can lease.
Nobody is selling anything. Ok that’s an exaggeration, but most of the sky cranes you see are building apartments – ie. To be leased, not sold. Why? Because rents are at an all time high right now, so builders look to rentals and cash flow, and they’re pretty darn attractive.
Conclusion:
My conclusion is that this current market is here to stay for this year, and probably next too. Many people think it will “pop”. I don’t think it will, but I do think it will balance out eventually, but its going to take at least a year or more to get from 5,000 listings back up to 30,000+ listings…that’s not going to happen overnight.
If you have any questions about our Crazy Market ring me or message me: 303-946-1840 / dave@ThriveDenver.com – Dave Ness