The Most Wonderful Time Of The Year...To Buy A House:

If you planned on buying a home in 2017 and you've made it this far without buying one, there's good news. We are rapidly approaching the best time of year to buy a house. In a matter of weeks, prices will bottom out for the year and there will be far fewer buyers looking to  buy than during other months. 

Every year in Denver, November and December allow very favorable conditions for buyers. With home prices peaking in the summer months, what follows is a steady decline in home prices each month usually starting in July and finishing in December. 

When homes are listed in the late fall, many of them end up sitting on the market for months due to decreased demand and the fact that many of them are over priced. These sellers do not get very many showings or offers (if any), and as the snow starts to fall they become inpatient and anxious. With little to no competition on these homes, conditions favor the buyer. You are more likely to get a great deal on a home during the winter months than any other time of year. 

So, if you've been thinking about buying a home, don't wait. By the time February rolls around, the tables will turn and conditions will strongly favor sellers. Buyers have a great opportunity in the coming months; in a strong seller's market like the Denver market, this is your chance to get ahead. 

The Most Important Factor When Selling Your Home:

Sellers generally speaking want to get top dollar for you home, and to have it sold as quickly as possible. Both of these are reasonable and achievable goals when selling a home in Denver. As a seller, you need to know that the single factor that determines what price your home sells for and how quickly it sells is the current market conditions.

Our market is a constantly evolving entity that lives its life in cycles. There are certain times of year where you could receive multiple offers over a weekend- all for over asking price, and be under contract in no more than 3 days. Other times, your house could sit for months and get very few showings, and no offers. 

For that reason, its really important that you decide to list your home with a real estate agent who is a expert in our market. Most agents can tell you when the busy seasons are and when its slower, but they don't necessarily understand why or how that affects your home's value. Look for someone who can give you a month to month break down of buyer demand and  how it relates to our active inventory of homes for sale each month. 

What Goes Up Must Go...
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One of the most common questions I get is, "when will home prices go back down?" Buyers want to buy low and sellers want to sell before they lose equity in their home. The short answer is, likely not anytime soon. Our market, and our home prices, are governed by the simple economic principle of supply and demand. Our supply is tiny and our demand is huge. I'll spare you the numbers and data but if you want to read more about that, check out my blog post from earlier in the year, Are We In A Bubble? 

If you're worried about prices dropping here's a few key factors to watch:
1. Look for our inventory to exceed 4-5 months (currently ~1 month).
2. Look for net migration to Denver to decrease to 20,000 people or less per year (currently averaging 40,000) and for home builders to pull 15,000 or more permits for new  homes. 
3. Look for interest rates to surpass 5% in a year's time or our unemployment rate to double or surpass 6%. 
4. Look for sub prime loans and foreclosures to increase dramatically (both currently very low). 

Any one of these factors would cause our home prices to level out; several of the above combined could lead to decreasing home prices. Right now however, there is no indication that home prices will decline any time soon; if anything, the available data suggest that they will only continue to increase for the foreseeable future. 

Are We In A Bubble?
One of the most common questions I get asked is, "are we in bubble" or "what will the market do in the next several years?" Its a great question and here in Denver, its all about supply and demand. The chart below (borrowed from Lonnie Glessner with Nova Home Loans) illustrates the difference between our market now and 10 years ago during the last bubble. 

Today, our inventory is a fraction of what is was 10 years ago and we've added a high number of jobs and new residents while new home development lags behind. Expect more of the same next year as inventory continues to shrink and more companies, Vertafone, Xero, DaVita, RLH Corporation, and Whole Foods, to name a few, look relocate their headquarters to Denver. 

Perks Of Being A Home Owner In Denver:
Just how much of a factor is Denver's real estate market? Consider this: I helped one of my clients buy a condo last winter for $230,000. Today, that same unit in the complex is selling for $270,000. In 8 months, that condo has appreciated 17% which equates to $40,000 in equity. Few markets allow such rapid appreciation is such a short amount of time. The bottom line: if you'd like to own a home and you can afford to buy, don't wait.  With each passing year, as home prices and interest rates increase, it will become harder and harder to buy a home. 

Home Buyer Seminar
Early next month, ill be hosting a free home buyer seminar for anyone who's interested in learning more about how to buy a home in Denver. Topics we'll discuss include:

• Saving For A Down Payment
• Home Buying Process: Contract To Close 
• Understanding Mortgage Loans
• How to Buy In A Seller's Market 
• Finding The Right Home
• The Benefits of Home Ownership  

If you are interested in attending, or know someone who might be interested in attending, send me an email.

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​1. Prices Are High, But Demand Has Slowed
As it does every summer, our housing demand has slowed down quite a bit. While home prices have likely reached a high point for the year, currently, the demand isn't there to support them. The result is wide spread price reductions; many sellers expected a quick sale of their home for over asking price with multiple offers because of what they saw this spring.

Expect activity to pick up mid way through August as people get back from vacation and school starts again. Through the fall, the market will favor sellers with certain areas (i.e. Highlands Ranch, Arvada, to name a few) and  certain price points (under $300,000)  remaining very competitive. Also look for home prices to gradually decrease each month until December. 

2. How Much Is Your Home Worth?
In a real estate market like Denver's, your home's value fluctuates monthly. Since 2012, homes in Denver have appreciated 10% every year. If you've bought a home in the past several years, you are likely in a great equity position. Don't rely on Zillow for an accurate estimate as their numbers are likely off 6-20% (see more below). If you're curious about your home's value, contact me and I'll send you a free market analysis that will tell you what your home could sell for in today's market. 

More: The Truth About Zillow

3. Rents Continue To Rise
One study by Apartment List found that rent in Denver has increased 52% in the last 10 years. That puts us in 3rd place behind San Jose (57% increase) and Seattle (56% increase). The common factor shared by those three cities is job growth that is out pacing new housing growth. The Colorado Department of Labor reported 118,000 job openings advertised online in the month of June while Denver only has 36,800 people that are willingly unemployed. Denver's booming economy continues to be a major factor in housing demand as people move from all over the nation to live and work here. It means that rents will continue to rise. 

4. What Will Denver Look Like In 10-15 Years?
Denver is an amazing city, and an amazing place to live. Recently, as Denver's popularity has surged, so has its population. Like it or not, Denver is changing as it grows. The fact remains that with all of these new families and new people moving to Denver, we still simply don't have enough places for everybody to live for.

The major issues are, local government delaying or interfering with new housing development, lack of affordable housing, and labor shortages in the construction industry. If these issues are not resolved, look for Denver's home ownership rates to mirror San Fransisco's and Seattle's in the next 10-15 years. San Fransisco (36%) and Seattle (46%) had many of the same housing issues that we face currently. Currently our home ownership rate is 61% and dropping as more people choose to live here even if they can't own a home. 

For questions about how to buy or sell your next home, feel free to read through some of my other blogs or give me a call; I'd be happy to answer any questions you may have!

More: How To Buy In A Seller's Market 
More: How To Win In A Multiple Offer Situation

​1. Denver Home Prices Expected To Rise 10% Next Year 
A few months ago, the Denver Post published an article that cited a research firm in Florida, Location Inc., that claimed Denver's home prices would plummet 11% starting in 2019. They presented absolutely no data to support their claims, and when one of my colleagues reached out to them, they still did not provide any data. In short, their claim was based on an in-house algorithm. 

In more recent news, Veros Real Estate Solutions, among many others, has predicted that home prices in Denver will RISE another 10.3% in the next year. What is causing our home prices to continue to increase? "Denver...continues to show a tightening of home supplies at around 1.1 months. Combined with an unemployment rate of an extremely low 2.1% and rapid population growth, this is one of the strongest markets in the country. " Home prices are certainly not going to decrease any time soon and possibly not for many years to come. Buyers- try to buy sooner rather than later. As home prices rise, it will only get harder to find a home.

More: Are We In A Bubble?

2. Denver Has The Lowest Delinquency Rate In The Nation
According to Black Knight Financial Services, Colorado has the lowest mortgage delinquency rate in the nation with only 2.1% of mortgages being more than 30 days late.  What this means is that people can afford the high home prices in Colorado; if they couldn't our delinquency rate would be much higher. 

3. The Summer Real Estate Market
Now that we are in the summer months, the market has actually cooled off a bit. While many buyers are on vacation, sellers have all decided to list their homes for sale all at the same time. The result is that 1) homes sit longer on the market, 2) list price to sale price is down, and 3) price reductions are up. In short, supply is up and demand is down. Frustrated sellers who aren't getting showings or offers means buyers are more likely to get a deal. Expect this to change mid way through August as people get back from vacation and school starts again. If you're looking to buy, now is the time to buy.  

More: How To Buy In A Seller's Market
More: The Truth About Zillow
More: How Much Money Do I Need To Buy A House?

Questions or comments? Just let me know! If you knew someone looking to buy or sell a home, I'd love to be the person you refer them to!

Last weekend in Denver over 18,000 people participated in the Colfax Marathon or other affiliated races. Being a buyer in Denver right now is certainly a test of endurance as well and might even feel like running a marathon. Our market picked up steam in April and home prices continue to climb. Many homes continue to spend only a weekend on the market and go under contract for over asking price with extremely favorable terms for the seller. It's a great time to be a seller. 

It's also a great time to buy. Here's why- it's likely that in a few years prices will be MUCH higher than they are now. We will probably still have very low inventory. Buying now means you get your ticket to the game and reserve your seat. It's an expensive price of admission, but well worth it. The way home prices have risen over the past 5 years means it doesn't take much time for your home to grow in equity.  

​I Want To Sell My House But...
- Will I be able to find a new one? Most likely, yes. Most sellers are accepting offers that allow them to live in their house for up to 60 days after it closes. This gives you about 2 months to find a new home and go under contract once you accept an offer on your current home. 

More: Are We In A Bubble?

Should I Wait To Buy? 
- Probably not. Home prices in Denver have increased ~10% every year since 2012. On top of that interest rates will almost certainly rise from 4% to 5% or higher in a year's time. This time next year, it will be harder and more expensive to buy than it is now. 

More: How To Buy In A Seller's Market
More: The Truth About Zillow
More: How Much Money Do I Need To Buy A House?

Quick Facts:
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​Inventory: In April 2017, we only had 5,300 homes for sale; we usually have about 15,700 homes for sale in April (avg. 1985-2016), and given our population increase in recent years, we would need 67,000 homes built immediately to satisfy demand. 

Prices: On average, homes in Denver are selling for 10.5% more than this time last year. What this means is if you buy a home in Denver and hold it for a few years, you will very likely be in a great equity position. There are so few markets in the nation that allow this kind of appreciation. Normally, homes in other markets appreciate 3-5% per year. 

One of the most frequent questions I get is: "How's the market?" Check out my monthly market update for April 2017 below. 

1. Denver’s Transforming Market
If our home prices do not slow down or drop sometime in the next few years, we will be well on our way to looking like a West Coast housing market. Prices would soar (yes, even higher than they are now), owner occupancy rate would decline, and more people would be forced to either live in Denver and rent or move somewhere else. If you had to make that choice what would you do? Rent and save for a home or leave Denver altogether and move somewhere else? 
 
More: When To Sell Your House
More: How To Buy In A Seller's Market 
More: How To Win In A Multiple Offer Situation

2. Low Inventory
One of the main drivers of you red hot market is low inventory. Historically in March from 1985-2016, Denver has had an average of 15,000 active listings. In March of 2017, we had just 4,921 active listing. That’s 27% more active listings than we had in February 2017, a significant increase; however, it did little to slow demand.
 
3. Interest Rates Rising
Rates for a 30 year FRM are currently hovering around 4%. Look for another quarter point rate hike sometime this summer. In a market like ours where affordability is a major issues, rising interest rates especially rates above 5%, could become a major factor and ultimately cause prices to level off or drop. 

4. Don't Wait To Sell Your House
In March, we ended the month with 3,772 active listings and 3,769 listings under contract. When the number of properties under contract meets or exceeds active listings, its known as compression. It means now is an excellent time to sell and a tough time to buy.
 
Sellers who price their home correctly receive multiple offers, usually for over asking price, have all of their needs met, and usually go under contract just a few days after listing. Buyers can expect a lot of competition and usually need to have an ace up their sleeve to be the winning offer.


If you're thinking of buying or selling this year, give me a call. I'd love to help you make your next move.

Recently I've gotten more and more questions about Zillow and the accuracy of the information it presents. Below is a short look at some things you should know about Zillow. (Impatient readers skip to the bottom for a better alternative). 

How Accurate is Zillow's Zestimate?

​Let's look at what Zillow has to say about itself first: Zillow reports that its median price error for homes in the Denver Metro area is 5.1% How much could 5.1% affect the price?

Home Price: $300,000      +/- $15,300         $284,700 - $315,300
Home Price: $400,000      +/- $20,400       $379,600 - $420,400
Home Price: $500,000       +/- $25,500        $474,500 - $525,500

Anywhere from $15,000-$50,000. That's not even the worst part. Zillow reports that less than half (49%) of its Zestimates are within 5% of sales price. This means that over half of the Zestimates for homes in Denver are off by 6-20% 

"Over half of the Zestimates for homes in Denver are off by 6-20%"


How much is Zillow off by? 

Based on Denver's median home price ($355,000) and Zillow's self reported median error for Denver (5.1%), Zillow's typical error for homes in Denver is $18,105. 

"Zillow's typical error for homes in Denver is $18,105."


I'm a buyer and I look for houses on Zillow

Unfortunately, it's not uncommon to find an "active" listing on Zillow that actually sold months or even years ago. Zillow does not update their listing information reliably or consistently. You as a buyer could be wasting time looking at houses that aren't even actually for sale. Zillow wants you to contact one of the agents it has displayed on the right side of your screen. They'll then take your information and sell it to those agents. 

Where does Zillow's data come from?

According to Zillow: (emphasis added is mine)
“The Zestimate is not an appraisal and you won’t be able to use it in place of an appraisal, though you can certainly share it with real estate professionals. It is a computer-generated estimate of the worth of a house today, given the available data. Zillow does not offer the Zestimate as the basis of any specific real-estate related financial transaction. Our data sources may be incomplete or incorrect; also, we have not physically inspected a specific home. Remember, the Zestimate is a starting point and does not consider all the market intricacies that can determine the actual price a house will sell for.”

"Most upgrade information is not in the public records, and is not easily quantifiable. We do not know about home updates and remodels unless they have been reported to the local tax assessor, so those items are not used in Zestimate calculations. While we do utilize user-submitted data that is measurable, (e.g., additional bedroom count, bath count, and square footage) there is no way for us to systematically gather and verify the type of remodel or build information where the value is based upon how the final product appeals to the buyer. Because of this, the algorithm can’t use that information."

In short, Zillow uses and in-house algorithm that analyzes data from public record.

Zillow cannot account for:

• The condition of your home
• Its location in the neighborhood
• The great view from the backyard
• The noisy street it may be next to
• The new roof
• The new granite counter tops in the kitchen 
• The new shower in the master bathroom 
• The landscaping 

Additionally, when calculating home price, Zillow uses years worth of data. Most real estate professionals in Denver use 30-60 days of data when listing a home. The market here in Denver changes rapidly and neighborhood activity fluctuates weekly. 

How should home price be determined?
​
When I list a home, I want to have the most complete picture and understanding of current buyer behavior. It is the buyer, not the seller or listing agent, that determines what a house is worth. 

My Approach:

• In preparation for a listing, I will call the listing agent for every comparable home that has recently sold or recently gone under contract in the neighborhood.
• I will ask how many showings and offers each home received, how many offers were over asking price, and how long it was on the market.
• ​I will also go walk through any comparable homes in the neighborhood that are currently on the market. This will help me understand how potential buyers will view my client's home compared to the other homes in the neighborhood that are for sale and how to set the price accordingly. 
• Finally, I will recommend a list price and strategy to my clients based on the current market and neighborhood activity on how to get the most value for their home. 

How much is your home worth?

If you'd like to know how much your home is actually worth, contact me for a free competitive market analysis. 

What should I use to search for homes?

Let me introduce you to recolorado.com. Recolorado is the public version of the MLS. It is the most accurate and up to date system available. It is also free, and unlike Zillow, they will not collect your contact information and sell it. 

If you had to guess what the best time of year is to sell a house is, what would you say? The majority of people believe its the summer time, but its actually right now. March-May has been the best time to sell a house in Denver for the last four years. But don't take my word for it, lets look at the data.

The graph below (provide by Land Title) shows the relationship between sold properties and active listings over the last three years. Notice the "compression phase" from March-May. Simply put, for the last several years, demand spikes and supply plummets during the spring months. 
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​This year, our annual spring frenzy is in full swing. Last month inventory reached a new all time low of just 3,900 active listings. By comparison, the average number of active listings for the month of February from 1985-2016 is 14,600. Consider also that in housing markets a cross the country, six months of inventory is considered normal; in Denver, we've got five weeks of inventory. To top it off, prices are still increasing; the median home sale price in metro Denver is up 9% year over year. 

More: How To Buy In A Seller's Market
More: Are We In A Bubble?
More: 4 Quick Market Facts & What They Mean For You

Lets look at some more recent numbers. In the graph below, notice that from February - May of 2016, and February of 2017, ​properties under contract (the green bar) met or exceeded active listings (the yellow bar). For the number of under contract homes to be anywhere near the number of active listings is a telling indicator of a hot market. Notice that in the other months of the year, active listings surpass the number of properties under contract by much wider margin. 

What does this mean for you as a seller?

It means right now is the best time of year to sell your house. If you want leverage in negotiations, favorable terms, and top dollar for your home, there is no better time to sell. It is not uncommon for homes that are listed in March, April, or May to receive multiple offers over a few days, be listed for a week or less, and to sell for $10,000 or more over asking price. That's just the tip of the iceberg in terms of what's possible. 

If you want to see market forces at work for yourself. Stop by an open house this weekend. How many others came and went while you were there. If you are actively looking for houses, maybe you noticed other buyers and their agents at your last last showing. Go to recolorado.com and find five houses under $400,000 that you like. In a week, check to see how many of them are still active. The bottom line is, if you want the opportunity to get the best deal possible for your home, then now is the time to sell.  

If you have questions about potentially selling your house, email me at willdavis@equity-usa.com; I'd be happy to help in any way I can. 

4 Quick Facts & What They Mean For You:

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1. Record Low Listings
In February, active listings reached a record low of 3,878. February’s historical average is 14,635 (1985-2016).
 
What this means for you: Simply put, there are so many people and so few houses. If you are looking at buying this year, you will likely be up against stiff competition especially in price ranges under $400,000. It’s very important to be prepared and have a plan when you enter the market. If you're selling, you'll enjoy the benefits of an extreme seller's market, but you'll also need a plan and a strategy for the next home you buy. 

More: How To Buy In A Seller's Market
More: 6 Ways To Get Your Offer Accepted
 
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2. Rising Rent Rates
Rents rose 10.2% from Q4 of 2015 to Q4 of 2016. Denver now has the 4th highest rental rates in the nation.
 
What this means for you: There are fewer and fewer situations where renting is cheaper than buying in our market. Is buying a home in Denver expensive? Yes, but the cost of getting into the market and owning a home is well worth the reward. Plus, its extremely unlikely our home prices are going to go down anytime soon. We could be looking at many more years of appreciating home prices.
 
More: Are We In A Bubble? 
More: How Much Money Does It Take To Buy A House? 


3. Denver’s Job Market
NerdWallet ranked Denver the second best city for job seekers in 2017. In 2016, our job growth rate was 3.2% as we added nearly 45,000 jobs. 
 
What this means for you: Expect more and more people to continue to move to the Denver Metro Area. Our well-balanced local economy paired with job growth is one of the main reasons our population keeps increasing. Population growth and job growth mean increasing demand. Increasing demand combined with low supply (see #1) mean home prices will continue to climb. In February of 2017, median sold price increased 9.2% year over year.
 
 
4. Condo Prices Soar
In February, condo median sold prices increased 14.6% year over year. Condo development currently only makes up 4% of residential new construction. By comparison, in the early 2000’s, it made up around 25% of residential new construction.
 
What this means for you: Inventory of condos, the most affordable price points, will remain low. One major reason for low condo development is our construction defect laws. Colorado lawmakers have been unwilling to allow any changes to our construction defect laws up to this point. Builders are not building condos currently because the current law allows for them to be sued very easily even over minor issues. Lack of affordable housing and condo units is a major contributing factor for our low inventory. 


If you have questions, or you're looking to buy or sell this year, please feel free to reach out to me: Email Me

How To Buy A House In A Seller’s Market
 
In Denver, our real estate market is very favorable for sellers. With the population growth we’ve experienced in the last few years combined with strong job and wage growth and declining inventory, seller’s have the upper hand in the market. With so many buyers competing for so few houses, here's a few strategies that will give you an advantage over your competition. 
 
More: Are We In A Bubble?


1. Shop Under Your Price Point
 
Most of the houses in our market are going for list price or over list price. Start shopping houses that are priced about $20,000 below your maximum loan amount. If you’ve been pre-approved for a loan up to $300,000, you need look at houses in the $270,000-$280,000 price range. More than likely, especially around the $300,000 price point, you will be up against other offers on that property. You need to be able to offer over list price to have a shot at getting your offer accepted. It’s not uncommon for a house to sell for $10,000-$20,000 over asking price. If you’re only making offers on houses that are at your maximum price point, you can’t offer over list price, and you’re unlikely to have your offer accepted in a multiple offer situation.
 
More: How Much Money Do I Need To Buy A House?


2. Look At Houses Now, Not Later
 
You’re not the only one that loves the beautiful 4 bedroom 3 bath ranch with the finished basement and huge backyard that just got listed. If you wait until Saturday to go see it, it might already be under contract. In a hyper competitive market like Denver’s, its better to go see houses within 24-48 hours of being listed. Call your realtor and swing by to check it out on your way home. If you like it, ask your realtor to write an offer that night. If you write a good offer, it will be hard for a seller to forgo instant gratification and not accept it before other offers come in.


3. Adjust Your Timing
 
To the degree that it’s possible, try to enter the market during seasonal lulls. Denver’s market is busy year round but there are still times when it’s less busy. The middle of the summer and around Christmas time tend to be much more favorable times for buyers. Many of the other potential home buyers are busy on vacation or spending time with family during these time and demand for homes slows down. Listings sit longer on the market and don’t receive as many showings or offers.  Sellers are way more likely to accept an offer under asking price or compromise on other terms than any other time during the year.
 

4. Write Your Best Offer
 
Especially in a multiple offer situation, its important to write a very strong offer for the seller. If you come in trying to "see what you can get away with," your offer probably won’t even be considered. Escalation clauses, unnecessary contingencies, low ball offers, and seller concessions are not recommended. For ways to write a strong offer, see the link below.

More: 6 Ways To Get Your Offer Accepted
 
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5. Be Prepared
 
Because homes in our market tend to move so quickly, it’s essential that you come in ready to go. You should have done your research and you should also have the time and commitment necessary to  undertake the home buying process.  Before looking at any homes seriously, you should have a pre-approval letter from a lender, know what neighborhoods or areas you want to live in, and know what the “must haves” are in your next home. Being prepared will allow you to make decisions more quickly and keep you in the game in our fast moving market.

More: Basics of Home Buying


If you're looking to buy this year, I'd love to help you become a home owner. Please feel free to reach out to me with any questions! Email Me