If you are an active buyer anywhere in the Denver area, you probably nod vigorously when someone at a cocktail party casually states, “I hear the housing market is hot right now.” As a real estate professional on the front lines, I see buyers who are discouraged because they keep losing bidding wars and sellers who are pleasantly surprised when they receive an offer just hours after their house goes on the market. And the trend seems to be continuing. The latest statistics show that the number of active listings in the Denver housing market (also called inventory) has dropped almost 29% since this time last year.
Although there are many forces driving the activity in the housing market right now, I want to touch on one that is not mentioned as often, yet is significant – investor activity. At the bottom of the market a few years ago, individual and institutional investors were incredibly active. As the market has picked up and home prices have risen, investor activity has slowed but investors in the Denver market, including the Denver suburbs, continue to buy single-family homes because rents remain strong in the area (for more information on individual investor activity on a national level, see The New York Times’ recent article “Single Family Homes as Rentals” http://www.nytimes.com/2014/07/20/realestate/single-family-homes-as-rentals.html?ref=realestate&_r=0).
What does that mean for the rest of us? Investors can be most competitive when they buy a home with cash, and can easily offer a seller all cash with a 14-day close. Right now, this is mostly occurring in the under-$250K segment of the housing market, and those types of offers are tough to turn down if you are a seller, leaving traditional owner-occupant buyers out in the cold.
Now for the good news – there are still ways to win as a buyer in this market.
- Make sure that you have your financial ducks in a row when you are ready to buy a home. This includes speaking to a lender before you start looking at homes.
- Make sure that you are working with an agent who thinks strategically about the process. In this market, your agent has to be someone who is more than a human key to get you into homes.
- Search for homes on sites that give you live access to the MLS (Multiple Listing Service) like www.SuburbanDenverProperties.com rather than a third-party site (Zillow, Trulia, etc.). It can take up to 24 hours for a third-party site to update information from the MLS, and in this market, you can’t afford to lose that kind of time when looking for homes.
- Be patient. You may have to bid on a few homes before having an offer accepted. And, don’t give up!