The start of spring means longer days and warmer weather, and the beginning of the home buying season. This year is shaping up to be another seller’s market in Denver, paradoxically because many homeowners are hesitant to put their homes on the market.
Dwight Thompson owns a three-bedroom home in Aurora that’s served the family well. But as the kids grow up, it’s getting a little cramped, and he’s come to hate the kitchen’s location, which is in the middle of all the action.
“The first house, you’re just in love with everything about it at the beginning,” Thompson says. “Then you realize especially once you have kids, that, ‘oh, this kitchen is in the wrong place, I’m going to kill my child with boiling, scalding hot water when she comes running through here to get to her playroom.’”
Thompson is ready to upgrade, but there’s a problem: He doesn’t see many homes out there that he likes, and when he does there’s a bidding war.
“And then they’re out of your price range,” Thompson says.
Potential sellers like Thompson aren’t putting their home on the market because there isn’t a good selection of homes to move into, but there isn’t a good selection of homes because sellers aren’t putting their homes on the market.
In the Denver area, there were only 7,441 active listings in last month, according to Metrolist. Experts say a healthy market would have 10,000 homes for sale.
Charles Roberts with Your Castle Real Estate says his agents come to him frustrated.
“Everyday, five times a day: ‘Charles, I’ve got six buyers, we can’t find anything.’ That is the nature of the market today,” Roberts says.
Demand for homes in the Denver area is as strong as ever. Rents have climbed 20 percent in five years, and mortgage interest rates are still hovering around a relatively low 4 percent. That makes buying an attractive option for people who can muster a down payment. It’s a classic seller’s market, but it’s missing the sellers.
“They’re afraid to get caught without a house, and we’ve seen it happen,” Roberts says.
The right home, at the right price can sell in less than a week. That’s partly because smart buyers aren’t waiting. They spot homes on websites like Zillow as soon as they come on market, and swoop in with their best offer.
Roberts says that leads to another reason some homeowners are waiting to sell. The strong demand for a limited supply has driven home prices to record levels in the Denver metro, up more than 20 percent since 2009 according to the S&P/Case-Shiller Home Price.
“They’ve been saying if the market is so good, why don’t I just stay here for a while and make all this money,” Charles says. “And the fact is, those people may have been right.”
Though Roberts warns against timing the market, and Kirby Slunaker with Metrolist – which tracks homes on the market in Denver - agrees.
“The only problem with that is, sometimes you miss the top,” Slunaker says.
Slunaker says it’s possible the inventory of homes will rise as we get closer to summer. Last year many sellers put their home for sale when real estate agents got back to basic sales techniques.
“And they called them up with a simple line – ‘So you’re not underwater anymore, would you be interested in selling your house now? And, by the way, here’s the market, and here’s what you can expect for days on market and a price point,’” Slunaker says. “When they went back to those types of practices, inventory improved pretty dramatically, quickly.”
But Slunaker says even though there were more homes on the market last, they were still snatched up by buyers at an extraordinary pace. Last June Metrolist reported homes lasted just 37 days on market.
Which brings us back to potential seller Dwight Thompson in his Aurora home, and the dilemma of a hot market.
“The prices have risen for this neighborhood, dramatically,” Thompson says. “Our house is worth almost double what it was worth when we bought it in 2010.”