In the past 30 days, the following has happened to my buyers and listings:
- One buyer lost out on two houses because of multiple offers on houses in Wheat Ridge, a western suburban off-shoot of the Denver metroplex. He finally found a house that had been on the market less than two weeks because it needs a bunch of cosmetic work. Price point: $230-250k.
- One buyer lost out on two houses in Denver proper because the houses both had offers the first days they were on the market. She was able to secure one because she agreed to a back-up position on it and the buyer backed out. The seller has also agreed to fix nearly EVERYTHING on the inspection list. Price point $180-200k.
-Half-duplex went under contract in one of Denver's hottest upcoming markets, Sloan's Lake, in two days (one day, technically). This is one day longer than the duplex around the corner from this property that went on the market two weeks prior. Price range $190-210k.
- Finally, one buyer got in a bidding war on a property in the Denver Highlands on a house that was originally listed at $275k and dropped to $265k. She bowed out of the war, which ended up bringing the price of the house back to near its original list price.
I'm truly amazed at how hot the action is in this price point. None of these buyers are investors. All but one are getting FHA loans, and the people selling are moving up to higher price points. The sweet spot, at least in Denver, is anything under the $417k loan ceiling, and if you're a first-time home buyer, more power to you.
Using this data as an indicator of the future, I have to imagine that the people selling these $200k-ballpark houses are moving into $300-400 houses, you would think. That's at least where my clients are moving to, once they sell their places. And once they buy, those sellers have to move somewhere else, and so on, and so on...
Theoretically, once all the "lower" price point inventories have been thinned enough to create a balanced sales market, then the buyers should eventually be heading into the higher price points. Of course, this type of organic stimulation won't reach the $1million-plus levels for quite some time, but logic points us in this direction.
That is, unless there is so much inventory at the $300-500k range that all the displaced sellers from the first-time homebuyers can't make a dent in one of the higher price ranges. Which doesn't afford a trickle-up opportunity and all this homebuying frenzy in 2009 stops at midfield and the resale sector of the residential real estate market has to punt in 2010.
The other road block is the inability for buyers to get jumbo loans. We had a speaker come to one of our sales meetings recently and try and get us pumped up about the high-end market and the signs of life there. The next week, we were provided with a chart by one of the more prevalent real estate consultants showing the jumbo-loan flatline starting around November 2008. To complement that chart, a mortgage officer from a fairly well-known national bank spoke that while he has seen some million-dollar deals come by his desk, the buyers are ponying up their own cash to get their loan under the conforming level.
The problem is that the average $600,000 homeowner that's looking to get to the next level doesn't have that kind of jack to get his loan under $417k.
For those of us in real estate sales, I would love to see 2010 improve upon 2009, simply because 2009 has shown some amazing signs of life, but I'm dubious about seeing the money flowing uphill.
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