Denver continues to be a hot market. According to S&P/Case-Shiller, home prices rose by 10.20 percent as of June. Denver was the only city included in the index that posted double-digit year-over-year growth in June.
Denver's home prices were impacted by the city's “rapidly expanding economy”, what that means is legal pot, and the demand for houses coupled with a very low inventory of houses for sale. According to NAR®, there is approximately one month's inventory of houses available in Denver, compared to the national average of about five months.
Now your first reaction might be “I’d love to be working in that market.” If you are a listing broker in the Denver area, times are good. If you work with buyers, things are really difficult. And that seller that you had an easy time selling their house, now wants you to find them a replacement.
When a market gets too hot (IMHO) here is some of what happens:
# 1 At first, the better houses sold quickly. As those have dried up we are seeing inferior houses being purchased because of the inventory shortage. A lot of pigs are getting lipstickJ Buyers and some brokers are not being as prudent as they normally would because the goal is just to get a house, almost any house, don’t be too picky.
# 2 Your buyer better have enough cash and be willing to pay above appraisal.
# 3 Buyers are very frustrated. They put in offer after offer only to get beat out by someone else. In some cases they can’t even get to see the house before it is under contract. Though it’s not the brokers fault, when buyers complain about their predicament to their friends, the brokers name gets mentioned in an unfavorable light.
# 4 The market is setting up a bust of some proportion. I anticipate that as more states legalize pot for recreational use in the November ballots, we will see fewer people move to Colorado. Housing prices will cool and some of those overpaying for marginal houses are going to pay the price. Short sales and foreclosures will ramp back up.
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