April 2021 Market Update: What does it mean to be in a seller's Market?
Below is an excerpt from my April 2021 newsletter. It shines light on what we brokers are seeing in the current real estate market in the Roaring Fork Valley. I hope you find it helpful, whatever your real estate needs may be.
Current Market Conditions: Low Inventory
The flurry of activity in the Roaring Fork Valley last summer and fall has left inventory at an all time low. To give you an idea of just how low, have a look:
These inventory numbers include both single family homes and condos, townhomes, and duplexes. Basalt housing inventory is down 70% compared to this time last year! Carbondale housing inventory is down 53%; Missouri Heights is down 40%. See the Mid-Valley Report below for further statistics as of April 15th - take a close look at the high percentage of inventory that is under contract. I've also added new stats for vacant land in all three areas.
This shortage of inventory has created a very strong Sellers' market. Here are some examples of what this looks like:
1. List price INCREASES for the first time in a long time.
2. Many properties are coming back on the market after being under contract at higher prices, usually due to being under contract at over asking price.
3. Back up offers at higher prices than the first position contract.
4. Closing sale prices above asking price. This is usually due to multiple offers. We are seeing it in especially high demand properties such as new construction and high-end remodels.
5. Very little negotiating room. In a Buyers' market, Buyers can start offers low and work their way up in price if needed. In the Sellers' market we're in, that strategy isn't working. In many low ball offers are just ignored, especially if the listing is new. Most sellers are willing to wait a few more weeks for an offer at or just below asking price, even if the listing seems grossly overpriced. In most cases, that strategy works because our environment is so competitive. In the past 3 months, the only offers that have gone under contract were ones that were full price from the start. I have also submitted a full-price offer that wasn't successful because there were 5 other offers on the same property.
If you're a seller, you have an extremely unique opportunity to maximize your investment. If you are thinking about selling, but want to remain in the Roaring Fork Valley and are wary of turning around and buying high, would you consider renting for a few years? The rental market is also in high demand, but with the right connections, we can find a suitable rental for you and your family.
If you’re a buyer, be prepared:
1. If you need a loan, get pre-qualified before you begin your search. If you need recommended mortgage brokers, please let me know! If you have cash, be prepared to close quickly.
2. Request showings as soon as new listings hit the market. Take advantage of 3D tours to get a feel of the property first.
3. Make a decision and submit offers quickly (within hours, not days!).
4. Be prepared to offer full price, or near it.
5. Be prepared to compete with other Buyers. Ask your Broker what it means to be in a multiple offer situation and what price and terms would put you in the best position possible to secure the property.
6. Consider a back up offer. If the property is already under contract, consider this: Contracts are falling out a higher rate than usual due to the volume of offers being made sight unseen and due to emotional distress because of the times we're in.You can continue to look at new listings while you have a back up offer in place (we can write provisions in your offer that allow you to terminate if you find something else). With inventory so tight these days, back up offers are a smart strategy to better your odds of securing a property.
I am also in the market to buy a condo or a home right now and like many of you, I am feeling resentful and nervous about the buying conditions right now. I encourage you to think about the positives: mortgage interest rates are still at record lows, at just above 3%. And, ultimately, if your real estate investment is long-term, focus on the lifestyle investment you are also making and what that means to you. Twenty years ago, my mother said that we pay the price to live here. That is still true today, perhaps even more so now.
It's because we'd rather be here than anywhere else.
What’s next? Prices will remain high until the general real estate market in our area plateaus. Many Buyers are already holding off on making a purchase due to high prices. Some segments of the market have already stalled. In time,days on market with accrue until Sellers start come down on price. The process, if that is the case, is slow… however. It could be several years until (or if!) we see significant drops in real estate prices; the real estate market does not drop as quickly as the stock market!
I encourage you to remain optimistic about real estate opportunities here in the Valley. Our lifestyle and small-town communities are hard to beat! Stay healthy and get in touch if I can help you in any way,
Sara