18 offers, 12% over list price .... Market going bonkers again?

Denver, Colorado
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18 offers, 12% over list price .... Market going bonkers again?

James Carlson
Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes

Ugh, not again. Are we entering crazy bonkers time again? 

I just had clients lose a home in the Denver suburbs a competitive situation reminiscent of 2021/2022. The home got 18 offers and went for 12% over list price. This isn't the first competitive situation I've seen in recent weeks.

What do you agents/investors think? 

Recent market stats from Denver and Colorado Springs lend some credence to this.

Denver

-- Median home price up 5% YoY in January. 
-- 5% might not sound too crazy, but A) We don't have February numbers yet and B) The trajectory is upward. Previous months were basically flat YoY.

Colorado Springs

-- Median home price up 3.5% YoY in February
-- Again, this is up from 1% YoY in January, so the trend is not only YoY increases, but an acceleration in the increase.

My thoughts? I don't think this is 2021 redux, but I do think things are going to get much tighter. The 2023 market lulled some buyers/investors into thinking they could relax, that they had some power and time to mull over decisions. The spring may be a rude awakening.

What's everyone seeing out there? In Colorado or elsewhere?

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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
2y

Over or under asking doesn’t really mean anything. Let’s say I want to sell a home that’s worth $400k. I can list it for $440k and sell it for “under asking”. Or I can list it for $350k and get a boatload of offers and sell it for 14% over asking. I think the average realtor sells 1 house per year? Maybe with so little practice they’re not very good.

We’re going to assume the property appraised at the selling price or close enough for the buyer to bring the extra cash. Probably also safe to assume it wasn’t investors bidding it up and most buyers aren’t investors and the buyers willing to pay the most aren’t investors. (Unless this was a distressed property or one with an opportunity to expand for the right buyer. Also the kind most likely to go over asking.)

If we’ve had 10-15% inflation over the last couple years house should be 10-15% higher than 2 years ago. I think prices have room to run but everything is local. There will be places people are fleeing and places they are fleeing to. 

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  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    2y

    In Kansas City we are seeing a mix. Suburbs are definitely desirable. Certain ones more than others. City properties are still slower moving and buyers have leverage. The past month I have noticed more activity. I think some people are still waiting while others are jumping in. We'll see how the year goes, I think rates will shift it either direction. For sellers multiple offers is still happening but I have buyers getting deals 5-15% off asking so it varies. 

    2Reply
  • James Carlson
    OP
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    2y
    Quote from @Caleb Brown:

    In Kansas City we are seeing a mix. Suburbs are definitely desirable. Certain ones more than others. City properties are still slower moving .... For sellers multiple offers is still happening but I have buyers getting deals 5-15% off asking so it varies. 


     Interesting you say this about the 'burbs. That's where this house was in Denver. I think it's less a function of people just love the burb life and more that people are priced out of the city as much so they're looking for the "affordable" option ... and that's in the suburbs.

    And I do think there are still some under-asking properties out there, but anything that's taken care of, that's a remodel (but not an obvious crappy flip), is going quickly now. 

    2Reply
  • Matt M.
    Realtor · Denver, CO · Member since 2013 · 2k+ posts · 1k+ votes
    2y

    I've got a new listing that has had ok traffic. I'm launching 3 flips this month, so I'm hopeful. Rates are scaring people off again. Congrats on the listing!

    3Reply
  • Travis TimmonsPro Member
    Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
    2y

    My take is very anecdotal, but I had a chat with a neighbor a couple of days ago that has been a renter for 3-4 years. They moved, as renters, into our suburban neighborhood in 2019 for the schools given that their first child was starting kindergarten. 

    The plan was to buy after 1 year, then covid hit, market was crazy, they did not want to "participate in the madness." That lasted through Q3-ish 2022, rates shot up, waited to see what would happen, prices never came down (at least in our corner of suburban Houston). 

    They plan on buying this spring or summer. His exact words were, "I mean, it's not like home prices are going down any time soon." It's a bit of a defeatist attitude, and I do feel for the guy. It sucks. I think that it speaks to a large pool of buyers, though. They've been waiting long enough and are tired of waiting. They have run out of hope that prices come down and have also had multiple years to save up.

    3Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    2y

    Over or under asking doesn’t really mean anything. Let’s say I want to sell a home that’s worth $400k. I can list it for $440k and sell it for “under asking”. Or I can list it for $350k and get a boatload of offers and sell it for 14% over asking. I think the average realtor sells 1 house per year? Maybe with so little practice they’re not very good.

    We’re going to assume the property appraised at the selling price or close enough for the buyer to bring the extra cash. Probably also safe to assume it wasn’t investors bidding it up and most buyers aren’t investors and the buyers willing to pay the most aren’t investors. (Unless this was a distressed property or one with an opportunity to expand for the right buyer. Also the kind most likely to go over asking.)

    If we’ve had 10-15% inflation over the last couple years house should be 10-15% higher than 2 years ago. I think prices have room to run but everything is local. There will be places people are fleeing and places they are fleeing to. 

    6Reply
  • James Carlson
    OP
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    2y
    Quote from @Matt M.:

    I've got a new listing that has had ok traffic. I'm launching 3 flips this month, so I'm hopeful. Rates are scaring people off again. Congrats on the listing!


     Is your listing anything special? Not asking you to dog on your listing, but I'm interested, because I do see the middle-of-the-road homes -- clean, but not updated, nothing special -- sitting for longer and the nicer ones with a little something extra going quickly. Wondered if yours fits in that theory or breaks from it?

    1Reply
  • James Carlson
    OP
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    2y

    @Travis Timmons

    I feel like there's an entire thread's worth of discussion around buyers who in 2021/2022 said, "I'll wait for it to cool down" and now are shaking their heads in disappointment. I mean, prices aren't going up as fast, but they're not going down and interest rates have decimated buying power. 

    I'm not even criticizing them. I can understand why they made that choice, but it's tooough right now to look back. 

    6Reply
  • James Carlson
    OP
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    2y

    @Bill B.

    Yeah, of course. I see properties intentionally (or erroneously) underpriced and receive a lot of offers. That's been going on even as the market stalled out the last year. 

    This house was already priced about $30k over comps, if based solely on br/ba count and square footage, but it was at the crest of a hill, had mountain views through big bays of windows and views of the Denver skyline. So yeah, it was something special, but still all-in now this place is under contract for nearly $90k (or about 20%) over similar homes without the views. 

    1Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    2y

    There’s more than a thread worth of people who waited. There’s almost a forum’s worth. You will see 5+ year old threads of people saying they are waiting or that others should wait for the crash. You’ll find people “making fun” of the people who bought in 2019/2020 because they were going to get crushed. You’ll find threads of how Covid was finally the 20-30% crash precipitator. 

    I doubt one of those posters has apologized to the lifelong damage they did to the financial lives of anyone that followed their advice. I was literally making that point 3 years ago and now i’to even more devastating. My only consolation is those that lost out because they were waiting for others to lose everything so they could profit. They can continue to suffer without my concern. 

    5Reply
  • James Carlson
    OP
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    2y
    Quote from @Bill B.:

    ...You will see 5+ year old threads of people saying they are waiting or that others should wait for the crash.....

    Yep, there was going to be "Another Crash in 2017." And a "Housing Crash in 2018-2019." And again in 2020. And in 2021 and in 2022 and on and on. 

    I understand how if you aren't really paying attention that you'd think "this can't go on forever." But the basic economics of supply and demand dictate that prices weren't likely to do much but go up for awhile. Builders not building enough and older homeowners not selling means supply is constrained. Meanwhile, Millennials are a larger demographic cohort than even Boomers and they've hit in prime home-buying age. 

    Little supply, high demand ... voila, high prices.

      1Reply
    • Bill B.
      Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
      2y

      I wonder what the “this can’t go on forever” crowd would say if you asked them if they thought haircut prices would keep going up forever? When do they predict haircut prices to crash?

      2Reply
    • V.G JasonPro Member
      Investor · Member since 2022 · 3k+ posts · 3k+ votes
      2y

      The train of thought is there's a second wave of inflation likely hitting here shortly. We're also entering prime real estate times-- Q2. I'd say it's more the latter, than the former.

      The real "crash" on real estate will be when people's DTI finally get suffocated and/or divorces happen for folks who bought together. You'll likely see less divorces for financial reasons from that, those chickens won't come home to roost until another 7-10 years.

      I do see a correction though, but that's regional. Denver's biggest points of migration are LA, SF, and New York. It's an excellent city to meet a lot of people's desires, don't see this market as one that crashes  or even corrects-- but do see some neighborhood pockets with some ripping and some dipping. Cherry Creek will be higher bid, Aurora lower bid. 

      1Reply
    • Bruce WoodruffPro Member
      Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
      2y
      Quote from @James Carlson:

      @Travis Timmons

      I feel like there's an entire thread's worth of discussion around buyers who in 2021/2022 said, "I'll wait for it to cool down" 

      Never 'wait' in this game....

      2Reply
    • Henry Lazerow
      Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
      2y

      Same is happening in chicago and surrounding suburbs. We never got the crazy pump during 2021 or drops and our market has been steady appreciation instead. Over last month I have seen many multiple offer scenarios. 

      1Reply
    • James Carlson
      OP
      Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
      2y
      Quote from @Bill B.:

      I wonder what the “this can’t go on forever” crowd would say if you asked them if they thought haircut prices would keep going up forever? When do they predict haircut prices to crash?

      LOL. I'm stocking up capital for the haircut crash. Gonna pick me a couple high fades in foreclosure.

      3Reply
    • James Carlson
      OP
      Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
      2y
      Yeah, there is a point at which prices rise faster and then beyond incomes and then just not enough people can afford homes. 

      But like you said, here in Denver and Colorado Springs, prices can definitely go up when the source of inflow are cities with higher housing prices. In both of these cities, four of the top five source cities are higher cost. (See charts below.)


      0Reply
    • James Carlson
      OP
      Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
      2y
      Quote from @Bruce Woodruff:
      Quote from @James Carlson:

      @Travis Timmons

      I feel like there's an entire thread's worth of discussion around buyers who in 2021/2022 said, "I'll wait for it to cool down" 

      Never 'wait' in this game....


       Yep, buy now, buy tomorrow. When you can, get in the game, build more capital, do it again. On and on.

      1Reply
    • James Carlson
      OP
      Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
      2y
      Quote from @Henry Lazerow:

      Same is happening in chicago and surrounding suburbs. We never got the crazy pump during 2021 or drops and our market has been steady appreciation instead. Over last month I have seen many multiple offer scenarios. 

       Interesting that Chicago didn't go crazy in 2021. And like @V.G Jason said, is what I've seen recently and what you are seeing part of some fundamental shift in the dynamics from the past year, or is it simple seasonality?

      0Reply
    • Russell BrazilBusiness Member
      Moderator
      Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
      2y

      I've seen in the last few weeks 90, 65, 42, and 35 offer situations.

      I just priced one of my listings about 10% higher than it should have been, and still got 7 offers and it escalated just shy of 10% over list, to end at about 20% above comps.

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    • James Carlson
      OP
      Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
      2y
      Quote from @Russell Brazil:

      I've seen in the last few weeks 90, 65, 42, and 35 offer situations.

      I just priced one of my listings about 10% higher than it should have been, and still got 7 offers and it escalated just shy of 10% over list, to end at about 20% above comps.

      Your experience would indicate this is more like a shift in market dynamics, right? Not simply the traditional seasonal uptick. I don't remember this happening in February and March last year.

      It seems more buyers are getting off the sidelines. I've noticed it in the number of intake calls. We're more a boutique than behemoth shop, but still there's been a noticeable increase in calls.

      0Reply
    • Nicholas L.Pro Member
      Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
      2y

      @V.G Jason

      I think you're saying that for people who bought maybe at the tip top of what they could afford, if they take on more debt and/or variable rate debt adjusts and/or they lose a job and/or they get divorced, they'll be under a lot of financial strain / potentially unable to afford their mortgage.  Is that accurate?  Isn't that at least partially offset by the continuing single family housing shortage... there are just not enough people in that category to increase inventory enough?

      not disagreeing with you, genuinely asking.

      1Reply
    • Brian Jackson
      Realtor · Akron, OH · Member since 2023 · 56 posts · 40 votes
      2y

      I don't think we are there yet. We have seen signs of competition for houses as the inventory is just so low. At the same time, I have 10 listings right now, priced fairly, that aren't being flooded with buyers.

      0Reply
    • Carlos Ptriawan
      Member since 2019 · 7k+ posts · 4k+ votes
      2y
      Quote from @Nicholas L.:

      @V.G Jason

      I think you're saying that for people who bought maybe at the tip top of what they could afford, if they take on more debt and/or variable rate debt adjusts and/or they lose a job and/or they get divorced, they'll be under a lot of financial strain / potentially unable to afford their mortgage.  Is that accurate?  Isn't that at least partially offset by the continuing single family housing shortage... there are just not enough people in that category to increase inventory enough?

      not disagreeing with you, genuinely asking.


      most area income and DTI ratio actually could only be achieved when one family is having husband and wife working professionally. So yes separation would trigger automatic sell.

      The exception for this is perhaps midwest.

      1Reply
    • Brie SchmidtBusiness Member
      Moderator
      Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
      2y
      Quote from @James Carlson:
      Quote from @Henry Lazerow:

      Same is happening in chicago and surrounding suburbs. We never got the crazy pump during 2021 or drops and our market has been steady appreciation instead. Over last month I have seen many multiple offer scenarios. 

       Interesting that Chicago didn't go crazy in 2021. And like @V.G Jason said, is what I've seen recently and what you are seeing part of some fundamental shift in the dynamics from the past year, or is it simple seasonality?


       It was crazy competitive with almost all offers over asking price but Chicago has always been a steady increase, never a balloon.  Even during the crash we didn't get decimated because we never had a sharp increase.  So we went down a bit but never "crashed"

      2020-2022 was pretty nuts but not super crazy compared to 2018-2019 as most offers have been over asking price the first weekend since 2018

      May 2022 it dropped off a cliff though and 2023 was terrible in terms of inventory.  I am an investor agent so I only work with 2-4 units, in a typical spring/summer market I analyze about 200 properties a week and find 7-10 that meet my minimum criteria for clients.   Since summer 2022 a good week I would analyze 50 properties and be lucky to find 1-2 a week.  July 2023 I went a whole month without finding a single property that meet my criteria.

      Usually our market is dead from Nov-April and I have taken 4 month vacations in the past.  We might have 1-2 showings a month and can easily go a few months with nothing to see.

      Mid Jan 2024 it is like a switch flipped.  I have been working from 5am-7pm for weeks now just to stay on top of things.  Of course every transaction has been unusually challenging but if all my contracts close right now I will make 50% of my 2023 sales just in Q1 2024

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    • Nicholas L.Pro Member
      Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
      2y

      @Carlos Ptriawan

      agree.  although... Jason Hartman has pointed out that interest rates were so low before the recent increases, that buying was like going back in time and getting a mortgage in ~2011-2012.

      so... it still feels like the fragility of the current group of people who already own is a bit overstated.

      this is the distinction between the market being unaffordable (it's very unaffordable) and unsustainable (maybe it's unsustainable?)

      1Reply
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