In today’s real estate market, a lot of the rules of what people think they want are out. Real estate agents have to set buyers’ expectations about what they can get in their budget. If buyers are approved for $500,000, they really can’t look at anything above $450,000 because homes are going for 10% to 15% above listing price in the Denver area. New listings were down over 13% in January, according to the Colorado Association of Realtors, and inventory is down to 0.7 — less than a month.
Consequently, we’re starting to see buyer fatigue, where buyers are frustrated by the lack of inventory and stiff competition for the few houses that are available. They’re throwing their hands up and saying, “I’ll rent for a year and wait for the market to crash.” Unfortunately for those buyers, if the market pulls back in a couple of years, say, 3% to 5%, it’s still going to be higher than it is today. Buyers think everything is going to come down like it did in 2008, but the back-end fundamentals for a similar scenario aren’t there.
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The good news for builders is that we’re moving people toward new construction in droves. Builders have the product, and they’ve got the land. However, we’re seeing that some buyers are willing to buy homes that don’t have all the features they want or in neighborhoods they don’t like; they’re just buying because they need housing. Some of these houses are going to come back on the market in a few years as we start to level off and buyers begin looking again for homes they’re more excited about.
We’re finding a lot of interest in the different smart home technologies. Obviously alarm systems are always out there, but smart lighting, Wi-Fi mesh systems to improve internet throughout homes, and mobile workstations around a home, where even your television is able to project what you’re working on, are getting a lot of buyer interest.
Houses are shifting to be more functional, too, almost going back to not having an open floor plan. The open floor plan is kind of over at this point as people working from home need to go back to dedicated rooms.
We’re seeing more investment in basements, too. They’re not just a game room anymore. Buyers can have workspaces for two spouses, a homework space for the kids, and an open area, similar to what you might see in a small office.
