what are denver homebuyers willing to do in this competitive market?

via The Denver Post

By Megan Ulu-Lani Boyanton | Published on April 28, 2022

Denverites are willing to go further than the average American to secure a home in the city’s competitive housing market, according to a new report.

More than 70% of prospective homebuyers in Denver said they’d make an offer within three days of viewing a house, compared to 65% nationally, Bank of America found in its 2022 Homebuyer Insights Report.

Not only are Colorado house hunters willing to act in haste, but they’ll also get creative to secure their keys. At 44%, potential millennial buyers in Denver are more likely than the average millennial to say they’ll utilize public or private grants for closing costs.

On top of rising interest rates, the median closing price for a single-family home sat around $660,000 in March, according to the Denver Metro Association of Realtors. Meanwhile, the average closing price jumped to $797,700.

However, the supply issue is alleviating slightly. The number of new listings for homes got a boost to 4,332 last month after hitting a low of 1,779 in December 2021, DMAR reports.

“Earlier in the year, buyers offered six figures above the asking price while competing with dozens of offers,” said Andrew Abrams, chair of the DMAR Market Trends Committee. “With the recently increased inventory, it is more common to compete with just a few offers.”

Still, he noted that the combination of “record-high” sales prices, increasing interest rates and “an average close-price-to-list-price ratio of 106.46 percent” mean buyers suffer steep monthly mortgages.

With these factors playing against them, 32% of prospective buyers in Denver feel pressure to find a home within the next nine months, according to the Bank of America report. But, even with the coronavirus pandemic receding in the U.S., 33% now feel worse off financially to make the purchase.

“In Denver, the supply of homes is tight like most markets,” said Chris McClain, senior vice president at Bank of America in Denver. The city “has lots of people moving in from out of state, which adds to the challenge.”

Just over 30% of Denverites are willing to offer 5-10% over asking price, the report said.

“Offers of $300,000 over asking price were not uncommon, with one home we know of closing $600,000 over list price,” said Colleen Covell, DMAR Market Trends Committee member.

Still, she cautioned sellers “to stay grounded in their pricing strategies as buyers can sense when a house is priced too high, even in this hyper-charged market.”

When sellers get carried away with pricing, they “end up losing out,” Covell said.

The survey was conducted between Feb. 18 and March 8, sampling 2,000 adults who either own a home or plan on it.