Heading into the spring season, the inventory of available homes is once again at a record low. The lack of supply is primarily due to – the lack of supply. Despite record high home prices, with tales of multiple buyers, competitive bidding, and with continually escalating home prices, many people who would ordinarily take advantage of the hot market to sell their home, are sitting on the sidelines. This Denver Post article lays it out pretty well:
The situation is most bleak in the price points under $500,000, but in the $500,000 – $1,000,000 things are tight too.
While we saw a big jump in listings from December to January, some say that even doubling the supply will not bring things back to normal.
Keys to finding a home in a tight market:
- Patience – You may need to submit several offers on several homes before finding success.
- Pay cash if you can – This puts you ahead of buyers with a financing contingency. Once you own the home, you can then go back and finance it after after the cash purchase. If you are well capitalized, ask your banker about a credit line to facilitate a cash purchase.
- Be prepared – If you are financing, have everything lined up before you start looking and have an approval letter from your lender at the ready.
- Be creative – Are you open to selling your current home and renting until the right opportunity comes up? You need to examine and carefully evaluate all options.
- Act fast – In a tight market, there is not much time for decision-making. Having a trusted advisor who knows the market and can counsel you quickly on the benefits and drawbacks of a potential purchase will help you make good decisions in this compressed environment.
- Be carefull – It’s easy to get caught up in the hype and the frenzy of a tight market. Of some comfort is the fact that if you end up paying a bit more than you had hoped for a home, the trend in Denver is toward continuing escalation in home prices, so time should be on your side. With that said, it’s important to use sound judgement.
- Wait?? – You may want to put off your home search for a few months. Inventory is at record lows now, but should increase in the Spring and Summer. Of course the number of Buyers will increase as well. And prices will be higher than they are currently.
Also, if you, or anyone you know, are thinking about selling, make sure you are fully aware of the situation you are about to jump into when it comes time to buy.