At the onset of 2020, there was no way to predict that Covid19 would make “stay home’ the theme of last year. One thing is for sure, homes are in more demand than ever in 2021

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The lowest inventory in history forces prices up and creates extremely competitive situations.

Denver has become accustomed to low inventory. Since 2012 we’ve been operating at about one month’s inventory vs the 6 months of inventory required to create a “balanced market”. Typically we get a spike in inventory in Spring but in 2020 due to Covid19 instead of seeing a spike, we actually saw inventory decrease. Supply has dropped to less than 0.5 months of inventory in January 2021. Yet demand is stronger than ever. In the resale market, almost every single-family home has multiple offers. In 2021 I’ve witnessed a new phenomenon – showings are completely booked through the weekend. With only one group allowed in the house every 15 minutes, popular homes book up quickly.  Terms escalate quickly in these competitive situations. It is now commonplace that buyers waive inspections, pay appraisal gaps, and use Accept. inc to make cash offers.

Get all the Denver Real Estate Market Data here.

Multiple offer situations and low-interest rates are pushing prices up.

With lower inventory, most listings are receiving multiple offers and going significantly over the asking price. This demand for homes in Denver is accelerating the increase in prices. Why is this? COVID?  Partially. With Covid, people’s needs changed. The need for more space, a home office, and a backyard/outdoor space is important. That paired with all-time low-interest rates.  With low-interest rates, buyers are not wavering at the prospect of higher purchase prices. With no end in sight, the buyer wants to jump on this opportunity because they know if they wait, prices will be more expensive next month and when interest rates could rise, their buying power/price goes down.

Current homeowners have a massive amount of untapped equity.

I disagree with a recent piece by the Denver Post that said, “distressed sales and foreclosures could rise significantly from low levels as forbearance plans granted by the CARES Act expire and borrowers look for an exit strategy.” I do not see this happening. In the Denver market, I believe foreclosure will continue to be almost nonexistent. Residential values have gone up close to 40% in the last two years in Denver. Even facing unemployment, an owner can sell their home for a profit. It’s statically likely to sell in one weekend, over the asking price. An educated homeowner would not go into foreclose when they can sell at a profit and keep their credit clean.

Moreover, everyone who owns a home in Denver is sitting on major equity. They can tap into this equity using a home equity line of credit or by selling their home. Either way, we have a huge group of current homeowners who are anxious to make the most of their home equity. Now is an exceptionally good time to sell. Sellers can use their home equity for a down payment or they can sell and get a 60-day rent back from the buyer so they can stay in their home while they make non-contingent offers on their replacement home. We are seeing many homeowners keep their current home as a rental that cash flows and use that additional income to subsidize their new home’s mortgage payment.

Rising taxes and interest rates could reign in appreciation in Denver in 2022.

NO ONE IS TALKING ABOUT THE MAJOR IMPACT THIS TAX CHANGE WILL HAVE ON THE REAL ESTATE MARKET. I was only able to find one article about it online, summarized below.

In November 2020, Colorado voters passed every statewide ballot measure that dealt with taxes despite being in the midst of a pandemic. Voters repealed the Gallagher amendment (which has actually caused taxes to decrease in previous years).  Without Gallagher tax bills will rise in lockstep with property appreciation from now to eternity. Taxes in Denver will increase by $2400/year minimum for the median home in 2022. Denver sales tax rates increased by .5% and the mill levy increase by 4 mills, so assuming the median home price of $606,000, the tax bill would increase by about $2400/year minimum, if Denver continues to appreciate, which it likely will that number will be closer to $3000/year into perpetuity.

2021 is a reassessment year but taxes are paid in arrears so the higher bills won’t appear until 2022. One of the largest drivers of appreciation in Colorado is the out of state buyers from higher-cost coastal areas like California or New York. They are leaving these areas due to large property and income tax bills. As Colorado continues its upward trajectory of taxation, it will soon join the coastal club of expensive cities and at some point, see more migration out than in as people move to the next up and coming city with lower taxes.

An extra $2400 per year in taxes, would be equivalent to interest rates going from 2.75% in 2021 to 6% in 2022. If property taxes go up as planned in 2023, that would be equivalent to a 9% interest rate. In addition to taxes starting to double every year, some people think interest rates might increase in the future. I’ll believe it when I see it!

If you are looking for an opportunity for a good deal, consider a city condo in 2021.

Downtown has become a ghost town without workers, sports events, and conferences. Many bars and restaurants have shut their doors and the homeless have set up camp. Young adults didn’t last long on college campuses and moved back in with their parents at much higher rates this year than last, with nearly 2 million 18 to 25 years old still living at home in August according to Zillow.com. Pre covid, commutes, and being in “walkable” neighborhoods were a primary focus. With the vaccine, downtown will enjoy a renaissance in 2022 as these younger buyers leave the nest and flock back to city centers. Until then, there are deals all over downtown in the condo market. Get one today below market value at low-interest rates and wait for the renaissance of Downtown to realize gains from your genius foresight.

Looking for listings online? Every time a real estate agent adds a listing to the multiple listing service (MLS) it gets published to thousands of websites for consumers. The same information appears everywhere, it’s just a matter of choosing which app/website you prefer and pairing that technology with your favorite real estate agent to help you through the buying process. My philosophy is to work with each client on the platform they prefer most.

Every real estate website has the same basic listing information. They compete for users by trying to offer better features than other websites/apps. Almost all websites/apps are free to use for consumers. They typically make money when they connect you with an agent. Agents listed on Zillow are typically paying over $3000/m to be advertised in a zip code and connect with new buyers who request a showing through the service. Redfin also wants you to use their discount agents so they will give you a feature to schedule a showing with their agents. We believe hiring an agent should be based on their abilities and experience – not a random connection fueled by advertising dollars.

You should use the best agent and the best technology to find your next home. You can just as easily share the listing you like on Zillow with your preferred real estate agent and schedule a time with them to meet you at the property. They will be someone you trust and can help you beyond just showing a home to make sure you have an exceptional home buying experience.

There are thousands of real estate websites that advertise listings including www.LivingRoomDenver.com. However, because we are a small, locally owned company we have not been able to invest millions of dollars into our website to add features in the same way that Zillow.com has over the last 15 years. Below we’ve shared three of the most user-friendly websites/apps where consumers can find listings online.

Zillow 
Zillow holds the biggest market share of any real estate website capturing 29.2% of the market and also owns the second most visited website Trulia.com. They get approximately 59 million unique visitors per month! Zillow launched in 2006 was a game-changer for the industry. For the first time, consumers without an agent could sit at home and browse houses all around the city (and in other cities and states).

Pros:
1. Google maps/street view linked in the third and fourth images in the photo scroll. Street view can put you in front of a home in seconds to evaluate if you like the “feel” of an area.

2. See how many times the property has been viewed and how many people have saved it. This helps you evaluate the popularity of a listing.

3. Tag what they like about properties. For example “price” or “kitchen”. The app/website uses your votes to push you listings it thinks you will like based on past votes. It makes it simple to view list of homes you favorite during your search.
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4. Reviews – Zillow is a good place to check reviews about your agent. See my reviews here.

5. Zillow walkthrough + 3D tours for tours from your couch.

6. See listing history,

7. Easy to send links to your agent and friends.

8. Most extensive rental listings for privately held homes

Cons:
1. Open Houses not accurate
2. Slow to update new listings and under contract,
3. Agents advertising
4. Always double check your Zestimate with a professional real estate agent. Zillow does not have the ability to analyze the finish level of your interior which can account for major price adjustments.

Redfin

Unlike Zillow and Realtor.com, Redfin is an actual brokerage who pays its agents a base salary and makes money when users buy or sell homes with its real estate agents. They offer a 1% listing fee if you also buy a home with them. At Living Room Real Estate, our listing commission is always negotiable and if you are listing and also buying a house we can be very competitive with Redfin plus offer personalized service with a dedicated agent on your side.

Features about Redfin we like:
1. It updates the quickest from the MLS. Way faster than Zillow!

2. Shows the exact bathroom count. MLS shows 2 baths when there are actually only 1.5 which is a huge difference.

3. Shows properties that are getting more traffic as a “hot home” which helps me know that those listings will get multiple offers.

4. Has an icon on the first pic in the listing to let me know if there is a 3D walkthrough available.

5. Allows you to X out listings you don’t like.

6. Has a feed that shows me new listings and price changes since the last time I opened the app.

7. Really good open house functionality, not as relevant right now.

8. It has a great mortgage calculator and a commute calculator feature.

What I don’t like:
1. Once a listing is sold the photos go away.
2. Redfin agents are discount service providers who do higher volume. They may not give you the dedicated one on one attention that we provide to buyers through the home buying process.

Agent’s Choice – HomeSnap

HomeSnap is likely your agent’s favorite app because they offer rich features for your agent to do business. You might have a better experience sharing listing from HomeSnap with your agent because from their phone they can access extremely valuable information that one other app offers professionals.

Pros for Buyers:
1. Stand in front of any home and snap a photo. The app will recognize your location and give you all the information about the home available even if it is not for sale.
2. Communicate directly with your agent in this app. Make sure your notifications are on so you can see messages.

Pros for Agents:
1. Each listing has private information that is only shared with other real estate professionals that do not show up on Zillow for example. Your agent can see private remarks which typically have information about when offers are due and showing instructions.

2. An agent can quickly research the listing agent with easy access to their contact info, office info, past deals analysis. Your buyer’s agent can evaluate their level of experience of the listing agent which will help you in negations.

3. From their phone, agents can quickly create a comparative market analysis report for any home with a simple workflow and email it to you as PDF documents.

4. We can schedule a showing with the seller directly through this app – not an option on any other platform.

5. Agents can use Homesnap Pro is see important data about an entire neighborhood including Likelihood to List, Distressed, Ownership Type, Home Equity, and Loan Balance.

Cons

1. This app is built for agents and caters to their needs. It is not widely used by consumers and is not super user friendly.