From the June 10 LA Times:
The much-predicted foreclosure wave that was expected to dump more homes onto the market has not materialized. Fewer borrowers are entering default, and banks are better managing the properties they do have on their books.
The inventory problem has been exacerbated by the plunge in home prices since the go-go years. Many people who bought at the top of the cycle are so deeply underwater, they can’t get the price they need to sell and are therefore not bothering to put their homes on the market.
On the other hand, if you plan to break even or come out ahead on your house when you sell it, things couldn’t be better in Denver real estate. Hell, Denver condos are selling… quickly. Stupid negative equity.
Actually, it’s negative equity that helped create this amazing over-demand climate in today’s Denver real estate market. Inventory across the country is at 2006 lows, which has essentially created a market where fairly-priced homes are receiving multiple offers (more on this later). But it ain’t 2006. There are plenty of sellers out there who think the market has actually rebounded and are trying to gouge well-educated buyers into overpaying. You can spot those homes on the market; they’ve been listed for longer than 30 days and haven’t reduced their prices yet.
But real estate isn’t fair; it’s not designed that way. It’s an organic process – on micro and macro levels – that went toxic after Wall Street monetized it. If you bought at the height of the market, you aren’t fired up about the proposition that all this demand isn’t creating a spike in values to recover your paper losses. It’s doubtful that even if this breakneck pace of home sales continues into next year, it’ll be a while before price follow.
the Kentwood Company has been enjoying record sales volume through the first half of 2012, and there is no evidence that this market is tapering off anytime soon. But if low inventory is a result of homeowners refusing to take a loss on their home, it stands to reason that the only houses on the market are those sellers who either have to sell or expect to make money in the process. But once this positive equity inventory shrivels up, it’ll be even harder to find good homes to buy in 2013 unless you plan to work the bank angles.
Who has the most to gain from the frantic market? Homeowners that don’t want to sell because they’re afraid they won’t break even on their home. There is enough demand to create bidding wars on properties – especially in good neighborhoods – where the return of your initial investment is more likely now than ever before.
Call your local Realtor – if you’re in Denver, your local Realtor is Karl Lueders – to find out what your home is worth. And, as much as I hate to say it, you might be able to “get” a little more than you thought.