When the Supply is Low, Prices go …..???

Click on Image to Enlarge

So sorry, and it was the Daily Double and you bet all your winnings……but the answer is….”When the Supply is Low, Prices Go…..Down!”

Yes, it really is a crazy real estate market. If you click on the chart to the left you’ll be able to actually read what it says..,,and that is that the inventory of homes on the market for sale in the Denver area is only 40% of what it was a year ago! Wow! That’s pretty amazing. But even more interesting is that prices haven’t gone up as a result…how weird is that!

So what’s up with this market? It would be easy enough to conclude that the number of buyers is proportionately down but we really don’t think that’s true. We’re working with a lot of buyers right now and our biggest problem is finding a house to buy. There’s just a very limited selection. And today’s buyers won’t just buy something. They are very careful. They’ve seen what’s been going on, they read the papers and hear all the horror stories in the media and they won’t buy a house if it isn’t a good deal.

On the other hand, sellers are scratching their heads and saying what’s up with this? I have a nice house, it’s sitting here, I can’t find a buyer, this market is terrible!

Here’s our two cents on what’s going on.

  • There are buyers out there, willing and well qualified.
  • These buyers will buy a house if it’s a good value. The buyers want a little cushion if things happen to get worse.
  • Houses that are priced right, even if they’re a fixer upper, sell quickly and may get multiple offers.
  • Sellers that are realistic and realize the market has changed and that their house is worth the same or less than it was 4 or 5 years ago and price it accordingly get it sold quickly.
  • Sellers who have a hard time believing the above, price the house too high and it sits on the market.
  • Many other potential sellers are waiting for the market to improve to put their house up for sale

So, this must be how you can have a market with low supply and low prices….the Buyers are controlling the real estate market! They don’t want a house bad enough to pay more than they think it’s worth. So, if there isn’t much to choose from, rather than buy what’s there and compete with the other buyers to get it, they’ll just wait. Times have sure changed.

For Sellers, the take away is….the Market just isn’t the way it used to be. We’re so spoiled by double digit appreciation rates over the years that we think it should be that way all the time. Fact is, it isn’t that way now and it hasn’t been for several years. To sell your house today, you’re going to have to change your outlook and sell it for less than what you “think” it’s worth.

And, if you think you’ll just wait till next spring and prices will be better, don’t count on it. Who really knows how long we’ll be in this malaise? It could be for a while. The general economic indicators are sure not great. We suggest being realistic and practical about this and expect that things will be flat for a while. Given that, would you choose to sell now or two years from now if prices were pretty much the same? Do what’s best for you but don’t count on things rebounding quickly or dramatically. Chances are it won’t look like that. Slow and steady may be the new normal.

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About Tom & Beth White-O'Connor

We've lived in Boulder and the surrounding mountain area for over 23 years. We're Realtors at The White-O'Connor Team, Coldwell Banker Residential Boulder. Tom loves to write, play music, look at houses and find great house deals! Beth can fix anything and she loves house design and remodeling. Our house is a testament to her creativity. We have a daughter in San Diego who gets to ride horses for a living. Our two cats and the most amazing 16 year old dog in the world keep us company at home. Give us a call at 720-276-0826 or 720-366-6196 if we can help you Buy or Sell a home or find a great rental property. Best, Tom and Beth.
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