This house at 3179 W. 39th Ave. sold for $ 130,000 above list price in April. Photo courtesy Christopher Wright of Orchestrated Light Real estate
The persistent nature of the COVID-19 pandemic has created a housing market that is driven by more emotional choices.
August 11, 2021
Husband and wife Justin and Amanda Choi sold their Berkeley home for 20 percent above price in April. The house, which is listed for $ 645,000, received dozens of offers and was signed for $ 775,000 in just four days.
“We got offers for $ 740,000 or something like that on the first day,” says Justin. “I think my exact words were, have people gone mad?”
For someone who isn’t buying or selling a home, hearing these numbers make you wonder if the Denver people have really lost understanding of what a home should be worth these days. Elizabeth Sacerdoti, a broker at Kentwood Real Estate, says it is not; COVID-19 has created market factors that we have never seen before and that drive people to consider emotional as well as financial needs.
From January through July, Sacerdoti says she hasn’t written a single offer at or below list price and has typically seen homes sell for $ 50,000 to $ 300,000 above list price. “I saw a connection that many houses sold around 14 percent more
In addition to outbidding a home, buyers were willing to negotiate terms such as inspections and valuation gaps, or to rent the home to the previous owner for a period of time.
“What I found is that we really needed to quantify the impact the pandemic had on people’s emotional needs for housing,” Sacerdoti says. “As a real estate agent, it is my responsibility to make a purchase a solid financial investment. The conversation changed to add what the emotional needs of the people to cope with the pandemic were in terms of housing. “
The first part of the year was not characterized by typical factors, according to Andrew Abrams, chairman of the Denver Metro Association of Realtors’ Market Trends Committee. “We defied the logic or the data for the most part,” he says.
As the demand for single family homes continues, many buyers are turning to condominium and are faced with similar decisions.
Although condominiums in the heart of Denver didn’t sell very well last year, Jenny Usaj, a member of the DMAR Market Trends Committee, says sales increase as businesses reopen, with some condos selling even more than list price, she says.
In fact, several of the condos in the newly built Lakehouse near Sloan’s Lake sold above asking price, says Brian Levitt, president of Nava Real Estate Development, which developed Lakehouse. But that’s not uncommon. In the US, the average condo sold above asking price in May and again in June, according to the latest data from Redfin.
When it comes to single-family homes, BSW Real Estate CEO and co-founder Bret Weinstein notes that the Denver housing market seems to be slowing and is finally experiencing the seasonality we were used to before the pandemic. “We’re finally at this point where we’re getting more inventory, we’re starting to slow down a little. We didn’t have any seasonality in 2020, ”he says.
Even so, in July, according to DMAR trending data, homes were still being sold at inflated price. Abrams expects the market to stagnate for the remainder of the year, with homes selling at more than list price the first weekend they are available and at or below list price the second weekend.
It is the continuation of a trend in emotion-based decision-making that has led the market to remember an auction by 2021 with buyers trapped in winning. “I think that’s bad practice in theory, but house prices have gone up since then. The people who paid too much are probably really in equity now because a month or two later they are all using the comps they bought from, ”Abrams says.
In essence, houses are worth what people are willing to pay – and when the demand is there, people often pay more. Peter Winscott, director of sales at Orchard, says buyers realize if they don’t go above list price, someone else will. “Everyone has to decide at the end of the day what will meet their financial needs. I think the fear of missing out on a home is more important to customers than how much they pay, ”he says.
This is exactly what made buyers Jon and CJ Bathgate buy a home this summer. The couple started casually looking at homes this spring with an aim to move within the next 18 months, but the Bathgates felt pressured to buy a home – and quickly. “The extra pressure made our schedule a little faster because all of these great houses were moving so fast,” says CJ. “We had to act now.”
So they did. After two offers and overbids, the couple finally landed their own home on the third attempt. The Bathgates said they bought a home near Cherry Hills Village for less than 10 percent more than the asking price.
“We ended up in our dream home,” says CJ. “I say it every day, ‘I can’t believe we have this place.’ I’m over the moon and it kind of covers up all the grief, fear and intensity that went into the whole process because after all, when you cross the finish line, it feels really good. “