18 offers, 12% over list price .... Market going bonkers again?

[James Carlson]

Ugh, not again. Are we entering crazy bonkers time again? 

I just had clients lose a home in the Denver suburbs a competitive situation reminiscent of 2021/2022. The home got 18 offers and went for 12% over list price. This isn't the first competitive situation I've seen in recent weeks.

What do you agents/investors think? 

Recent market stats from Denver and Colorado Springs lend some credence to this.

Denver

-- Median home price up 5% YoY in January. 
-- 5% might not sound too crazy, but A) We don't have February numbers yet and B) The trajectory is upward. Previous months were basically flat YoY.

Colorado Springs

-- Median home price up 3.5% YoY in February
-- Again, this is up from 1% YoY in January, so the trend is not only YoY increases, but an acceleration in the increase.

My thoughts? I don't think this is 2021 redux, but I do think things are going to get much tighter. The 2023 market lulled some buyers/investors into thinking they could relax, that they had some power and time to mull over decisions. The spring may be a rude awakening.

What's everyone seeing out there? In Colorado or elsewhere?

[Bill B.]

Over or under asking doesn’t really mean anything. Let’s say I want to sell a home that’s worth $400k. I can list it for $440k and sell it for “under asking”. Or I can list it for $350k and get a boatload of offers and sell it for 14% over asking. I think the average realtor sells 1 house per year? Maybe with so little practice they’re not very good.

We’re going to assume the property appraised at the selling price or close enough for the buyer to bring the extra cash. Probably also safe to assume it wasn’t investors bidding it up and most buyers aren’t investors and the buyers willing to pay the most aren’t investors. (Unless this was a distressed property or one with an opportunity to expand for the right buyer. Also the kind most likely to go over asking.)

If we’ve had 10-15% inflation over the last couple years house should be 10-15% higher than 2 years ago. I think prices have room to run but everything is local. There will be places people are fleeing and places they are fleeing to.