Friday Update February 12, 2021
Yea it's not getting any better out here. 245 single family homes on the market, builders running out of land and limiting sales. I closed on a new build yesterday that we contracted at 338k in August that would go for close to 400k today. And they didn't even do a good job finishing it. I'm going there now to help literally finish the house.
Rates are more or less steady with a slight upwards drift. 10 year T notes are up to about 1.19% which is representative of greedy money leaving the relative safety of bonds to go chase stocks. I imagine at some point in the not too distant future the stock market will blow off a massive chunk causing rates to plummet again, which will in turn send even more people rushing into housing.
If you can't tell by my tone the market is incredibly frustrating. Here is a quote from a buyer's agent working in the Washington DC area that sums it up perfectly:
"The low cost of money now has buyers able to be more aggressive and willing to overpay for properties. As a buyer’s agent, tasked with trying to help clients find value, that piece of the equation is nearly impossible to do" Said Paul Legere, a Realtor in the DC area.
This comes from a CNBC article that references the fact that major markets across the board have bidding wars as a norm. Salt lake city for example has bidding wars on 90% of all sold properties, Denver is in the high 70% range and I would bet that we're somewhere between those numbers. Here is the article if you're curious
So record low inventory persists, interest rates near record lows, yields on just about any investment vehicle outside of WSB YOLO stocks are garbage and so money is pouring into real estate. We have invenstors in the Colorado Springs area fighting for invesment properties with a gross return of less than 6%. 10 years ago returns of less than 12% were laughed at and allowed to linger on the market for months.
We have way, way too many agents. The pandemic hit some service sector jobs much harder than other sectors and a lot of those folks got real estate licenses. Before you think I'm talking down to or about anyone I worked as a bartender for years then got into real estate. I'm not saying that making a transition into a new career is a bad thing. I'm saying doing so because you think there is easy money to be had is super fucking stupid. We have people in this business, always, but right now especially who have not the slightest clue what they're doing and it is ever so obvious. I constantly hear of agents bickering with each other at showings, calling each other names, and sometimes escalating to actual fights. If you don't know how to manage money, how to manage stress and most importantly how to manage the expectations of your clients you should seek a job with a W2.
And if you're thinking of buying a house in Colorado in 2021 bring your A game, player!