Isn’t everything these days? Well, the closest thing to anything I know almost everything about is real estate. I recently marked 40 years with REMAX, and I’m not even close to being done! One of the many things I love about the agents I work with is that nobody slides. There has been a constant commitment to excellence and MAXimum service amongst
my associates, which has kept us all energized and motivated to keep the bar high. I’d be remiss not to give a huge shout-out to the person who has led and inspired us from day one: my mentor and friend, Jim Weichselbaum.
Among my peers, both inside and outside my own company, I’m known to be a numbers guy, and a bit of a perfectionist. I reminisce about the beautiful fall day when I stood with one of my peers on the bridge that crosses the lake at the Broadmoor Hotel in Colorado, Springs, debating the strength of the current market, knowing empirically through my data that I was correct, let alone by experiencing what was going on around me through the many agents I was in contact with. It was the annual State Realtor Conference, and I was privileged to be a director at that time. I’m a firm believer that “Knowledge is Power.” So I do my homework.
We’re in a market so unique right now that it’s difficult to characterize it by any one previous period. Last year in March, the average sale of the 40,686 homes closed in the prior 12 months sold for 103.1 percent of list price. I’ve never seen anything near that. Yes, the market was that hot. And inventory remains very, very low as builders can’t produce entry-level homes except for apartments and condos. The median price of a new home in the Denver area is plus or minus $700,000. Another unexpected result of the Great Recession’s record-low interest rates (0 percent Fed rate—unprecedented— although it previously dropped to 1 percent for three years in the 1950s), combined with the moving frenzy during the pandemic, is that all those folks who bought or refinanced at 2.5-3 percent interest won’t be selling their homes for a long, long time. Hence, even less inventory.
Excepting the last 15 years, I experienced what I look back on as normal, albeit cyclical, markets that favored sellers sometimes and buyers at other times, and at the times inbetween favored neither one over the other. Those are known as balanced market periods or shifting market periods depending on how quickly things were changing. But market shifts have been happening since long before I became an agent—even very dramatic ones that I’ll reference such as the Great Depression of the 1930s, the Oil Embargo of the 1970s, the DotCom Boom and Bust of the 1980s, and the Great Recession and Covid-19 Pandemic most recently. Prior to this last 10 years, the biggest boom in real estate, at least in Colorado, was the late ’70s when the sometimes nefarious Fed dropped their rate to 4.75 percent just before raising it to 20 percent in
1980 due to rampant inflation. That should sober up a few out there.
In 1975, there was a rush to Colorado for jobs in the oil industry, federal government, airlines and, of course, construction as a means to build the housing and infrastructure for all of that new industry. That’s not even to mention the quality of life that Colorado has offered almost forever. I moved here from the Midwest at 14 years old in 1975 to work construction with my two older brothers, and it was incredibly exciting for me! I witnessed track-home construction, which found its way here from California, and the mass production of many thousands of homes within a short period.
I have to say that the closer-to-normal conditions of the last three months have been quite welcome to many of us. But I fear that this may be short-lived, as I see multiple-offer scenarios occurring again, and overall purchase contracts exceeding new listings, further suppressing inventory.
What was not unprecedented, but led us to where we are now, was the incredible rate of home foreclosures in 2009 and 2010, which is only eclipsed by the foreclosures of the Great Depression. In 2011 and 2012, I was shouting from the rooftops for anyone with the ability to “Buy! Buy! Buy!” as I saw large investors buying homes in droves. My greatest fear, which has now become reality, was that the gap between the “Haves” and “Have-nots” would grow considerably as fewer homes
would be available for homeownership and many people would be forced to rent for the rest of their lives. Of course, many of those people whose homes foreclosed, by the time their credit and income recovered, could no longer afford the same homes they previously owned due to home price increases. Homeownership is the single greatest vehicle that most Americans will ever have for building net worth, retirement and inheritance for their children. Even now, I implore those who can to help their family members, especially their adult children, to get their foot in the door of homeownership. It will benefit them much more than money they may inherit many years from now when home prices are up and the value of money diminished.
I can’t find data for this (yet) but I’m willing to bet that the ratio of investor-owned, single-family homes to owner-occupied homes, here and across the country, is rising, perhaps to record levels. The government is even flirting with plans to require all neighborhoods to allow construction of multifamily homes to fill the housing gap. Watch for that coming toa neighborhood near you! There’s no denying we continue to be in a housing crisis, so there will be many ideas floated. Some will makesense. And some will be completely ridiculous. You can bet the Realtor Associations will weigh in on that.
Every day, being a REALTOR® is an interesting day. The KC Butler “Home” Team wishes all of you Happy Homes!