We Now Have Bidding Battles, Not Wars
Here is March’s real estate report courtesy of SMDRA for our 7 county metro area.
- Buyers and sellers closed on 4,085 homes (attached and detached) last month, which was down 6.5% from a year ago.
- Attached sales dropped by 8.3% and detached sales dropped 5.7%.
- The number of new listings dropped 2.5% from last March to 5,778 new listings, but attached homes saw a BIG increase of 9.3%. Owners of attached homes want to move up it appears.
- Buyers placed 5,345 homes of both types under contract last month, an increase of 4.9% from last March.
- We ended March with 5,568 homes of both types on the market. This is a BIG increase of 41% from last year.
- Still, months of inventory is only 1.36 months.
- The average sales price last month of both types of homes was $469,146 an increase of just 2% in the last year.
- The average sales price for attached homes was $357,174, an increase of 4.5% from last year.
- The average sales price for detached homes was $517,723, a 1% increase from last year.
- The median sales price of both types of homes in March was $410k, a small increase of 1.2% over the last year.
- The median sales price for attached homes rose by 3.1% to $300k.
- The median sales price for detached homes rose by just 1.1% to $445k.
- The sales to list price ratio dropping is a sign of fewer and “smaller” bidding wars. I am hearing this year that a home may get 3 or 4 offers; but not 20+ like so many did the last couple of years. So, maybe these are no longer bidding “wars”; but just bidding battles?
- Median CDOM had been averaging 5.75 days for the last 4 years in March and the increase to 11 days this year is another sign of 3 things—first, it’s taking a little longer to sell some homes, second, we have higher inventory levels, and third, fewer bidding wars and smaller bidding wars. We are instead seeing just bidding battles today. Buyers have more choices today!
- March home sales peaked in 2017 and have dropped the last 2 years back to the levels we saw in 2015 and 2016. This drop to more “normal” levels doesn’t concern me.
- I dug DEEP into the Average CDOM data and I saw BIG increases for homes priced in the $100’s (12 to 28 days), $200’s (15 to 35 days), and $300’s (20 to 30 days).
- I did the same for Median CDOM data and once again I see BIG increases for homes priced in the $100’s (4 to 10 days), $200’s (4 to 10 days), $300’s (5 to 7 days). $400’s (6 to 11 days).
- The most competitive price range is in the $300’s. I imagine this is where most of the Bidding Battles are occurring.
- The most competitive county with the shortest Average CDOM is Arapahoe with just 18 days, second is Jefferson at 29 days. Denver county has the highest Average CDOM at 88 days. This is a HUGE and surprising discrepancy.
- Because of more inventory buyers don’t have to write an offer “on the spot” and they can wait a few hours or even a day or two to write an offer. Listings are no longer auction type of sales with the highest and best offer due in minutes.
- Plus, buyers can be pickier and more easily find the “perfect” home for them, instead of settling for any home that is in their budget.
- Third, more buyers feel like they can let a house go due to inspection issues, because there are more houses to choose from.
I thought of this second analogy about our housing market. For the last few years with incredibly low inventory levels nearly any home listed under $400k could start a bidding war or fire as soon as it hit the market and it would go under contract in just 1-3 days.
Today, it takes more than just listing the home in the MLS to “ignite” a bidding war. You have to add “other fuel” to the fire in addition to just placing the home in the MLS. The house must have a good/great location, be priced a little low, and in great condition for that price. If it’s not in great condition then the home must be priced really low to “ignite” a bidding war. This is why homes are staying on the market longer (higher Median CDOM) and we are seeing a sales to list price ratio of < 100%.