All-cash offers. Bidding wars. Offers with no-ceiling escalation clauses. Waived home inspections, except for health or safety flaws. Sight-unseen offers sometimes within minutes of a home hitting the market.

Denver-area home buyers deployed all the above strategies in recent months while attempting to land a property in the midst of what can only be described as a seller’s market on steroids.

“This is unheard of from my history in the market. I’ve never seen it like this,” said longtime Denver Realtor Billy Van Heusen, who has had a Colorado real estate license since 1972. “Everything is out of whack and there’s no inventory.”

The most recent report from the Denver Metro Association of Realtors (DMAR) shows only 2,075 active listings at the end of May – a record low and down 71% from May 2020. Average sales prices for single family homes and condos hit a record high $623,279. And average days on the market dropped to just 11 days – less than half as much time on the market as just a year ago.

Buyers and agents have described the market as emotional, frustrating, extreme and moving at speeds not seen before in Denver’s non-coastal market.

“Denver has certainly had low inventory before, but I don’t think its ever seen this extreme amount of demand,” said Jenny Usaj, a Denver-area agent for 15 years and DMAR Market Trends Committee member. “The demand to live in Denver appears unstoppable.”

Agents also pointed to the extremely low interest rates creating opportunity for first-time buyers, and increased savings levels created by the COVID-19 pandemic shutdown of all travel, and group-gatherings entertainment. There’s also great hesitancy for many people to sell their homes, fearing the difficulty of buying another in this market, which means less homes on the market.

Three metro-area buyers talked to the Denver Gazette about their recent experiences. While two of them successfully landed homes, the third is still looking after eight months.

Still searching 

“It’s very hit or miss,” said LeAnna Efird of Denver. “To be honest, in the last two weeks we haven’t looked at all. We’re just so frustrated, and don’t want to do it right now. We just need a break.”

Efird, a healthcare worker, is in a unique situation. She is taking care of her mother, who has health issues and had to move in with her. They sold her mother’s condo in September and have been trying to find a ranch-style home with a basement, so they could each have their own areas. They’ve lived with friends, at an extended-stay hotel and have been renting a house – which is only available until July.

“It’s not like we don’t have money,” she said. “We’re pre-approved and have 40% to put down. But we still haven’t been the best offer. We’re not sure what to do.”

They’ve lost bids on about eight homes, including when they had placed a higher bid but lost to an all-cash offer. They’re looking for homes in the $500,000 range, but aren’t willing to overbid extreme amounts or waive inspections.

“People have been overbidding so much on houses, we can’t possibly compete,” Efird said. “You have to book showings as soon as it hits MLS (multiple listing service) or you won’t get a showing. A lot of showings are only 30 minutes, so you get about 15 minutes to make a $500,000 decision. It’s insane.”

Denver 100’s Andrew Malkoski said that’s why it’s important to work with an agent who knows how to help you structure offer compete with cash.

“Between things like escalation clauses and appraisal gaps, there’s so many ways to help a loan contingent look more like the strong case” over cash, Malkoski said. “It’s important for them remember seller has different motivations, it’s not always price. And sometimes we don’t know what that is.”

Usaj counsels buyers on the three P’s: “be prepared, patient and persistent.”

“It moves quickly, so buyers must be ready to go when they’re in the market,” she said. “Make sure finances are in order. Have proof of funds if you’re using cash. If you need to liquidate a 401(k), do it beforehand.

“This market isn’t for everyone.”

Getting creative 

Amelia Abernathy, with her husband Will and young daughter Haley, are relocating to Denver from Tennessee in July due to Will’s job. She’s also pregnant with twins and identified immediately with the concept of an “emotional” market.

“It’s been pretty brutal,” she said. “There were a lot of tears. … but our Realtor (Van Heusen) was super positive and said ‘we’ll find you something.’”

The couple, who found out in April they were moving, put deposits down on six homebuilder’s lots out of desperation, but didn’t really have the time to wait for a new build.

“We had a $700,000 budget, but were looking at homes in the $500,000-$600,000 range because of all the overbids,” said Abernathy, who works for a financial services firm. “We started looking at making a few offers, but we were real hesitant … we didn’t want to pay $100,000 over asking price.”

Van Heusen typically makes calls to new housing development sales people to see if any under-construction home deals have fallen through.

“Some of the builders out there have waiting lists that are 100-200 people long,” said Van Heusen, a former Denver Broncos punter and wide receiver in the 1970s. “In this case, Amelia got lucky.”

A buyer had backed out and the home was about to hit the market. The broker asked how fast Van Heusen could get his clients there. He rushed to the development near Southlands off E-470 and East Smoky Hill Road, walked Amelia and Will through with a video call. They put a deposit down and got the house. It will be finished in July.

Both Van Heusen and Usaj said the market hasn’t seemed to hurt any economic development efforts, as companies are still moving to Denver and hiring. They might just offer longer rental allowances to give new residents time to find a home.

“Rising tide lifts all ships, as the saying goes,” Van Heusen said. “Even with these prices, companies and people are still moving here.”

“I’ve not really seen any companies, or businesses, hold back or be concerned,” Usaj said. “Most employees who see an opportunity to move to Denver jump on it.”

Good investment

Paul Phillips is one of those people. He came to Denver from New York last year to help a friend with a startup company. Though he was renting, Phillips decided in December it was time to invest in Denver’s real estate market and reached out to Usaj.

“It just takes a while,” he said. “The inventory is so low, it just takes patience.”

Having lived in markets like New York, Boston and Calgary – Phillips said “the prices here don’t look that insane to me.”

He put a couple of condo bids in, most $50,000-$60,000 over asking price. When he finally found a condo in Denver’s Five Points neighborhood, he and Usaj moved quickly.

“I saw it on Thursday, gave them the bid Friday morning and included a clause they had to accept by Saturday morning,” he said. “They accepted … we got the last one.”

He only went $10,000 over the asking price of $600,000 for the two-bedroom condo. He feels good about the investment.

“In this market, you almost don’t go in with a mindset of what you want – you have to be open to everything,” Phillips said.

Usaj doesn’t see any relief for buyers in sight.

“It’s going to be a very busy summer,” Usaj predicted. “I don’t see this inventory problem getting solved. Last month, there were 2,500 on the market. The balance for a market of this size should be 36,000 available – so we’re pretty far off.”

The only thing that might bring balance to the market, the agents said, is if the Fed raises interest rates in the Fall. That would create a smaller pool of first-time buyers who would qualify.

“Inventory will catch up some, but I don’t see it having dramatic negative effect on prices,” Van Heusen said. “With the amount building going on and people continuing to move here, Colorado’s market is going to remain strong. It’s basic economic supply and demand.”