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Denver Homebuyers Arent Looking As Much At Homes They Cant Afford
By Patrick Clark
Bloomberg News 2/25/16
Rising home prices in Denver are robbing buyers of a favorite pleasure: looking at pictures of homes they can't afford.
Or at least, that's one way to read a blog post published Thursday by real estate brokerage Redfin.
Traditionally, buyers browsing online listings have looked at homes that cost more than they plan to spend, according to Redfin.
But in Denver, so far this year, the difference between the median viewed listing price of $379,000 and the overall median listing price of $337,000 is 13 percent.
That's way down from 2014, when the $359,000 viewed listing price was 26 percent higher than the $285,000 median listing price. In 2015, the gap was 23 percent.
In other cities where inventory is scarce and prices have increased sharply, like San Francisco and Boston, buyers are also starting their searches at lower price points.
There are a couple reasons buyers might start their search by aiming high. We all like to look at stainless steel appliances and killer views, whether or not we can afford them.
More practically, it's smart pricing strategy. If you want to spend $300,000 on a house, you might shop for homes that list for $330,000 and make a lower offer.
The research looked at nine large U.S. cities to see whether real estate searchers were using that logic.
Why would buyers target their search below the local median listing price? Eric Scharnhorst, the Redfin data scientist who compiled the numbers, said it's more likely that buyers are adapting their pricing strategies to hot markets where bidding contests have become the norm.
"In a city where you need to compete, you start looking at homes for $280,000 with the exception that you'll wind up spending $20,000 more," he said.
A simpler theory: In these markets, more people want to buy relatively cheap homes, even though few are available. Whatever the reason, homebuyers in the most competitive markets seem to be abandoning the urge even to peek at the high ceilings, Italian appliances, and outdoor kitchens of their fantasies.
My name is RaNae Urso and I specialize in residential sales and buyer representation in the Denver Metro area. I have been in the real estate business over 14 years of my 30 years in Colorado. I enjo....
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