Scott Bayens: High stakes, placeholders and winning in the game of chess
I got a call from a good friend and local banker a couple weeks back who told me he’d hired a young exec who’d be relocating from the Front Range to the valley with his wife and kids. After he told me what they were looking for and at what price, I told him straight up I was happy to assist his new employee and aid in his search. I also warned him the information I would provide could very well blow up his plan to transfer his new employee here after telling him there was nothing in his price range. I essentially told my banker buddy I was going punch his rising star’s right gut and break his heart at the same time.
The subject of inventory, or the lack of it these days, is ubiquitous and frankly becoming exhausting for those of us in the biz. I was settling in for my son’s soccer game a couple weekends back and the parents next to me were mid-conversation, rattling off statistics, recent sales prices, re-counting multiple offers, and just jarring away like a bunch of professional dirt pimps. What’s going on in real estate right now is not only the talk of the town but a near national obsession. The impromptu exchange got me thinking about my new buyers, and others like them with whom I’ve worked under the same set of circumstances.
Of course the spectrum of buyers I am referring to are the infamous millennials, surprisingly now pushing 40 with young families, good jobs and money in the bank. Statistically, they are now the largest group of American homebuyers, outpacing baby boomers and Gen X. In fact, millennials, oft-misunderstood and more than occasionally maligned as sheltered and spoiled, are out in force, active in the market and interesting having a significant impact on supply around the country. We brokers dismiss them at our own peril!
Interestingly, a recent article featured in “Insider” showed home ownership among millennials has increased from 40% to 48% in the last three years. On top of that, 30% of millennials who don’t yet own homes say the pandemic has pushed up their plans to secure one. Finally, the authors calculated millennials’ insatiable demand has left America short 2.5 million homes!
Of course this is but one factor for the lack of supply. Rising constructions costs, more restrictive zoning requirements, and investors snapping up starter homes to hold and operate as rentals. The cost of lumber is up as much as 300% and supply chains clearly stretched.
It all continues to fuel a sellers’ market some say is out of control. There’s even been some mention of the “B” word – yes, the dreaded “bubble” — although analysts are quick to point out unlike the Great Recession, there’s nothing artificial to see here. This market is real and moving so quickly it’s been hard for even the pros to keep up. Properties that hit the “sweet spot” in terms of price, location, amenity, and fit and finish are on the market for mere days before going to escrow. In many cases buyers are coming with cash and fast closings, and in some instances waiving inspections and foregoing appraisals.
Last week a modest three-bedroom, two-bath half-duplex in Southside near Basalt was listed with a notice it would be available for showings a few days later. On that day, the listing broker hosted nine showings, 30 minutes each, back-to-back, for nearly five hours. It went pending with multiple offers above full price a day later.
In Carbondale the seller of a two-bed, two-bath condo in the downtown core saw three offers in three days. She purchased the unit last September and listed it $80,000 more than what she paid. She’s now in escrow another $10,000 above that and has a back-up offer that would yield nearly $100,000 of proceeds in less than seven months of ownership.
Pickings are becoming slim enough that Realtors are now talking to their clients about “placeholders” — essentially recommending buyers take what they can get to get in the game and have something to trade in or trade up in order to secure housing now, as well as get their rook on the chessboard.
In the last month, I closed two moderately priced condos in the mid-valley; one under half a million, the other just shy of $600,000. The cost of these mortgages are not insignificant, but my buyers consider themselves lucky to be on the board, so to speak. By the way, both buyers required financing to make their purchases, so it’s nice to know sometimes the little guy wins.
And I’m still working with that young couple. Now that the initial sticker shock has worn off and they’ve become more educated about the local market dynamics, we are working as a team and thinking outside the box. I’m confident we’ll find something for them.
As for sellers, this summer and fall are sure to be one of those singular moments in terms of timing and opportunity, with the stars aligned in their favor for the near future. Buyer or seller, it remains an exciting and historic time and one I bet will be remembered for years to come.
Scott Bayens (GRI, ABR, CNE) is a Realtor® with Aspen Snowmass Sotheby’s International Realty. Learn more about him and view current listings at http://www.aspendreamhome.com.
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