Have you heard about the real estate market in Denver? It is, in short, a nightmare for anyone with a semi-reasonable budget. Looking at the numerous articles my mother has sent me, the noticeable influx of young, nature-and-beer-loving-hipsters, and the increasing crane population in the entire area, you’ll see that Denver is one of the most desirable cities right now for my fellow millennials. Unfortunately, as we all discover the charm of Denver and the surrounding mountains, getting a foothold in the housing market has become more difficult.
While some reports say that the real estate market is finally slowing down, I believe anyone with a budget under $500K will still face some competition for houses, and if you’re under $300K and want to stay within Denver in a finished house or condo (ie, not one that the listing boasts has “investment potential!”) then your choices will be quite limited. If you have a specific area you are looking to stay in, then prepare yourself for a couple of months of searching and some heartbreak along the way. With that being said, here’s some advice from my experience navigating the Denver real estate market.
Tips to Buying a Home in Denver
Hire a real estate agent, but expect to some legwork yourself:
While sites like Redfin make it easier to schedule your own tours with their representatives, hiring a dedicated real estate agent means you’ll have someone on your side throughout the process. With that being said, you should quiz agents on how much work they expect you to do while looking for potential houses, and how aggressive they are in a tough market. We found that cash offers were quite common and hard to beat no matter who your agent is, but it’s still worth knowing their strategies for putting together an attractive traditional, mortgage-based offer.
We also discovered that, while we received a daily email with new and updated listings, due to having a quite large search area and budget range there was still a lot of manual sorting that we had to do as the home buyers. This may be different for some, but in order to quickly move on a house we needed to check listings daily and pick out those we wanted to see, rather than having our realtor identify specific ones that they thought we should look at.
Narrow down your home search area as much as possible.
Within our initial home tour, where we saw 8 houses in order to get a sense of what areas and types of houses would fit our budget, we had a pretty good idea of the general area we wanted to be in. We limited our search to detached homes (wanted a yard for the dog, typical millennial!) and looked primarily in NorthWest Denver and Wheat Ridge. We wanted to stay on this side of town due to it being close-ish to downtown and also somewhat convenient for a Boulder or Broomfield commute.
We also found that areas such as Edgewater, Berkeley, Sunnyside, and Wheat Ridge had the characteristics that we were looking for such as being walkable to some restaurants and shops. Coming from the east coast we weren’t quite ready to become completely car-dependent and are glad that we made this a sticking point in terms of areas we looked at. After our initial tour we tried to focus on these areas, although did still get listings that were in different parts of town and even looked at a couple of places further out. Since we had relatively flexible schedules and wanted to keep an open mind I didn’t mind looking further afield, but if you have limited time and don’t want to sort through listings you definitely won’t be interested in, I’d narrow your search area as much as possible.
Be open to a wide variety of home types and characteristics.
The area you look in is one of the only things you can really have control of with a budget under $500K, and as your budget goes down you’ll find this becomes even more true. We looked for detached homes with a minimum of 2 bedrooms, and those were pretty much the only characteristics we could control within our price range. “Must-haves” like open kitchens and updated bathrooms pretty much disappear when you’re facing an expensive market and steep competition for homes.
We weren’t sure going into it if we’d like a home that was completely done or if we’d be willing to do some updates. In the end, although we did bid on a couple of updated homes and saw several flipped homes (don’t get me started on the finishes and weird layouts some of those ones have), we went with a home that fit our main requirements but needed some internal updating. We felt that walkability, neighborhood, and the outdoor space were more important than having everything completely updated inside. And on the plus side, since this house definitely needed a facelift we ended up getting it under list price and without a bidding war – almost unheard of in Denver, but it had been on the market for a while (in Denver, “a while” is often just a few weeks) and the seller was very motivated. While we looked at some homes with 3+ bedrooms, we got one with 2 quite small bedrooms, one of which is more of an office area off the living room. Since we were planning to use the second bedroom as a combo guest room/office area we decided this was ok for us, but it wouldn’t have worked for everyone – another reason being open to different configurations and levels of done-ness is important!
Get ready to act fast if you want to buy a home in Denver
The number one thing we heard about this market was that we’d need to be ready to act fast if we saw something we liked. To demonstrate – we saw one house the day or day after it was initially listed. Within an hour of seeing it we decided we wanted to make an offer, only to discover it was already under contract. Once it sold we discovered it went for $20K over asking price. This was not an uncommon situation for houses in the areas we were looking in.
Before you even start looking at houses you’ll need to get pre-approved for a mortgage with a bank or mortgage broker. Since you’ll get a sense of what the monthly payments will be with all the additional fees for various house prices, this also helps in figuring out your realistic budget. Once pre-approved, be ready to write an offer immediately if you see a house you like. Houses that know they will sell would often have a deadline for reviewing all offers, but if an offer is good enough it’s possible they would take it before the deadline. On the flip side, being the first offer can backfire if it encourages subsequent offers to go above asking price. This is an area where an experienced realtor who develops a relationship with the selling agent can help, although when faced with cash offers above asking price it may not make a difference. Which brings us to…
Be prepared for some heartbreak.
Even if you’re extremely diligent about looking at listings and seeing homes quickly, you will probably experience some heartbreak. If a house seems like it would be perfect for you, chances are there are several other home buyers thinking the same thing. We made 3 offers on houses, pulling out of the first one ourselves as we felt the sellers were asking too much (they eventually got what they wanted), getting beat on the second, a thoughtfully updated and seemingly perfect-for-us house, with an all-cash offer well over listing price, and getting our offer accepted on the third.
Making offers and going back and forth with sellers and other bidders is stressful, but from what we’ve heard we were actually quite lucky – in Denver it’s not that unusual for people to make 10+ offers before getting one accepted. We heard of one house that had over 40 offers on it. With that level of competition, it’s impossible for many buyers to even get in the middle of the pack, let alone win!
So, be prepared for some stress and heartbreak. We were pretty upset after losing out on the updated house to a cash offer, but looking back are glad that we ended up with a house at the lower end of our budget that allowed us to do some updates ourselves. We even took inspiration from that house when updating our own kitchen, so in a way it was a blessing in disguise.
In the end, we got a nice house in an area we liked and are happy with the decision, although it hasn’t been without some stress along the way as we have gone through the renovation process. I’d say the most important lesson is to be open – whether it’s to condos instead of houses, new builds, or an area slightly outside where you thought you wanted to be. The house we got is in a small neighborhood that we had no idea existed during much of our search, and we’ve loved it so far. Luckily, being Denver, even small neighborhoods have local breweries!
Next up – our renovation process. The good, bad, and asbestos-y parts.