COLORADO SPRINGS BIDDING WARS
When will bidding wars stop in Colorado springs?
Frustrated and scared homebuyers or wannabe homebuyers keep asking the question: when will bidding wars stop in Colorado Springs? This probably won't come as a comfort, but it's not just the Colorado Springs market that has a lack of inventory, high demand and subsequently lots of aggressive buyers paying well above asking price and sacrificing many of the standard buyer protections (inspections, appraisal, etc.) As scary and intimidating as the market can be, it's good to know what you're against and plan accordingly.
Note: For people that prefer learning through audio, this content can also be found on our Colorado Springs' podcast. This episode ran March 22, 2022.
when will the bidding wars in colorado springs stop?
Right now, time in the enemy.
People have been asking this question for at least the past year, and Colorado Springs (and much of Colorado) has had limited inventory since at least 2019. Added to that, the housing prices in Denver have been going up since 2011, so people holding out for pricing relief may need to continue to wait.
Rather than trying to time the market, we advise our clients to think of time as the enemy. The reason we think time is the enemy in the Colorado Springs' housing market is because housing prices are appreciating rapidly. Specifically, Colorado Springs' housing prices appreciated 28% in 2021. With a median housing price of $448K right now, if that trend persists in 2022, the median housing price will be $573K in 12 months, a $125K gain in one year and approximately $60K in 6 months. This is why we advise our clients to be as aggressive as possible in the beginning. The sooner you buy in Colorado Springs the more buying power you will have.
thinking about bidding wars differently
It's been our experience that a lot of our clients are really turned off by the thought of bidding wars. They fundamentally don't like the idea of being part of an incredibly aggressive auction on a very expensive asset. I suspect it is both the idea of overpaying and the stress of muscling your way into a purchase that turns potential buyers off.
For this reason, we think it's important to recast the idea of bidding wars. When you purchase a home in this market, you know that the list price is likely anywhere between 85% to 95% of the true price of the house. If you accept that houses in Colorado Springs are under priced to help encourage multiple offers, you might have an easier time understanding the true price.
bidding wars: have a plan
Bidding wars are much easier to manage if you understand them and if you have a plan. The first level of understanding them is to understand, again, that the list price is likely 85%-95% of the actual price the seller anticipates to get on the house they are listing.
The second way buyers can protect themselves from bidding wars and/or failing to secure a house is to cap their search well below what they actually plan on spending. I advise my buyers to look at least $50K below where they plan on actually buying. Capping your search well below what you actually want to spend will help you participate in an aggressive housing market while preserving your budget.