July 2024 Real Estate Newsletter

Zillow Therapy: Imagining Dream Homes

In the hustle and bustle of daily life, many find solace in an unexpected place: Zillow. This real estate website isn't just for serious homebuyers; it's a playground for the imagination, offering a therapeutic escape into the realm of dream homes and better futures.

Ellisha Caplan, a 47-year-old consultant, finds calm by browsing Zillow in her spare moments. She explores homes in Philadelphia, where she went to college, and a small German town her family loves. “It's calming, like a massage for my brain,” Caplan explains. “I get to let my mind run awhile and just go with the flow,” as reported by Elizabeth Bernstein of The Wall Street Journal.

Rising home prices and high mortgage rates have made actual home buying a challenge for many. However, virtually touring homes provides a soothing alternative. People like Caplan use Zillow to imagine living in homes they believe they can afford, exploring nearby amenities and envisioning a better future. Giulia Poerio, a lecturer at the University of Sussex, tells Bernstein, “The fantasy is sustaining. Even if you can’t get what you need right now, you can Zillow it and get a little bit of energy or hope to keep you going.”

Interestingly, some people use Zillow to feel more content with their current living situations. By looking at overpriced or less appealing homes, they practice what psychologists call "downward social comparison." Hooria Jazaieri, an assistant professor at Santa Clara University, notes to Bernstein, “It’s a great way to make you feel grateful.”

While Zillow browsing can be a delightful escape, experts advise against letting it replace real-life goals and actions. Gabriele Oettingen, a professor of psychology at New York University, warns that excessive fantasizing can divert attention from actual achievements. “Your attention is away from your current reality,” Oettingen tells Bernstein. The key is to balance dreams with actionable steps toward making those dreams come true.

For some, these Zillow fantasies do lead to real-life changes. Elizabeth Uslander, 42, uses Zillow to cope with stress by looking at homes in small Colorado mountain towns. Recently, she found a home near Steamboat Springs that she and her husband loved so much they bought it. While they have no plans to move immediately, owning the home makes current stressors feel temporary. “I actually made the fantasy come to life,” she shares with Bernstein.

Source: Elizabeth Bernstein, "Pretend Renovations, Houses You’ll Never Buy: Call It Zillow Therapy," The Wall Street Journal.

Mid-Year Market Update: Denver Edges Toward Balance

As we hit the halfway point in the year, Denver's housing market is showing signs of stabilizing. More homes are becoming available, but many buyers are still hesitating due to high prices and interest rates. It's clear that the cost of housing, especially at median price points, remains a significant hurdle.

Inventory levels are a strong signal that we're approaching a balanced market for the first time in over a decade. One useful metric to understand this balance is Months of Inventory (MOI). MOI indicates how long it would take to sell all the current listings if no new properties were added. For example, if one home sells per month in a neighborhood with six homes on the market, the MOI is six months. A balanced market in Denver typically has 4-6 months of inventory. Currently, the MOI stands at 2.78 months.

Buyers are fatigued from the fast-paced market of recent years and are now taking their time. While some homes still attract multiple offers quickly, many others are sitting for extended periods before finding a buyer. Buyers are also more eager to negotiate, even for new listings. Sellers motivated to move will need to engage in these negotiations, while those waiting for the perfect buyer might face longer waits. Active listings have risen by 11.52% month-over-month to 10,214, a significant 68.27% increase year-over-year. This surge indicates that inventory is climbing.

Despite overall market unpredictability, real estate remains hyper-local. Activity varies significantly based on price, condition, and neighborhood. It's crucial for consumers to work with knowledgeable real estate agents who can analyze local data to set realistic prices and meet homeowner goals.

Info For Sellers

Contract terminations are on the rise, so sellers need to be cooperative and solution-oriented during inspections to keep sales on track. Today's buyers prefer homes with minimal deferred maintenance and modern updates. Ensuring that the HVAC, roof, and water heater are well-maintained and within their lifespan can help sell homes faster and for better prices. As competition among sellers intensifies, expect more deals to include seller concessions. In May, 56.3% of closed transactions involved a seller concession, with average concessions at $9,250 and a median of $7,000. This is up from May last year, where only 47.8% of transactions included concessions, averaging $7,723 with a median of $5,000.

Info For Buyers

With properties spending more days on the MLS, now is a great time for buyers who previously couldn't compete in the frenzied market to start shopping again. While buyers are cautious about potentially purchasing at a market peak, sellers often still expect multiple offers on overpriced properties.

As Denver's housing market moves towards equilibrium, both buyers and sellers must adjust their strategies. Engaging with experienced real estate agents and staying informed about local market conditions will be key to navigating this evolving landscape.