Homes listed in the first week of April get 14 percent more online views on average and are likely to sell 6 days faster on average than the rest of the year.
The number of buyers jumps dramatically in April, but the number of listings doesn't peak until a little later, so there is less seller competition.
The average rate on the 30-year fixed mortgage has fallen more than a quarter of a percentage point in the last week and is nearly a full percentage point lower than the recent peak last November
Timing is everything, especially in a housing market that has been less than dependable lately. So if you want to get the best price for your home in the shortest amount of time, you'd better list it next week, at least according to realtor.com.
Homes listed in the first week of April get 14 percent more online views on average and are likely to sell six days faster than the average during the rest of the year.
Homes sold in April are also priced 6 percent higher than those in January. According to the most recent pricing data, that could mean an additional $17,000 for sellers listing the typical home prices around $306,000. One caveat is that realtor.com is looking at average prices and does not take into account the type of homes for sale at different times of year. Larger, more expensive homes tend to be listed in the spring because families like to move over the summer, during school vacations.
"Given the time it takes from listing to close, putting a home on the market in early April positions sellers to attract buyers seeking to close and move before the beginning of school year," said Danielle Hale, chief economist for realtor.com.
The number of buyers jumps dramatically in April, but the number of listings doesn't peak until a little later, so there is less seller competition. The average list price in June is higher than April, again as larger family homes are being listed during school vacations, but there are fewer buyers, which increases the chance for a price reduction, although not by much. Homes listed in June are 1 percent more likely to see a price reduction and garner 2 percent fewer online views on average than the rest of the year.
If next week was already a great week to list, the steep drop in mortgage rates that started last week is only making it better. Buyers now have a little bit more purchasing power. The average rate on the 30-year fixed mortgage has fallen more than a quarter of a percentage point in the last week and is nearly a full point lower than the recent peak last November. Every quarter-point drop knocks about $50 off the monthly payment on a $300,000 mortgage.
Of course all real estate is local, and locality can impact timing. The best time to list in New York, Chicago and Dallas is March 31, according to realtor.com. In Atlanta and Seattle, it's April 7. In Los Angeles and Boston, it's April 14. In Phoenix and Tampa, it's early June.
And not everyone agrees. Researchers at Zillow, a competitor of realtor.com, claim the first two weeks in May are the best nationally. They add that homes listed on Saturdays get the most page views, although most real estate agents will tell you Thursday is when most people are trolling online, planning their weekend house hunts.
"Sellers time their listings to optimize their sale in all sorts of ways," said Skylar Olsen, Zillow's director of economic research and outreach. "Some need to time the sale just right to manage their own synchronized home purchase. Others are seeking to get the highest sale price possible."
For investors seeking to diversify portfolios, build equity or secure a steady source of investment income, the real estate sector presents a myriad of options and opportunities. The increased interest I've observed in the single-family rental sector can be attributed in part to the recent volatility in the equity markets and the growing uncertainty around when the economic expansion will finally lose steam. Here are five real estate industry trends savvy investors need to be watching in 2019:
1. Build-To-Rent Properties In Secondary And Tertiary Markets
The build-to-rent industry has expanded significantly over the past year, with traditional homebuilders and real estate investors becoming increasingly active in this space. Expect to see continued expansion in 2019, most likely in relatively affordable markets such as Atlanta, Charlotte, Houston and Phoenix where rental demand is strong and build-to-rent developments can deliver reasonable yields to investors. The factors I see driving migration toward these markets and away from expensive markets such as Northern and Southern California and the Northeast include high land prices, increasing labor and materials costs and arduous permitting policies in those regions.
2. Large Capital Partners Entering Joint Ventures
This year holds robust opportunities for joint ventures in the real estate investment space. Joint ventures between REITS and other operators with large capital partners make sense for a variety of reasons, including an ability to get direct exposure to housing while not having to build their own platforms. For example, in 2018, Toronto-based real estate investment firm Tricon Capital Group announced (registration required) it was partnering with an Asian sovereign wealth fund and a large U.S. pension fund on a $750 million joint venture to invest in 10,000–12,000 single-family rental (SFR) homes.
REITs, in particular, are coming off of a strong year of mergers and acquisitions (M&A) activity, as they seek efficiencies that can come from increased scale and more efficient property and asset management. Expect to see them exploring joint venture opportunities as a new way to deploy capital and generate returns.
3. Retail Investor Interest In Single-Family Rental Homes
Speaking of single-family rentals, demand for these properties among retail investors continues to show strength, especially in the wake of stock market volatility. Since residential real estate returns tend to be uncorrelated with stocks, investment properties can act as a portfolio hedge against stock market risk. Compared to investing in equities (including using REITs to gain exposure to the real estate asset class), investment properties such as SFRs may offer advantages including the ability to choose your markets and amount of leverage, as well as the potential for higher dividends by owning the properties directly.
4. Renting As A Lifestyle Choice
According to Pew Research Center, as of 2016, only about 37% of millennials occupied homes they owned, whereas more than half of early baby boomers were homeowners by the same age. Highly educated workers are increasingly drawn to cities and central business districts, where they tend to rent rather than buy homes in the suburbs. While it’s easy to blame falling rates of homeownership on lack of affordability, lending regulations, tighter underwriting practices and overflowing student debt, we must consider that for some, renting is a lifestyle choice.
Renters often have more flexibility than homeowners to move cities, change jobs or adjust for changes in their family unit. This trend is driving down rental vacancies and creating momentum in the build-to-rent movement, which often results in premium new construction featuring amenities like in-building gyms, stainless steel appliances, outdoor spaces, parking and proximity to recreational activities. In 2019, expect to see a lower rate of mortgage applications and a higher rate of urban-dwelling renters in cities across America.
5. Getting Creative To Satisfy Demand
The growing demand for rental properties increases rent prices for existing housing stock, of which there is simply not enough in many areas. Due to obstacles like permitting restrictions, impact fees, land costs and politics, building brand new inventory is not always an option. To satisfy demand, the real estate industry will have to find creative ways to increase supply.
Some property owners are exploring co-living, which allows management companies to fractionalize buildings and rent out bedrooms while slashing operational expenses via shared common spaces. Multigenerational housinghas also seen a spike in popularity. Reasons for this include declining housing affordability in the U.S. and increasing populations of foreign-born residents. In response, I've seen some builders and developers designing plans for single properties with separate living spaces for adult children and elderly parents. This trend also presents an opportunity to increase supply in existing construction that was not originally developed for multigenerational housing. In 2019, developers and builders alike will experiment with unconventional ways to create inventory without building new stock.
Between increasing demand from retail investors, a growing number of renters, an uptick in joint ventures and a wave of ambitious and creative new projects, both the SFR marketplace and the real estate industry at large can expect to see a great deal of activity in the year ahead. This being said, many economists predict we may be experiencing a recession sometime in the next two years. Property owners and investors should be cognizant of this potential as they implement their investment strategies. Some sectors of real estate, like SFRs, are likely to perform better than others given the fact a downturn could in fact increase residential rental demand as fewer people may be able or inclined to buy homes. Even so, this is just the beginning for SFR properties as an asset class.
1. Enclose With Attractive Woodwork
An enclosure is a traditional solution for hiding bulky plastic garbage and recycling bins. This design in Boston by Michael D’Angelo Landscape Architecture gives the typical approach a modern twist with evenly spaced horizontal boards for both the bin enclosure and the fencing. The enclosure’s sloped roofline also would make it easy to lift the lid of a bin to add trash, recycling or green waste without needing to pull out the bin completely.
2. Tie In With Your Home’s Architecture
When adding a structure to the landscape, it’s best to reference the home’s architecture by pulling in the style, paint color, rooflines and materials. If it’s done thoughtfully, something that could be an eyesore — say, garbage bin storage in the center of a front yard — can become an attractive asset to the overall look of the home.
At this duplex in Portland, Oregon, for example, the cedar used for the bin enclosure pulls the warmth of the wood down from the siding around the home’s entrance. Given the size and shape of the bin enclosure, it almost reads as if the wood siding was cut out of the front door section and transplanted to the ground-level bin storage.
The enclosure, designed by Pistils Landscape Design + Build, looks good from all angles and complements the home’s style and materials.
3. Conceal Behind a Screen
A screen can be a space-saving strategy for concealing garden elements in tight quarters, as it can be positioned as close to the fence or as far away as needed to accommodate bins, bikes or garden tools. In this Sydney backyard by Outhouse Design, a custom laser-cut Cor-Ten steel screen separates the garbage and recycling bins from the seating area while providing an attractive backdrop.
4. Tuck Under a Deck
If your entryway is elevated, put the area under the deck to good use by enclosing it with wood siding and shed-style doors. This design by Land2c Landscape Architecture for a home in Seattle incorporates a bench seat at deck level that can be conveniently opened to drop garbage or recycling straight into the open bins concealed below. While only a few steps from the back door, the bins are completely concealed from view and easy to access.
5. Top With a Living Roof
To help a shed for garbage and recycling bins read more as “garden” than “structure,” consider topping the enclosure with a living roof or planting vines to cover the exterior. In this London garden, designer Kate Eyre positioned the enclosure for the bins along the far side of an entryway courtyard. The thin, horizontal boards match the home’s fencing.
While the enclosure visually recedes into the fencing, the living roof of hens-and-chicks(Sempervivum spp.) stands out as a mini frost-tolerant dry garden. One would imagine that when viewed from the home’s upstairs windows, the succulent-topped enclosure would blend into the larger garden beds.
6. Grow a Leafy, Sweet-Smelling Screen
Surround a storage area with a trellis or wire fence, plant leafy vines and soon storage bins bikes or other equipment will be hidden from view. In this Mountain View, California, yard by Taproot Garden Design & Fine Gardening, a metal framework screens off the area for garbage and recycling bins from the driveway and street. Honeysuckle vines soon will cover the framework with fragrant blossoms and a leafy screen, masking both the sight and any odors from the garbage bins.
7. Get Edgy With Metal
If your home or garden aesthetic leans toward contemporary, consider using metal rather than wood to create a more modern bin unit. The designers at 415 Remodeling installed a steel enclosure in the side yard of this San Francisco home and added a living roof of mixed succulents and planters filled with evergreens and ornamental grasses to help soften the metal structure.
8. Adopt a Wall-Plus-Enclosure Combo
If you have a midheight wall close to the street, you’re nearly set for creating a concealed area for storing bins. Adopt a mixed-materials strategy, as was done for this brick-and-wood bin enclosure in an English front yard.
From the street, the enclosure looks like a handsome wooden top for the brick wall, though it’s hiding six green bins from view.
9. Fence Off Your Side Yard
Fencing off your side yard may seem like an obvious solution for hiding bins, rakes and other outdoor tools, so be sure to match the dimensions with what you’d like to store. Keep the length of fencing from the home to the gate long enough to conceal large plastic garbage and green waste bins even when the gate is open.
Make sure that the gate is wide enough to haul a bin through to the street and that it opens away from the bins, and consider a smooth floor surface for easy rolling. If you’d also like to store bikes or other equipment in this area, it could make sense to add a storage shed against the house in combination with a bin storage area.
10. Conceal AC Units With Neat Fencing
An open-topped wooden enclosure makes for a smart screen for air-conditioning units outside this garden in Mountain View by Taproot Garden Design & Fine Gardening. The open slatting of the ipe wood and the lack of a roof ensure plenty of ventilation for the units while providing an attractive screen. The raised bed, made from the same wood, provides a growing spot for peppers and herbs.
11. Give Compost an Organized Three-Bin System
If you have the space for it, installing a three-bin compost system can help turn a growing heap into a tidier system that is easier to manage. Generally speaking, a three-bin system works by always having compost going at different levels of decomposition. Fresh food scraps, garden clippings and leaf litter would be added to one bin, the middle bin would have scraps that are a little more decomposed, and the third bin would be filled with fully decomposed, ready-to-nourish-your-garden compost.
Urban Artichoke built this composting system for a San Francisco Bay Area client with a backyard edible garden. The bins are positioned along the back wall of the property, partially out of view and with easy access to raised beds.
12. Use Metal Cages for Compost and Leaf Litter
Don’t have room for a three-bin compost system? In this Austin, Texas, backyard farm designed by B. Jane Gardens, bins made of galvanized wire mesh corral leaf litter and garden clippings for a compost system that’s more organized than a simple pile. When compost is ready for adding to beds, one could tilt the lightweight mesh to shovel from the bottom.
BROOMFIELD, Colo. — Amazon may have scrapped Broomfield from its plans but don’t think city leaders didn’t have a backup plan. It’s called “Science City,” and Broomfield's leaders believe this development will rival downtown Denver.
Amazon who? The city of Broomfield has already moved on and started building on the 1.5 million square feet available for commercial development. It’s all in plans for the master-planned Baseline community bound by Highway 7 and I-25 and includes 6,000 residential multi-family units and a research park for science-based businesses.
There will be a new STEM K-12 school, shops and restaurants, a new location for the Butterfly Pavilion, parks, trails
not to mention places for the bees and other pollinators.
"So it will be an example of how do you create a pollinator-friendly environment," said Broomfield City and County Manager Charles Ozaki.
Ozaki told Denver7 development plans have been in the works for 10 years, and now with the growth moving north of the metro along with the supporting infrastructure, the time is now. But that is a big change for people who moved up here to get away from the hustle and bustle, like Tom Lahouse left Houston to retire in Broomfield a year and a half ago.
"A little bit of rural and city all kind of mixed together," said Lahouse.
Lahouse’s view of the mountains is intact, but on the other side, the cranes are popping up one by one.
"It’s got positives and negatives, and it’s just part of life," said Lahouse.
He's looking forward to the shopping, the restaurants, the more vibrant community but that comes with downsides.
“Traffic, noise, light pollution," said Lahouse.
It depends on how you look at the next thirty years, and for these neighbors, it’s glass half-full.
"More jobs for people and it helps Denver grow. I think it's a good thing," said Broomfield resident Thuy Baker.
Lahouse doesn’t plan on going anywhere.
"If I reach a stage where I need some help, I can move into the assisted living facility they're gonna be building right there, cus I hope to spend the rest of my life here,” said Lahouse.
Written by Jackie Crea
A local developer got the green light on Monday for a project that will put hundreds of apartments, including some rent-limited units, at the edge of the River North district in the Cole neighborhood.
Buildings on the site will be allowed to rise up to five floors, but its eastern side will be only three stories. A rezoning for the site was approved in a 10-0 council vote. Councilman Albus Brooks abstained, while council members Robin Kniech and Debbie Ortega were absent.
The plan is to build a 30,000-square-foot grocery store and more than 200 apartments. About 10 percent of the units would be designated for people making 60 percent of the area median income, or $49,000 for a family of three, the developers say.
That exceeds city requirements on the land, which is near the 38th and Blake transit station. The extra affordability won’t be legally required by the rezoning, but it will be cemented in a later agreement with the Office of Economic Development, according to developer Andrew Feinstein.
“Not only are we offering to do more units, we’re offering to do it at a lower AMI,” said Feinstein, referring to the income limit for residents.
The site is mostly between 37th Avenue, 36th Avenue, Downing Street and Marion Street.
The plan will eliminate the “Lawrence Swoop,” a curving section of Lawrence Street that cuts across the properties. Instead, drivers will use the existing street grid. The developer bought that section of the road from the Colorado Department of Transportation.
“We’re going to wrap this entire site with a substantial tree lawn, with three times as many trees as are already there, and we’re hoping to have a 17-foot-wide tree lawn on Marion,” Feinstein said.
The developers also are paying to convert Marion and Downing streets from one-way to two-way along the project’s edges, which may slow traffic speeds and improve pedestrian safety.
The Cole Neighborhood Association supports the plan, in part because the developers signed a memorandum about their intent to provide affordable housing, a grocery store and better sidewalks. The project also has support from the adjacent Curtis Park Neighbors and the River North Art District, which overlays the area.
The project is about a half-mile from the new Natural Grocers on Brighton Boulevard and just north of the Downing Supermarket. Mayoral candidate Lisa Calderón has suggested that the city should do more for those existing businesses.
Councilman Rafael Espinoza asked why it took so long. “The city could have helped address this problem sooner,” he said, pointing out that the “food desert” is only changing as gentrification arrives.
But Councilman Brooks said it wasn’t so simple. “Since Day One that I got into office, we’ve been working on grocery stores in our community,” he said. “It doesn’t matter how much money we as a government put into grocery stores, it’s their decision to come into a neighborhood.”
The developers haven’t named a grocery store for the new development. Brooks initiated the zoning and helped to coordinate the project but isn’t financially involved. The project’s being run by EXDO Properties, Elevation Development Group and Kentro Group.
Written by Andrew Kenney
What cool down?
Denver real estate may be evening out (relatively speaking) in the suburbs, but in the city proper, it’s as competitive as ever.
Even though Denver’s real estate market is cooling relative to last year, it’s still hot. That’s the message Jill Schafer, chair of the market trends committee of the Denver Metro Association of Realtors, had to share about DMAR’s latest prognosis on the Denver metro area’s real estate market.
DMAR last week released a report examining home sales data from 11 counties that encompass Denver, Boulder, and their suburbs. Year-over-year, the report found the number of homes sold in February decreased 10.9 percent and the median price of homes also decreased slightly, down 1.2 percent year-over-year. The Denver Post noted this was the first February-over-February drop in seven years, but Schafer says buyers and sellers shouldn’t put any stock in that observation.
“The first six months of last year were just kind of an anomaly,” Schafer says. “We were crazy busy.”
Schafer says high-demand neighborhoods like RiNo, Sloan’s Lake, and Highland are as competitive as ever. The market is cooling (relatively speaking) in the suburbs, but even that doesn’t mean much. In Denver’s highly competitive real estate market (the most competitive in the nation, according to Forbes), the market can stand to cool a little and still be quite hot. Sellers have an advantage across the non-luxury market (that means—if you have the money—it’s easier to buy single-family homes selling above $1 million or condos at $750,000).
Overall, homes priced for the rest of us are now selling at a median of 39 days on the market. That’s up 21 percent from this time last year. This means buyers are gaining a little ground, but they’re still far from having the upper hand in this real estate market. Schafer says when homes are selling quickly (less than five months on the market), sellers have the advantage—they can hold out for a better price. Anything longer than six months on the market, she says, shifts the market advantage to buyers. Prices fall and buyers have more leverage to negotiate.
“We’re still in a strong sellers market,” Schafer says. “And, I don’t think it’s really slowing down in the suburbs. It’s just a little slower.”
Housing inventory on the Front Range is increasing relative to demand, contributing to the slowing market. DMAR’s March report found single-family home inventory increased 36 percent over last year and condo inventory increased 79 percent over last year. Nationwide, the report says Denver ranked sixth for the number of apartments added since last year (11,700).
But this isn’t driving down the average price—that’s increased (less than one percent) across single-family and attached units.
So, if average price is your thermometer, Denver’s not cooling at all.
Advice from a Real Estate Agent
Schafer shares her advice for buyers and sellers in the Denver-metro market.
Moving on up
“If you’re looking at moving up in price range, now is a great time to sell and move up to a higher price-point, because you’ll have a little more [buying] power there, and your [non-luxury] house will sell at its peak.”
Moving in (for the first time)
“If you’re looking to get into the market for the first time, you’re probably going to be further out from the city, and you may want to look at some new construction. Some of the big builders have move-in-ready properties, and there’s not as much stress for first-time homebuyers if they can find something in their price point, because they don’t [always] do competing offers on new construction.”
“It’s a little tougher if [homeowners] want to go down in price.” That is, if you want to sell your home and move into something more affordable to save money or downsize. There’s scant inventory of nice, smaller houses priced below luxury levels (that’s where sellers are retaining their advantage), so good luck finding a moderately priced third-act abode.
If you can pay to play, Denver’s real estate game is excellent. “Sellers don’t have to have their home on the market forever. Prices are still strong. Interest rates are incredibly low and they’re probably going to stay there—so to me, it’s the perfect time for people to be buying and selling.”
Written by Haley Gray
Do's and don'ts
Don’t discuss your journey specifics on social media. Sellers can see the info and it could be used against you.
Don’t take on any new debt before or during your home-buying process.
Don’t spend too much time on algorithm-based valuations versus local experts.
Don’t be of the mindset that you’ll make the money when you sell. “You make your money in real estate when you buy, not when you sell.” Buy wisely.
Do make sure that your most recent taxes are complete or ready to be complete
Do begin and get as far through the financing legwork as you can. A buyer who is simply awaiting an appraisal and final verifications will always have a leg up.
Do hire a broker who understands the importance of establishing relationships with brokers on your behalf. Do they know how to communicate in many different ways?
Do have your general ideas of what you want but let your realtor take you out to other ideas that may also be of interest – especially if you are on the newer side of residency.
Do have a list of your must-haves, your negotiables and your non-negotiables. These will change during the process but staying focused, at least at the beginning of your truest desires, is key to the long-term success of the investment.
Do be conscientious of your timeframe. If you plan to be in the home short-term, look at how quickly your down payment could be absorbed by a market value decrease. If you put 3.5 percent down, what happens if your market falls 5 percent? Much safer if you plan to be in the home for 10 years instead of two.
Best ways to save money
Sweat equity can mean long-term gains. Be conscientious of the timeframe though. We are entering a cooling in the market. Are you looking to make your money in 2, 3, 5 years?
Be open to your areas. Really focus on what is important to you today and what could be important to you in 3-5 years. Will you care as much about the walkability and prefer a larger lot? If you’re looking at condos, which amenities are really worth it to you to pay for in your HOA?
Choose a lender who is able to present you with multiple options. If you need more cash for rehab, is accepting a higher interest rate in lieu of cash at closing or “closing costs” worth it to you?
Look at your lot and it’s zoning. Is it zoned for an ADU? Could you build one and create a secondary source of income on your own home?
How much to put down
The first question any buyers should ask themselves is how much do they feel comfortable paying for their mortgage. Start there and not at the house price. Build your comfort zone in pricing around that number so you don’t dangle the carrot in front of your own nose.
Do you qualify for VA? Use your benefits!
Know that anything less than 20 percent down requires mortgage insurance. That is an add-on to your base mortgage, so weigh the benefits that this added cost would mean to you versus putting more down if you can.
After hitting severe turbulence and taking a dive in September, metro Denver’s housing market stabilized at a lower altitude in October, according to a monthly update Monday from the Denver Metro Association of Realtors.
Buyers purchased 4,181 single-family homes and condos sold last month, a decline of 3.89 percent from the number of sales in September and 15.9 percent below the number of sales a year earlier.
That monthly decline was more in line with usual fall slowing than the alarming 30.5 percent drop in home sales measured between August and September.
The pendulum of market power can shift quickly after long stretches of favoring either buyers or sellers. That was the case in 2008 when the financial crisis put buyers firmly in the driver’s seat and again in 2013, when the oversupply of homes evaporated and sellers took over.
Jill Schafer, the new chairwoman of DMAR’s Market Trends Committee, said in the report that sellers are still in the driver’s seat in metro Denver.
“It appears we still have a ways to go before we get to a buyer’s market. And that’s not just my opinion, that’s the story the statistics tell as well,” Schafer said.
Sellers had 8,539 listings on the market at the end of October, down 3.04 percent from September and up 35.28 percent from a year earlier. The inventory of homes for sale dipped below 4,000 late last year and has more than doubled since. Historically the inventory for metro Denver has averaged around 16,000 homes, so the market remains tight.
But home price gains are slowing in metro Denver and median prices remain below the peaks hit last spring.
The median price of a single-family home sold in October was $435,000, up 1.17 percent from September and 5.45 percent from October 2017. The average price rose 4.9 percent from September to $526,092, and is up 8.43 percent over the year.
The median price for a condo sold was $299,250, down 1.24 percent from September, and up 8.84 percent from October 2017. The average price of a condo sold came in at $341,418, a decline of 2.3 percent monthly and a gain of 3.49 percent year-over-year.
Agents report more sellers are dropping their asking price, more buyers are backing out of contracts and listings are taking longer to sell. New listings took 29 days to sell last month, up from a fast 19 days measured in June.
Higher interest rates this year have boosted borrowing costs and made mortgage payments less affordable than they were last year. And while home price gains are slowing, they haven’t declined in response to a higher cost of money.
“Interest rates are starting to affect affordability,” said Nicole Rueth, a lender with Fairview Mortgage and member of the markets trend committee.
Buyers face the dilemma of buying now to get ahead of future increases in mortgage rates or waiting for home prices to soften and more inventory to hit the market. Reuth said that indecision is contributing to a “stagnant” market.
Concerns are also mounting about whether rising interest rates and global trade disputes could usher in the next recession. Out of the last six recessions, four were accompanied by home price declines, although the 19-percent decline in the last recession was extreme, according to a separate report from Meyers Research.
Not too long after Tom Porth sold his business this year, he went to Colorado for a ski vacation. He had worked in different capacities for the Village Inn restaurant chain for four decades, ultimately owning nine restaurants, and he was eager for retirement.
After a trip to Steamboat Springs, Colo., Mr. Porth returned to his home in Waterloo, Iowa, intent on buying a mountainside condominium. So he did what anyone would do: He found a realtor in Steamboat who arranged for him to rent a condo in the place he thought he’d like.
“The price was more than what my Iowa blood was used to seeing, but it seemed to be what you’d pay for something of that caliber,” said Mr. Porth, 62.
But on that visit, his agent suggested a newer, amenity-filled development up the hill — One Steamboat Place. It offered select people the opportunity to stay in a condo before buying it. Those condos cost even more, so he picked the least expensive unit. Still, it was double what the other one cost.
In a real estate market that has been strong, fueled by stock market gains and low interest rates, such programs would seem unnecessary. If one person doesn’t want the condo another will. But a combination of changes to the tax code, which limit the deductions for mortgage interest and property taxes, rising interest rates and a general feeling that increases in home prices are set to cool are making some people anxious about the luxury real estate market.
“We’re a long way into the cycle,” said Christopher Mayer, co-director of the Paul Milstein Center for Real Estate at Columbia Business School. “It’s not surprising to see things slow down relative to where they were.” This sense of uncertainty is causing some buyers, particularly at the high end, to be more discerning. Expensive real estate is staying on the market longer.
“In markets where there is plenty of inventory, buyers are not afraid to take their time, do their research and ensure they feel they are making a good decision,” said Stephanie Anton, president of the Luxury Portfolio International, a luxury real estate firm. “People are not going to overpay or make an emotional decision.”
Sensing this, some high-end developers have begun building their marketing plans around a concept meant to get people past that uncertainty: test live in a house or condo before you buy it. And this concept is spreading not just in the second home market but to urban condominium developers.
“If you look at the real estate markets, it’s unbelievable that people tour homes five, six times and make a $10-million investment, but they’ve never stayed there,” said Greg Spencer, the chief executive officer for Timbers Resorts, which developed One Steamboat Place, where Mr. Porth stayed for his tryout. “We say, if we have available inventory, why not give people the opportunity to try it out?”
Dan Scott, president and general manager of The Whitetail Club, a development in McCall, Idaho, said the movement toward “try before you buy” is an outgrowth of the housing crash and recession 10 years ago, which left many buyers skittish about making a big investment too quickly.
“In the old days you did a real estate tour and drove people around for a few hours, but it didn’t give people a sense of what it was like to be there,” Mr. Scott said. “Coming out of the recession, what the buyer wanted has changed.”
Mr. Porth said the tryout got him hooked — and more comfortable with spending a lot more money than he’d planned. “I don’t think I’d do it any other way now,” he said. “I need to spend time in that resort but also that unit. By staying, you can learn to love something; you can also learn something you may not like.”
After staying in the lowest priced condo, which was about $2 million, he realized he didn’t want to buy that one — it overlooked the parking lot, not the slopes. But by that point he’d been taken in by the amenities and location so he asked to try one on the fifth floor — which cost 20 percent more than the already pricey base unit.
In April, he closed. Mr. Porth would not disclose the exact price of his home, but the average cost of a condominium in the development is $3 million to $3.5 million.
In some ways the hook would seem to be the home, but the real selling point is the experience.
Developers can sometimes get away with less than a full home. Clear Creek Tahoe is a mountain community on the Nevada side of Lake Tahoe with golf, water sports, skiing and hiking. It is also right next to California.
The marketing of the development started before the real estate crash and essentially went into hibernation until a new group took over in 2015. With the majority of the infrastructure built — but none of the homes — they needed a way to start selling half-acre to five-acre plots that were priced from $300,000 to $1.7 million.
So they built cottages with the same high-end finishes the eventual homes would have, but designed each one to evoke why people should buy there. One reflected the style of the designers of the golf course, another the boating on Lake Tahoe.
Lori Brooks and her husband, David, who live in San Diego, had been looking for a home around the lake because it ticked many of the boxes they wanted in what would eventually be a retirement home: near a college town and airport, good health care, plenty of outdoor activities.
In the spring, on their second visit to the Tahoe area, they stayed in one of the Clear Creek cottages — no charge — and ended up buying a lot. They’re planning on constructing a 4,500-square-foot home with both mountain and golf course views.
“We walked to our lot every night,” she said. “We envisioned what we were going to do.”
Others at the highest end are selling the escape from an uncertain world. Las Ventanas al Paraiso has been a successful resort in San Jose del Cabo, Mexico, for 20 years. It is now marketing the final 30 homes in the property, which range from $2.7 million to over $7 million.
“The question in the beginning was how do we sell them?” said Frederic Vidal, the managing director of the property who joined four years ago to run the property.
Unlike other program managers, he knew he couldn’t offer a free stay to look at a home. A lot of people knew the resort and he was concerned there would be guests simply looking for a free luxury stay for a few days.
So while he decided to charge for the stay, there was a caveat: the money would be refundable if the guest bought a house. The costs per night are $3,000 to $11,000 depending on the size of the home, and only those who are deemed serious buyers are eligible to stay.
The try before you buy system works with resorts because people are buying experiences as much or more than a place to sleep and eat. But buying your permanent residence is a bit different: it’s a practical purchase.
Letting your children try out bedrooms and play in the yard, while you test out the morning commute and figure out where you’d put the television would yield a lot of valuable information. Chances are, however, there is a family living in the house who would object — or other buyers who would be traipsing through at dinnertime.
A few apartment buildings are trying out a service that allows them to turn units they’re waiting to lease — without flooding the market with too much inventory — into temporary hotel rooms, and it has yielded people interested in living there full time.
Jason Fudin, co-founder and chief executive of WhyHotel, which creates these pop-up hotels, said the setup provides interim cash flow for the developers but also made a new building more attractive for people looking to move in.
“In a 300-unit building everything is designed for full occupancy,” Mr. Fudin said. “When you’re all alone in a big building something is off. It’s not like being in “Home Alone” — you’re in a zombie building.”
At their first project last year, The Bartlett in Arlington, Va., Mr. Fudin found that every 1,000 room stays yielded a tenant for the building, although there are limitations. He said the tryout concept worked better for rental apartments. “A condo is like a car — it has a never-lived-in premium,” he said.
Some experts say the try before you buy concept is perfect for a risky time — it allows potential homeowners the chance to be sure that they’re making the right choice.
While buying a house may be about your personality, Ms. Anton of Luxury Portfolio International said, “It’s also a financial decision.” In uncertain times, it may be best to wade carefully into that kind of big choice.