Sep 16, 2023 - Real Estate

Denver buyers don't want your fixer-upper

Illustration of two hammers forming an "X" shape.

Illustration: Maura Losch/Axios

In this housing market, Denver buyers aren't going to settle for homes requiring major renovations.

Why it matters: Homebuyers already hampered by gravity-defying prices and mortgage rates don't want to spring for someplace that looks like an HGTV "before" photo.

What's happening: With mortgage rates doubling in such a short time period, buyers' budgets have shrunk significantly, agent David DiPetro tells Axios.

  • When rates were at 3%, a buyer might have been looking at a $1 million price point. Now, with rates above 6%, their budget is closer to $750,000.
  • They're going to be pickier because their budget doesn't get them as much house as it did 18 months ago, DiPetro explains.

What they're saying: To get your house ready for market, Compass agent Kelly Moye recommends spending the bulk of your budget on the kitchen, baths and landscaping.

  • "If the kitchens and baths shine, people tend to look over other outdated features," Moye says.

Be smart: DiPetro has a few tips for how and where to invest your reno budget.

🏡 Revamp the exterior. Paint your house and do some light landscaping to get buyers in the door.

🚰 Update appliances. A full kitchen reno can cost a pretty penny ($30,000-$50,000). Instead, invest in modern appliances to win over buyers at a fraction of the cost.

💡Lighting. No one likes poor, yellow lighting. Replace your old bulbs with brighter LED lights.

The big picture: Self-identified fixer-uppers are typically selling for less, and more slowly, than expected, according to Zillow data shared with Axios.

  • Across the U.S., listings that mention the phrase — just 0.3% of sales in the first half of the year — sold at a 3.1% discount and took 3.2 days longer to sell relative to expectations, the data shows.
  • Listings pegged as "remodeled" or "renovated," which accounted for 24.1% of U.S. sales, sold at a 1.2% premium and 1.8 days faster than expected.

Zoom in: Listings that mention "fixer-upper" comprised 0.2% of Denver-area sales in the first half of 2023, per the Zillow data, while those advertised as "remodeled" or "renovated" made up 29.7%.

"Most homebuyers right now simply don't have enough money left over to invest in major repairs or remodeling," Redfin deputy chief economist Taylor Marr tells The Wall Street Journal.

Share of homes that go off-market within two weeks, by metro division
Data: Redfin; Note: Metro divisions are subdivisions of metropolitan areas; Chart: Axios Visuals

By the numbers: Roughly 51% of Denver-area homes in July were snapped up in two weeks or less, according to Redfin data shared with Axios.

Zoom out: Nationwide, around 41% of listings were marked pending, contingent or sold within that window, Redfin found.

State of play: Houses that stay on the market for more than a month are usually overpriced or in need of major work, according to Redfin's Taylor Marr.

  • Denver homes go off-market after a median of 12 days, compared to eight days a year ago, per the real estate brokerage.
  • This green-carpeted University Hills home is described as "great candidate for a remodel" or tear down. It's listed at $1.35 million and has been on the market for a whopping 410-plus days.
  • A $3 million home in Washington Park that's "ready for a creative transformation" has been on the market for more than 185 days.

Go deeper: Americans' homes are worth more than ever, but tapping into that value isn't easy

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