Minnesota's Californian

On Being a Tribute in the Real Estate Hunger Games

It’s been a little while since my last On the Drift post because I’ve been playing Katniss in the real-life real estate Hunger Games. Folks, let me tell you, if you’re looking to move from anywhere in the U.S. to anywhere else in the U.S., you must engage in a bloody battle just to get a comfortable place to hang your hat.

I’ve committed to starting my new job with Hormel on March 1. I thought that would give me plenty of time to sell my house in Denver and find the right house in Austin. Turns out it is, but only because I’ve been working it like Britney says to do.

As Denverites know, housing within the greater metro area is scarce and expensive. We’ve experienced an influx of Californians in the past 20 years. About one of every seven new Coloradoans in the past ten years alone has come from California, according to the Internal Revenue Service. (Texas and Florida are right behind.) The Californians sell their high-priced homes, put all that cash into their EV frunks, drive east over the Continental Divide and outbid every local trying to buy a half-way decent house. In Denver, more than 65% of homes sell over their asking price, sometimes by more than six figures. Often the offers are made with cold, hard cash instead of mortgage financing. Sellers find these offers hard to refuse because they don’t have to worry about their house appraising lower than the buyer’s inflated offer price. Those “appraisal gaps” cause lenders to balk, and deals then tank if the buyer doesn’t want to make up the difference by paying more out of their own pockets. So sellers pick the cash offers and home values go up and up. Locals without piles of cash can’t compete.

Denver’s housing market was as hot as that picture of Katniss this past spring. I had actually considered putting my home up for sale in the spring just to cash out, sit on a mountain of money and then figure out what’s next. A friend of mine did just that with her beautiful older brick home in the Mayfair neighborhood. She’ll soon be settling into a chic, low-maintenance townhome just a block or two away from Sloan’s Lake.

I couldn’t get my act together fast enough to ride that wave, and the market slowed down a bit this winter. But that just means the inventory of existing houses for sale is now at an all-time low. After the job offer came in, I did a search for the number of active homes for sale in the greater Virginia Village area of southeast Denver, which includes my smaller neighborhood of Lynwood. Three. Only three houses for sale. Average time from list to contract for houses that were already pending: 14 days. I called my agent – let’s get this show on the road. Bring on the Californians.

I spent the past couple of weeks getting my house decluttered and spiffed up to sell. (See my last post, “Self-Infliction.”) At the same time, I was working with a real estate agent in Austin to try to find a house to buy there. He had given me a tour of Austin, and I had my eye on some neighborhoods and even some houses that excited me.

Like this one:

Or this one:

Just kidding on that last one. That’s the Frank Lloyd Wright-designed Elam House in Austin. Not sure I could afford that exquisite example of Usonian FLW architecture, even if I were from California.

But that other mid-century modern beaut was listed for rent on Realtor.com. I asked my Austin agent to inquire on whether it was still available or whether the owner would be willing to sell. He called. I texted and emailed the link from the website. All I got back was a terse “Nope.” It wasn’t available either way.

So I sifted through the available listings in Austin. There were 23 total. Only 23 in a town of 25,000. That’s the lowest number my agent had ever seen in his 30+ years in the industry. Folks, this low inventory thing isn’t limited to Denver. At the end of 2021, the U.S. was short between 5.5 million and 6.8 million housing units, according to the National Association of Realtors. It’s a problem everywhere.

And of those 23 listings, my choices were either too-big 6000 square feet wall-to-wall carpeted manses last updated in 1987 or too-small 900 square feet salt boxes with peeling wallpaper and rust-stained sinks. It was beginning to look like my best shot at housing in Austin was the Planters NUTMOBILE® parked behind Hormel’s corporate headquarters:

At least the commute would be convenient.

I expanded the search to within a one-hour drive from Austin. That put me in the realm of Albert Lea, Owatonna, Rochester, and even Clear Lake, Iowa. I set my search settings to send me daily email alerts. This one on the southwest side of Rochester popped up last Thursday Jan. 20th:

A 4 bedroom, 3 bath mid-century modern with a two-car garage and a fenced in back yard in a lovely wooded neighborhood with similar MCM houses. With the finished basement, a total of 2,800 square feet. I was like:

I put on my all-leather superhero outfit and strapped on the quiver and bow. It was time to become Katniss from California. Within 3 minutes of receiving the email, I called the agent in Austin, who referred me to another agent in Rochester who knew that city much better than him. She got me scheduled for a showing from 11 to 11:30 a.m. Friday. She said the showing slots were already booking up fast and that the listing was underpriced at $315,000. It would be a hot property. I dispatched my mother and her friend Diane, who live about 2 and a half hours away from Rochester, to go take a look. We did a FaceTime tour and they reported that this was a perfect “Holli house.” Post-and-beam construction with a vaulted tongue-and-groove ceiling, gorgeous original wood floors and tall, almost floor-to-ceiling windows. (Gee, Holli, got a type?)

There were more showings Saturday morning, and then the buyers were going to look at all offers Saturday afternoon and pick a winner. The agent and I crafted the offer: full asking price with a $1,000 escalation clause with no cap. Inspection waived. Appraisal gap covered. Ten grand for earnest money. I couldn’t offer cash because my Denver house was not yet sold or even on the market. I scraped together every penny of savings and emptied out the HELOC to show proof of funds for 20% down financing with a pre-approval letter. No way was I going to make this offer contingent on the sale of my Denver home. The offer would be cast aside immediately.

As a lawyer, I cringed. What kind of negotiator am I? I was giving away almost every right I had to back out of the sale if the house was a lemon. I hadn’t even laid eyes on it in person yet!

But it worked. Out of 17 offers — seventeen! — the sellers liked mine the best but wanted me to give just a little more. My offer and one other had escalated to a price of $369,500. While their escalation amount was $2000 over the next highest offer and mine was only $1,000, the sellers liked mine better because I had agreed to more earnest money up front. If I’d further agree to make the earnest money non-refundable no matter what, we’d have a deal. “No matter what” meant that I couldn’t back out if I learned the foundation was supported by rotting bamboo sticks. “No matter what” meant that if my lender didn’t approve my financing, I’d lose both the house and the $10,000 and be back at square one. It took half a second to say, “Sure!”

It’s kill or be killed, tributes. The house is mine. I am Minnesota’s Californian.

Next up: Book two of the real estate Hunger Games saga. Tributes tussle over Holli’s little house.