THE VIRUS AND REAL ESTATE…WHERE DO WE GO FROM HERE?
As we move slowly through the month of May and closer to Summer, I have been getting many questions from clients about how the Coronavirus has affected the local real estate market. “Have we shifted into a buyer’s market?”, “Will real estate recover from the current crisis?”, or “Can I even safely buy or sell a home right now?”, just to name a few. These questions are understandable. Just as we approached our Spring peak selling season, the virus struck and completely disrupted the economy in an unprecedented way. The stock market tumbled, people were forced to stay home to avoid exposure, and unemployment spiked to record highs. As real estate agents, we went from preparing for our busiest showing time of the year to being cloistered at home, trying to navigate our businesses to a fully virtual format while coping with constant updates from state officials. Although it is impossible to say what the full effect of the pandemic will be on real estate since it is ongoing, I am gingerly optimistic based on a few key details.
STAY-AT-HOME MOVES TO SAFER-AT-HOME
Much caution is warranted since there is still an active pandemic, but one reason for my optimism is the progress made recently to kickstart our local economy. Colorado moved from the “Stay-at-Home Order” to the “Safer-at-Home Order” as of April 27th. The order was later amended as recently as May 8th. This allowed many businesses to reopen that were previously shuttered and more workers to return to their jobs. The influx of workers has already begun to ease the record unemployment applications, and may bolster the start of a recovery to local Consumer Confidence as people have more income and more options of what to do with their time.
SHOWINGS MAKE A STRONG COMEBACK
It is still far from business as usual for real estate industry, but showing restrictions have begun to ease in many counties. Denver County is one of many areas currently allowing property showings if they conform to strict safety restrictions. Some of these include disinfecting homes in between each showing, requirements to wear masks, gloves, and shoe booties, and adhering to the 6 ft. social distancing guidelines as outlined by the CDC. Open houses are still off limits, but many have turned to virtual open houses or virtual showings to safely build engagement with prospective buyers.
We expected showings to recover quite dramatically sometime during the Summer or early Fall due to pent up demand, but almost the moment the showing restrictions lifted, showing traffic exploded. At least in terms of local real estate, this is a strong indicator of what economists refer to as a “V” shaped recovery, where the economy dips quickly into a trough and then shoots back up nearly as fast into a recovery. You can see a strong “V” pattern emerging in the trends graphs on the right for 2020. Below are more details broken down by price point:
Homes Under $300K
Showings have returned to last year’s rates! New listings doubled from numbers seen over the last few weeks. The number of under contract homes more than doubled, bringing it closer to last year’s levels.
Showings are above last year’s rates. New listings are up 2.5x from the last few weeks and there are plenty of homes to look at! The number of under contract homes more than doubled and is getting close to last year’s run rate.
Showings are above last year’s rates and tripled overnight!!! New listings also tripled from the last few weeks and there are plenty of homes to look at. The under contact count more than doubled, getting close to last year’s run rate.
Homes $900K and Over
Showings are up 70% from a lackluster performance last month. They are still below last year but improving. New listings about tripled from the last few weeks! There are many homes to look at. The under contract count more than doubled but is still below last year’s run rate.
LOW INVENTORY AND INTEREST RATES
Finally, another key factor in my optimism about the real estate market is the low housing inventory. Despite the unprecedented health crisis and slight drop in home prices, it is still a seller’s market. New construction has been anemic for years. Without enough new supply, active inventory is being driven down by strong demand, continuing to keep home prices strong until more supply can be added to the market. Given the broader scope of the current economy, I do not see that happening any time soon.
It is still a great time for many trade-up buyers to capitalize on low interest rates and move up to a higher price point, and for new buyers secure in their jobs to lock in low rates if they are able to. If everyone follows their local safety rules, there are still deals to be found in this market.
CONTACT ME TODAY!
For more on the local real estate market, give me a call today! At Your Castle Real Estate we have all the latest trends data to help you accurately price your home, navigate a home purchase, or even make an investment!