Our spring real estate season was shaping up to be another one for the books prior to the self-inflicted quarantine and government-mandated business shutdowns in response to COVID-19.
How so? For several reasons:
In March, the number of closed home sales increased by 12 percent from the previous month. The average days in the MLS for home listings dropped by 9.4 percent year over year to 29 days. Amazingly, the median days in MLS dropped by a whopping 40 percent to 6 days. Think about that! Half of the homes selling across our entire region were going under contract in 6 days or less! Homes were hitting the market and buyers were jumping on them even more quickly than the same time last year. Home sellers were doing even better year over year in terms of close-price-to- list-price ratios. The average ratio was 99.85 percent, or 0.51 percent better year over year. Sellers weren’t discounting as much from their list price – meaning, they were making more money! The year-to-date comparison statistics were showing positive trends overall as well.
So what does it mean?
Buyers who need to find a home may find themselves in more multiple offer situations because of the reduced inventory. That could lead to upward pressure on home prices. There are still plenty of buyers for each home on the market at the moment. Could that buyer demand in April decrease? Possibly, but it’ll really depend on area and price point. It’ll also depend on changes in government mandates about essential business activity.
Will homes in the luxury market suffer the most? Most likely. Because of the current stock market reaction and subsequent downturn, some home shoppers in this market may be reluctant to make big moves. That could lead to homes staying on the market for much longer. I don’t expect prices to drop, I just think there will be fewer sales.
Do I expect a flood of foreclosures to hit the market in the next few months that creates a spike in supply, so much so that it outweighs demand in our local market? No, I don’t.
Do I think we’ll see a change in the “mix” of homes selling that it appears that the average price in the Denver metro and front range is dropping? Yes, I do think we can expect it. If less homes on the upper end of the spectrum are selling while more homes in the lower end are selling, then yes, the average price will look like it’s shifting downward. Even though each home’s value across all price ranges could still be increasing individually, the change in the “mix” of homes that actually close could be significant enough to show a change or decrease in the average price across the metro area and front range. Look for those headlines over the next two months and then reach out to me to discuss!
While remaining sensitive to the very real danger of COVID-19 to our friends, family, and ourselves, I am optimistic about the outlook for our local economy and continued strength of our real estate market once this passes. It’s helpful for me to remember that we brought the current economic slump on ourselves. We shut ourselves down and forced ourselves into isolation. We shut our own businesses down which forced employers to lay-off employees. We’re hampering our own consumer spending (which makes up 70% of our GDP). As a result we’re going to see unemployment spike and businesses do what it takes to survive the current situation. By definition, we may even see a recession in the short term (two consecutive quarters of declining GDP growth). Once the COVID crisis passes, I believe our economy will bounce back and will get back to a sense of normal.
If you are planning to continue with your home listing or home-buying plans in April, please be sure to take the proper precautions. The situation in Colorado continues to develop daily so procedures and essential business operations will continue to adjust accordingly. Reach out to me about those specifics, if you have questions.
Please remember to take care of yourself and your family while we all do our part to help stop the spread of COVID-19. Stay healthy and safe out there!
Be on the lookout for more real estate updates from my team and I as we continue to navigate these unusual times together. Thanks for reading!