Most analysts from the major financial institutions agree that the recovery of our domestic economy will be V-shaped. However, no one has a crystal ball to tell us how quickly we will be able to get back to normal life, on a national level or here in Colorado. We will have to see how the situation unfolds and respond as best we can to a “new normal”.
Global real estate tech strategist and scholar-in-residence at the University of Colorado, Boulder Mike DelPrete reported Tuesday of this week that the latest U.S market data indicates that the dip and recovery in real estate will actually have a checkmark shape. There will be an immediate drop, 3-4 weeks at the bottom, and a slow recovery period. This week’s local Boulder and Broomfield County market data implies we could have indeed already hit bottom.
For the week ending April 22nd, as expected new listings were down from prior weeks and down almost 68% compared to the same week last year. This could very well be the bottom, or at least within a week or so. Stay at home orders in Colorado will expire this Sunday, April 26th and in-person showings can resume (with some restrictions). This could prompt those who intend to sell their homes this spring to take those positive steps towards listing, or put previously listed and withdrawn homes back on the market.
Signs that our market is growing weary of the stay-at-home restrictions, and that we could be at the bottom of that check mark curve, are seen in the under contract and pending transactions, down over 58%.
Of the new properties listed in the last week, almost 44% of those in Boulder and Broomfield Counties were in the $300,000- $599,999 range. This is lower than in previous weeks indicating that average sales prices may be on the rise. Over 50% of the properties sold last week in the two counties were in Boulder and Longmont.
We’ve carefully watched the sell-through rate, the ratio of under contract and pending properties to the number of new listings, irrespective of the volume of activity taking place. This indicates how active our market; the bigger the % the stronger and more robust the market is. The sell-through rate went from 83.5% April 8-15 to over 120% this past week, indicating our market is incredible active and buyers are snapping up available listings at a much more rapid rate than normal.
We are also tracking back four weeks to see how relevant metrics change the longer the stay at home orders continue. New listings have steadily but evenly declined, but the picture could look very different in 2 weeks when some business activities will have resumed. The fact that the under contract and sold units have stayed fairly stable week to week indicate our Colorado economy and our local real estate market are still strong despite the challenging economic circumstances of COVID19.
According to Marci Rossell, chief economist for Leading Real Estate Companies of the World®, the comeback of the real estate sector will depend in large part on consumer confidence and access to credit. But there are a lot of positive indicators – 37% of all homes are owned free and clear. 27% of mortgage holders have equity in their homes of 50% or more. Going into the COVID crisis many major markets had less than 3 months of housing inventory, whereas in 2009 that metric was at 13 months. The difference between now and 2008-2009 is that housing will lead us OUT of this downturn, as opposed to leading us into it.