Realtor Beth Baker Owens Discusses how Real Estate is Affected by the Coronavirus
Realtor Beth Baker Owens offers real estate advice during this time of COVID-19, the coronavirus.
"Just the other day, in life BC (Before the Coronavirus), a home buyer asked, "When will the bubble in Colorado real estate burst?" I responded, "There is no bubble. Colorado's economy is strong," said Beth.
Colorado unemployment was below 4%, and job growth was about 2.3%. Mortgage interest rates were low. Current home price increases were not fueled by an explosion of risky mortgages as before the Great Recession. The Denver Metro increases in home prices were caused by a limited supply of homes facing increasing demand by an increasing number of buyers. Beth went on to say, "We can expect a moderate recession from normal cycles, but not a great one, unless there was an international economic calamity. Little did I know the outbreak of COVID-19, an international pandemic was headed our way and quickly!"
What does the pandemic portend for Colorado's economy and real estate in 2020? In short, the recession will arrive in Colorado earlier than expected. Just how intense the recession will be is unclear. We don't know enough about how this pandemic will proceed.
The National Association of Realtors published a survey on March 12 in the Realtor Magazine that states, "44% of real estate pros surveyed in the state of Washington and 34% in California reported changes in home tours. The two states currently have the highest number of reported cases of coronavirus in the US."
The showing changes indicated in the survey include fewer open houses, buyers sanitizing hands when entering, sellers requiring footies, or no shoes. In the spirit of keeping on with business, one Aurora, Colorado Realtor, has a baggie with latex gloves and alcohol wipes for his buyer tours. Another Realtor is traveling in separate cars and only seeing homes her buyer is seriously considering after their first on-line photo tour. Some buyers are requesting virtual video tours by their agent or the seller.
Sellers will have fewer showings, as some buyers wait the pandemic out, a decrease noted by 21% of the California and 19% of the Washington Realtors surveyed by NAR. From the NAR survey referenced above, Lawrence Yun, NAR's chief economist states, "…It is too early to assess the likely impact as to whether lower interest rates can overcome the economic and health anxieties." Days on market may increase if the voluntary quarantine is held strongly by the buying public. A Denver agent said his new listing had several showings last weekend, received three offers, and is under contract for $10,000 above asking. This is not unusual for the Denver Metro area. If this pandemic lasts a few quarters, we could see lower demand and supply and a more balanced market for the buyers still purchasing. There will be some logistics and hurdles to manage due to social distancing, including delays in recording sales when county offices are minimally staffed.
Talking with current sellers in Centennial, Aurora, and Denver, the combination of having to work at home with school-age children present and a fear of strangers bringing disease into their home is causing them extra stress. Some sellers are considering withdrawing their homes off the market for a while. Potential sellers who are normally gearing up to put their homes on the market in March for warm weather sales may wait the pandemic out, too. What could be the effect of decreased inventory? Fewer listings cause lower supply and would result in fewer closings. Lower supply might just keep supply and demand in a parallel decrease. This is what we have seen every fall and winter-lower strong demand by buyers for the smaller supply offered by sellers steadying prices and preventing large seasonal drops. Thus, Colorado's Front Range has had a seller's marked year-round for years how changes in supply and demand balance out will affect price.
An extended pandemic would affect unemployment and could increase foreclosure filings. After the pandemic, low-interest rates and pent-up demand could burst on the scene, driving demand up and increasing prices again. When this will happen is uncertain. Meanwhile, resourceful Coloradoans are finding alternative ways to meet and continue activities they need and love for work and play. Businesses and community groups are experimenting with on-line meetings, like Zoom. All told, if we can keep the death tolls down and minimize the pandemic's ability to overwhelm health services for the seriously ill, the rest of us will adapt and find some additional ways to interact and work. People will still buy and sell homes. When social distancing is no longer needed, we'll be delighted to leave the house and regain our freedom to assemble, sell, shop, and buy.
About Beth Baker Owens, Your Castle Real Estate
Beth Baker Owens is a Broker Associate with over twenty years of experience. As a Senior Real Estate Specialist, she has extra training in working with seniors. She has facilitated real estate transactions for hundreds of clients across the Colorado Front Range. Owens has been awarded the Denver Five Star Professional Award for Realtors several years. Your Castle Real Estate is located at 2755 S. Locust Street, Suite 150, Denver, CO 80222. For more information, please call (303) 550-2941 or visit https://HomesByBethOwens.com. You may reach her by email at BethBakerOwens@yourcastle.org.