Clearly, there is nothing good about living through a pandemic. Every person is touched in multiple ways and we are all looking for answers, timing, expectations, and avenues of support. There may not be many definitive answers for some time, however the better we adjust to these new realities, the easier it will be to move forward. My father taught me early on that it’s not the problem, it’s how you choose to deal with it!
It has been inspiring to see the humanity, innovation, and persistence that is helping us push ahead through the unknown. I believe there can be lasting positive results stemming from this very difficult period. In the world of real estate, brokers are having to adapt and develop new skills and improved attitudes to market listings and appropriately show property. There are newly created client questions and increased buyer screenings. In general, it seems buyers and sellers are willing to comply with reasonable safety requests and understand the need for caution on both sides.
The active buyers and sellers in today’s market are genuinely interested in making changes, whether in the form of a new home environment or a change of lifestyle. Sellers are willing to do a better job of preparing their home for showings, hopefully receiving fair notice prior to the appointment, and buyers are ready to take appropriate sanitary measures by donning masks, gloves, and possibly booties. We ask sellers to turn on lights and keep all doors open, making it feasible for buyers not to touch doorknobs or light switches, while many brokers help by supplying masks, gloves, and hand sanitizer.
The current crisis is very different from the Great Recession of 10 years ago. Since then, loans have not been handed to any borrower with a pulse, and houses are not under water (loan balances at, or over the home’s value). Borrowers have demonstrated a good credit history, minimizing the domino effect that foreclosures had on the market. The Federal government is helping homeowners struggling to make their payments with the right of forbearance, which was not an option a decade ago. This right of forbearance allows homeowners up to 180 days to postpone payments without late fees, penalties, or additional interest, with an additional 180-day option to do that again. Forbearance is a very effective measure to not allow a spike in foreclosures. As of May
1st, 2020, more than 3.8 million homeowners were enrolled in forbearance plans, which is 7.3% of all mortgages. This plan will significantly diminish potential distressed sales in the future. Typically, once most borrowers fall behind, they are not likely to catch back up. We no longer have the millions of high loan-to-value adjustable subprime loans in the market and most owners have had a healthy buildup of home equity heading into the pandemic.
The heart of the homebuying season has shifted from the spring to early summer and into the fall months. Since the Colorado stay-at-home order was lifted on April 27th, property showings have spiked, clearly demonstrating pent-up demand among buyers. From mid-March through April, showings were basically nonexistent. The first day of showings kicked off on Monday, April 27th, with 3,441 showings in all price ranges throughout the seven-county Metro Denver area. Since then, daily showings have ranged from at least 2,000 per day, up to about 4,600 per day, with the Saturday before Mother’s Day (May 9), topping 7,600 showings.
The surprising factor is that showings have become so strong despite the lowest level of available for sale homes in decades. Current sellers are enjoying that benefit while buyers are feeling the love of the cheapest money (rates) since the 1930s.
The chief economist for the National Association of Realtors, Lawrence Yun stated, “more temporary interruptions to home sales should be expected, though home prices may still likely rise.” Most real estate experts are unable to suggest if, or how values may go higher in the next couple years, however with low inventory, low mortgage rates, and continued demand projected for many years, it is highly doubtful prices will go lower.
In the coming months, the actual number of home sales may ebb and flow with potential COVID-19 numbers. However, don’t mistake the lack of inventory as a sign of decreased buyer demand.
Our world is different and still changing. People are learning about new preferences while establishing different lifestyle needs. Many are seeking, if not requiring more viable options as we work our way through a massive social and living experiment. We can still enjoy 300 days of Colorado sunshine and I believe fresh opportunities can and will be found by many of us.
For all your real estate needs, contact LIV Sotheby’s International Realty by calling 303.893.3200 or by visiting livsothebysrealty.com.