At this point, most everyone realizes how the impact of the pandemic is affecting our society and us individually. Directly and/or indirectly, each of us experience and establish new habits, perceptions, and lifestyle adjustments. The economic impacts are still being discovered as we learn new realities of how to adapt, modify, and improve the world we live in. An old friend by the name of Chris Vuletich would often say, “we’re just here for the visit, so let’s enjoy it!” With that thought in mind, it has become easier to understand why the real estate market is one of the few positive, and compelling, elements of our economy. Whether people have needed to reevaluate their housing situation or have chosen to improve their current living situation, COVID-19 has opened the door to seeing some new realities. For many, the need for creating a true home-office (or two) is becoming a necessity. Others are finding the need to better accommodate parents or older children in a larger home. Some of the reasons may be due to financial considerations, family lifestyle changes, or that people genuinely just want to enjoy and appreciate their home environment better. Several other preferences that have become more important include better and more inviting outdoor spaces to spend time, improved spaces to watch TV and movies, and a designated room (or flex-space) that is adaptable for exercising.
The pandemic is also, in part, responsible for the U.S.’ homeownership rate visibly improving. Essentially, this rate is the percentage of people who own their home as opposed to renting. By the end of the second quarter, 2020, the homeownership rate increased to 67.9%, up from 65.3% in Q1. In 2005, the rate hit its all-time high of 69.1%, prior to the “Great Recession” (2008-2011). That led to the rate falling to 63%, with foreclosures and short sales. The recent increase in homeownership was primarily seen by millennials in their 30’s. There is a demographic demand shift away from renting to owning a home, driven by millennials and accelerated by low interest rates.
Based on the last recession, it is reasonable to ask whether another wave of foreclosures might occur during this COVID-19-caused recession? That answer clearly falls under “highly improbable.” Foreclosures are a two-step event. It requires both an adverse economic state of conditions, and an insufficient level of home equity in properties. Today, Denver homeowners benefit from eight solid years of values increasing from 7.5% to 10.5% annually. Thus, Metro Denver homeowners can tap into their home’s equity through either a mortgage refinance, or through a sale. Currently, even through this pandemic, Metro Denver values are rising at a rate over 7%, from this time last year.
The Colorado Association of Realtors reported 10,771 single family homes went under contract in July, a one-month record and 21% higher than July 2019. In Summit County, 387 homes were placed under contract in July, more than eclipsing the 210 under contracts from July 2019. Most every Colorado mountain resort community from Vail to Telluride, and Breckenridge to Crested Butte, are experiencing record breaking interest and sales. Much of the interest comes from the Front Range, however contracts are coming from Texas, Oklahoma, and California, with surprising interest from Chicago, Florida, and the East coast. It’s obvious that Denver and much of the country are enjoying a good to great real estate market. It may be great for the sellers yet remains a bit frustrating for buyers who view every new listing when it hits the market. In a strong market with limited inventory, this behavior can be the single largest obstacle for buyers to overcome in purchasing a home. If you have not been successful competing against multiple offers or haven’t found the right home; then play the game differently. Start looking at homes that have been on the market for a while. Buyers (and brokers) often assume something is wrong when homes haven’t sold quickly. There are several reasons why, including just being listed too high. Additionally, sellers with longer market times are more likely to cut a better deal. The irony is that when buyers only follow new listings, they miss some great available homes with potential improved pricing, (not to mention, less competition).
To explore the best real estate opportunities on such an important large investment, an experienced broker will help you make and save the most money. For all of your real estate needs, contact LIV Sotheby’s International Realty by calling 303.893.3200 or by visiting livsothebysrealty.com.