THE LOST CONTRACTS, A RELATIVE RECOVERY
There is no denying the pandemic shutdown resulted in many lost home sales. Some sellers and buyers scrapped their plans altogether, while others put them on hold. Can these “lost” home sales be found again? The strength of the recovery will largely depend on price point.
Despite a quick rebound in traffic once showings resumed, the Denver metro sold count was down around 24% year-over-year between March and June. For this same period, there were 4,820 fewer closings than in 2019.
One encouraging detail is that more contracts have been written since showings resumed than had been written in the same timeframe last year. This suggests the market will recover at least some of the lost sales from the spring as these contracts finalize.
The recovered home sales have not affected each price point proportionately. Of the new contracts aforementioned, around 49% of them fall into the $0-300K and $300-500K price segments, despite these segments having together made up around 67% of the overall market share back in 2019.
ENTRY LEVEL HOMES — TOUGH TIMES AND LOW INVENTORY
Inventory is still at historic lows relative to the past 40 years. Developers have not been as active in 2020. Strong demand for affordable housing has not gone anywhere. Further compounding these issues, every level of government is bound to have budget shortfalls due to COVID, which may set back affordable housing measures. For entry-level buyers lucky enough to have held their current jobs through the crisis, it is highly competitive. By choosing a great agent, acting quickly, writing strong offers, and giving sellers plenty of leeway, there are still homes to be found if you can be patient.
MID-RANGE HOMES — HOMES PRICED $500-900K LEAD THE RECOVERY
The $500-900K price point is leading the recovery of the local real estate market. This price segment managed to recover better than any other, with around 43% of the recovered contracts falling into this price point despite making up only 27% of the overall market share back in 2019. This trend is largely driven by a continuing surge of demand for lower-priced homes that are lacking inventory, coupled with a greater variety of higher-priced inventory. Many trade-up buyers are cashing in on the equity they have been sitting on and using it to trade-up to larger and more expensive homes. For many trade-up buyers, recent events have been advantageous to their home buying goals. The record low-interest rates are providing them significantly more buying power!
LUXURY HOMES — THEY ARE JUST THAT, A LUXURY
Homes from $900K and up have been slower to recover than the lower price segments. These homes tend to sit on the market longer since there is a smaller customer base that can afford them. During recession years, any luxury product tends to suffer since everyone tightens their belts. The bottom line is that people do not need to move into a $900K+ home… they want to. Considering recent uncertainty in the stock market and a typically more volatile market during election years, many of these buyers are content to wait out the pandemic until things are calmer.
Feel free to come talk to us if you need any assistance navigating this unprecedented real estate market.