What is COVID doing to the Northern Colorado real estate market?
Because we’re fielding so many questions about what COVID is doing to the Northern Colorado real estate market we have moved to weekly market reports instead of our usual monthly reports.
We’re still seeing a surprising amount of activity, still seeing multiple offers on some homes, still seeing correctly priced homes sell in 2-3 days. However, it seems like there are two camps of people, 1st camp are going under contract and closing on homes without much concern, thinking that this will blow over soon and the market won’t take much of a hit and are taking advantage of interest rates. 2nd camp is worried that the market will take a big hit and are sitting on the sidelines waiting to see what will happen. Some are also waiting for their stock portfolio to come back up a bit before they buy. Lots of sellers have reached out with questions about whether they should list their home now or wait until summer.
Below is my prediction on the Northern Colorado housing market will do in the coming months, please understand, this is an educated guess and I could be wrong. It would be safer for me to say, “I don’t know, let’s wait and see.” But when people are relying on you to help them make housing decisions, “I don’t know” doesn’t do them much good. They want to know what you think.
Although COVID has been crushing our economy, understand that our real estate market is starting this crisis from a place of incredible strength, low inventory levels, high demand, rapid appreciation, you know that story ad nauseam. The questions is, as we get deeper into this mess, how long can the strength of our market keep bucking this trend? Right now there are still enough buyers in the mix to be gobbling up inventory, but with significant oil and gas layoffs on top of all the other COVID job loss, our housing market will soften a bit, but I don’t think it will take the beating that people are envisioning. I think that COVID will cool the market, prices may flatline or perhaps drop a few percentage points instead of appreciating the typical 3-7% that we’ve been accustomed to seeing. Then, hopefully soon, the world will come back online and things will come back to life.
In the 2008 collapse, NoCo’s biggest median price drop was -3.6% and the real estate market fundamentals were terrible compared to what they are now. You’d look down the street and see every third home with a yard sign in it. There was a 14 month supply of homes on the market during that crisis. That means it took 14 months for the market to sell all of its available homes. Right now it takes only 2.5 months for our market to absorb the entirety of its inventory.
While other markets were battered in 08, Phoenix lost 60% of its median price during the same time period, comparatively, our market faired very well. Certainly, there was hardship and many people lost homes to foreclosure in NoCo, but for the most part, our prices were incredibly resilient. The reasons for this are many, but the quickest summary I can give is this, it’s particularly expensive to develop new home communities, property taxes are half the national average which is driving retirees and working-age people here in droves, people don’t have to pay for private schools, plus all the other stuff people already know: mountains, sunshine, beer, weed, happy people and on and on.
So, if you press me for a prediction as my clients have been doing, my opinion is that COVID will slow the market and prices will flatline or drop slightly, but, a big price correction is unlikely. But, if you’re concerned about the future and want to wait, please wait! We never want our clients to feel uneasy about their purchase or sale decisions. If you’re coming up against an expiring lease or your current home is closing and you need a temporary rental while the dust settles, we have furnished, month to month rentals available. Please reach out for a list of those rentals. Also, Airbnb, Vrbo’s are dead right now so you should be able to pick up some great prices!
Thanks for reading. We’re here to help if you need us!