The new year started off strong with a hot seller’s market. In the last four weeks a sudden economic shift has everyone wondering where we go from here. Fast changes have come as the Covid-19 crisis transforms the way we do things. New obstacles stand in our way, while our innovations keep our personal and business lives moving forward.
The virus has brought a tremendous amount of change and uncertainty. Just a month ago we were in a hot real estate market. With the world turning upside-down, what happens to the market from here?
Still a Hot Market
As Governor Polis shut down businesses throughout Colorado, real estate was declared an essential service. Although a lot of transactions were already in process when the changes started, the real estate market has in no way dried up. Buyers are still buying and sellers are still selling, to a point that we are very likely still in a seller’s market. Full price offers, and even multiple offers over asking price, are by no means out of the ordinary right now.
It is certainly more difficult to list a property, have showings and hold open houses. But through policy and procedure changes, plus the adaptation of video technology, homes continue to go on the market and under contract. This isn’t to say the number of transactions is the same as we saw before the crisis, but the market is active, nonetheless.
Lenders Tighten Qualifications
As the economy suddenly slammed on the brakes, lenders quickly began making policy changes, raising qualification requirements and dropping some loan programs altogether. These changes took many potential buyers out of the market, both now and in for the foreseeable future. Unfortunately for some buyers already in the middle of a purchase, they found themselves with a loan they were no longer qualified for, and subsequently unable to complete the deal.
While lenders were tightening qualification standards, which included higher credit score requirements, rumors quickly spread that FHA loans were no longer available. The rumors are not true. Buyer’s need to be better qualified, but the loans are still available. In fact, with the continuation of the ultra-low interest rates, lenders are quite busy with purchases and re-finance loans.
Title Companies Find New Ways
The culmination of a home sale is meeting at the closing table to sign the final documents. With social distancing in place, the traditional closing process had to be quickly revised to minimize health concerns. Title companies across the board came up with a variety of ways to get the documents signed with minimal physical interaction.
In Colorado, people needing to have a document notarized must appear personally before the notary public. This means face to face signatures at closing. Remote notarizations allow documents to be signed digitally and notarized through video technology, but this form of notarization is not currently allowed in our state. Through the need to keep business moving forward, Governor Polis approved its usage for a 30-day period during this crisis.
With the stay-in-place orders and social distancing, we are coming up with innovative ways to accomplish tasks. A bill allowing remote notarization was introduced to the Colorado legislature in 2019, but failed. With title companies now actively using the system, it is likely this will soon become an approved form of notarization in Colorado.
The crystal ball is definitely fuzzy as we sit in the middle of this health care crisis. Although the outlook is uncertain, the continued activity in Denver real estate is a very good sign that the market will come back quickly. As we head into April, May and June, what should be the busy season in real estate, it is likely the high point of the season will be pushed further into the summer.
As counterintuitive as it may seem, it is still a good time to buy and sell real estate. According to RE Colorado statistics, in the last three days 560 new properties came on the market, with 566 properties going under contract. Properties are selling quickly. This is perhaps a signal that once we have passed the health crisis and are getting back to business as usual, the Denver real estate market will have a big rebound.