The Covid-19 Pandemic and subsequent dismantling of the US economy has residents wondering what the future of Denver Real Estate looks like. While Colorado has certainly not gone unscathed by the Coronavirus, we have clearly been more fortunate than States like Washington, Louisiana and New York. In fact, one of the advantages to living in Colorado is we are somewhat insulated from the coasts. We tend to be affected later and to a lesser degree when it comes to national events.
A Surprising Market
As we entered the economic shutdown with stay-at-home orders from our State government, there was an expectation, perhaps a sense, that Colorado real estate would crash. Realtors’ inability to show properties, a sudden uptick in withdrawn properties from the MLS and a new set of borrowing requirements from lenders all pointed to the demise of real estate sales. But surprisingly, although the overall numbers did drop, Denver remained firmly planted in a seller’s market. The pandemic and pull back in the economy didn’t suppress the continued demand from buyers. Sellers, either unwilling to list or unsure about timing to sell their property, added to the pent-up demand.
Comparing year-over-year, April 2020 numbers are down, but given the current circumstances it’s frankly surprising how high they actually are. While we braced for a new way of life, real estate transactions quietly continued.
The Real Estate Industry Adapts Quickly
Social distancing and new rules from the governor and County authorities turned the listing process for agents upside down. Open houses were suddenly a thing of the past. In-person showings were changed to virtual showings, or simply reviewing the property by looking at photos and then making an offer. The highly social activity of buying a home was replaced by online meetings, Facebook videos and 3-D virtual tours, yet homes continue to sell quickly.
Lenders Change Requirements and Drop Programs
Early in the economic shut down, lenders made quick changes to borrower requirements and loan programs. Credit score minimums for some institutions reportedly went to 680 and higher. With these new minimums in place, many home buyers suddenly found themselves unable to qualify for the loan they were already using on their purchase, or the loan program they were using no longer existed.
This isn’t to say lenders weren’t busy. In fact, big drops in interest rates brought a tidal wave of homeowners wanting to refinance. This kept lenders so busy that interest rates were held and not allowed to go any lower to temper the flow of incoming loans.
With the uptick in the lender business, title companies have also been busy with traditional purchase transactions and closing refinance loans. The traditional gathering at the closing table was gone in a heartbeat, and new ways were quickly devised to close loans in the midst of social distancing. Today, clients sign documents electronically as they are permitted, and the remaining documents are often signed In the title company’s parking lot, with the client never leaving their own vehicle.
What Does The Future Hold for Denver Real Estate?
There’s no denying that the Fallout from massive layoffs and shutting down businesses throughout Colorado are going to have a long-term effect. Yet as we entered into the pandemic our economy was barreling along as one of the best we’ve seen in history. Going into the crisis on a high note, our real estate market has continued to maintain its strength and provide hope for the future.
Denver continues to be short on home inventory for the current population, keeping us in a seller’s market. With low inventory, prices will be resilient and likely show no signs of coming down. The strength of the market moving forward will really depend on the length of time we remain in a stay-in-place mode.
Should the economy remain shuttered and the virus pose a continued threat, the market could take a negative turn. However, if residents are able to return to work and the virus recedes with the warmer weather, the pent-up demand in the real estate market should see home sales take off.