Cocktail ChattablesLIV Sotheby's
It would be impossible to discuss the current real estate market without recognizing the social and economic realizations the pandemic has created nationally, locally, and individually.
It is helpful to understand how real estate markets and home values have reacted to impactful events in recent history. For many of us, the Great Recession (2008-2011) may still feel fresh; yet that was a very different economic crisis. That recession was created by the housing market (over-building, loose lending regulations and homeowners using their homes as an ATM, etc.). This recession, however, is clearly a result of the pandemic! During this COVID-19 related recession, the housing market has been the dominant stabilizing force, fueled in part by interest rates, which most economists firmly believe will remain into the foreseeable future.
May and June were two of the strongest months ever… call it a delayed spring market. Homeownership remains the best opportunity most families may have to improve their net worth and long-term security. Denver and the nation have faced a housing shortage for several years as demand consistently outpaced available supply. Once we pass the worst of this crisis, hopefully within a year, housing demand will reemerge quickly. The recovery will not be a slow-growth cycle like what followed the 2008 recession.
Earlier this year provides a great illustration of such a forecast. From the end of January until COVID-19 became a reality in mid-March, housing demand was already stronger than at that point in 2019. After the “Stay-at-Home” order was lifted, these past three months have clearly demonstrated buyer demand to relocate, upgrade, downsize, modify lifestyle, or improve a living situation.
The market will remain active for at least the next couple of months in Denver, even with a potential second COVID-19 wave projected by fall. Desire and demand shall likely be increased (post vaccine) by early 2021, bringing more new listings to market meeting renewed demand. This past spring nearly 60% of sellers pulled out of the market; however, only about 30% of buyers postponed shopping.
According to a recent report by CBRE, a large national commercial firm, Denver, and Colorado as a whole, continue to climb the ranks as a top Tech destination. Colorado moved up to #7 for technology talent, swapping places with Boston in 2020 at #8 (San Francisco remains at #1).
The two main criteria used by CBRE to define top talent are 1) higher education attainment 2) actual preference by tech workers to live in that city. Speaking of educational attainment, Denver ranked #5 with 53.9% of people who are 25 years (or older) holding a bachelor’s degree or higher. That segues nicely into Denver’s millennial growth, increasing nearly 20% since 2013… adding to the strength of Denver’s housing market, both tenants and buyers.
Denver’s housing market is faring extremely well in spite of the pandemic. Showings of available properties are at all-time highs, yet listing inventory is not as high as it should be at this time of year. Demand is also fueled by affordability which is peaking due to the lowest interest rates… EVER! This sends a message to potential sellers; list your home now as it would be difficult to enjoy a better opportunity. To that point, more homes were placed under contract than were listed on the market in June.
Here are a few interesting observations, facts, and trends:
- 32 million adults were living with a parent or grandparent as of April 2020 (up 9.7% from April 2019).
- RISMEDIA reported every home sale adds over $88,000 to the economy through goods and services (both by vendors and professionals). This includes prep costs for placing a home on the market as well as improvements after purchase.
- The pandemic is shaping a trend toward “re-suburbanization”, trading the convenience of living downtown for more space in the suburbs. This trend may trend back within a couple years with baby boomers and the new generation.
- “McMansions” are making a comeback as more families create multi-generational households or need more space to work from home.
- Zillow economists are predicting interest rates between 2.5%-3% for 2021. We are currently approaching that level.
- And finally, I’d like to offer an old quote from somebody— “life is 10% what happens to you and 90% how you react to it.” Yes, we all have new challenges… and we get to choose how to deal with them. I hope many of you will seek the opportunities in real estate currently.
To learn more about your local real estate market or to create a plan for achieving your real estate goals this year, contact your LIV Sotheby’s International Realty broker or reach out to our team of real estate professionals by calling 303.893.3200 or visiting livsothebysrealty.com.