Our New Normal
COVID-19 has sent our market into uncharted territory. Since the start of increased COVID-19 precautions a few weeks ago, we have seen a significant decrease in showings in the Denver Metro area. This is in part due to buyers, sellers, and agents alike staying home to help slow the spread of the virus. With individuals and families facing financial hardships, we are also seeing buyers have to put their home-buying process on hold or even terminate on homes that were under contract due to loss of job or income.
Many sellers are also pausing all business until this subsides in the hope of slowing the spread, but also out of concern that showings will decrease given the situation at hand.
Governor Polis has issued “Stay at Home” orders for all non-essential businesses in the State of Colorado. For those of you who either have to buy or sell immediately, all real estate professionals have been deemed “essential” and are allowed to continue operating business while maintaining COVID-19 precautions.
There are many new guidelines being implemented by companies to ensure the buying and selling process can keep moving forward while also maintaining social distancing. Fannie Mae and Freddie Mac have issued new temporary appraisal requirements, allowing for desktop or drive-by appraisals. Many title companies are also implementing ways to close at home and electronically, or even “drive up” closings where there’s no need to get out of your car.
A Light at the End of the Tunnel
The federal reserve learned a hard lesson back in 2008, and that was the need to act quickly during times like this. Luckily, they did this time. The federal reserve is currently throwing everything they have to combat this. They have dropped the federal rate to 0, added another $700 billion in purchases, and have announced that they are going limitless. This means they will spend as much as it takes to keep businesses afloat. However, the most important factor is the containment of the virus. The sooner that happens, the sooner the economy can begin to recover and all of society can return to normal.
While we certainly don’t have a crystal ball, through all of this the Denver real estate market seems to remain strong. Many sellers are still receiving multiple offers, buyers are still actively searching, and Denver still has incredibly low inventory. These factors, alongside incredibly low rates, are still pushing Denver’s market forward.
What You Can Do
If you have to buy or sell due to personal circumstances (death, divorce, finances, etc.), if you are a renter who has received notice to vacate, if you have already bought a home and need to sell your current home, or if you have already sold your home and need to purchase your next home, you are still able to move forward with your buying or selling plans. Please feel free to reach out to any Love Your Hood broker to discuss your buying or selling needs and how to best navigate them at this time.
And of course, please stay home, and abide by government-issued precautions if you must leave your home.
If you or someone you know is struggling financially during this time and own a home, it is possible you have equity in your home that you could tap into. Talk to your financial advisor, lender and realtor about your options to refinance, take out a HELOC, or to sell if you need to. If you are having trouble making payments, talk to your mortgagee about payment forbearance as soon as possible.
Rest assured, Love Your Hood is taking COVID-19 precautions very seriously. Our heart goes out to all of the individuals and families who have been personally affected by this. At Love Your Hood, we truly love our neighborhood and those within it. If there is any way that we can support you or someone you know during this time, please reach out. We are happy to help.
All the best,
Your neighbors at Love Your Hood
Let’s address the elephant in the real-estate-market-room: the Federal Reserve dropped interest rates to zero.
So… What does that mean?
The reason the Fed has dropped rates to zero is to support the economy during the nation’s current self-quarantine. It’s looking like COVID-19 is not going away anytime soon, and the economy is feeling that impact in several ways.
With everyone holed up to avoid the virus, consumer spending is down. Making up 70% of the GDP, consumer spending’s dip is negatively affecting industries such as travel, entertainment, hospitality, and dining. This loss of business may lead to the laying off of workers in those industries, in turn creating a further lack of spending. Last week, we shifted from a bull market to a bear market, meaning stock markets are down at least 20% from recent highs. Investors are converting to cash and to other, safer investments due to this consumer spending concern.
The drop to zero is also to provide easier access to business and personal borrowing to weather this financial storm. It will provide businesses the opportunity to acquire short-term loans to help maintain payroll, keep employees, and keep doors open.
It’s important to note that mortgage interest rates are not necessarily directly correlated with the Fed’s rates. While mortgage rates are still at an all-time low, this doesn’t mean they will continue decreasing (however, this is still possible).
The good news in this is that the housing market remains strong. We ended February with a supply of 4,835 homes on the market (attached and detached). To add context to this, the record high for February was back in 2006, where we ended with 25,484 active homes on the market, while heading into a recession! So, demand is still high, and supply is still very low.
The buyer side of the market continues to be competitive, often with multiple offers over list price. With COVID-19 spreading, we anticipate a buyer slowdown as buyers avoid public places, like open house tours. However, this also presents an opportunity to continue (or begin) your home search in a less competitive environment, at least temporarily. Once the virus begins to stabilize and financial markets start to recover, you can bet it will be a mad dash to start touring listings.
Sellers remain in the power seat in this market in almost all price points — this is with the exception of homes over one million, where buyers are able to take back the process a bit more.
So, with the safety of our clients and our employees as our priority at this time, all Love Your Hood Brokers will be taking the recommended precautions against COVID-19. If anyone at Love Your Hood becomes sick, you can rest easy knowing they will be home, and another one of our amazing (and healthy!) team members will assist you with any property tours. We are also available to do virtual video tours of properties for you while you stay safely at home — please reach out to us to schedule one.
Here are the precautionary measures we will be taking to ensure that your home buying and/or selling journey is not affected:
- We will carry disinfectant wipes to clean all surface areas — particularly lockboxes, keys, and doorknobs.
- We will ask you to please refrain from touching any surfaces when touring homes.
- If you’re showing signs of illness, please let us know. We can do a video tour on any available home.
- Our entire team will be working from home as much as possible to do our part in slowing the spread of the virus and flattening the curve.
- All meetings will be done via conference calls or virtual video chat.
We encourage you to visit the Centers for Disease Control and Prevention website for additional information regarding COVID-19.
With regards (and washed hands),
Your neighbors at Love Your Hood
Source: Jeff Todd of CBS Denver
3737 N. Quebec St., formerly the Quality Inn & Suites, is now a 139-unit studio apartment building for people struggling with homelessness. The project utilized funding from the Denver Housing Authority’s bond program — a new partnership with the city — along with funding from other programs.
John Parvensky, the president of the Colorado Coalition for the Homeless, stated that the project’s intent is to provide access to mental health, counseling, and employment services in addition to affordable housing. Watch the news clip and read the City of Denver’s statement below!
Sale price is up significantly year over year, coming in at just over 30K more than 2019. Overall for Q1 so far, we’re not seeing the degree of price softening as Denver experienced last year (and typically experiences).
We’re seeing more days on market than last year too, with an average of 40 days compared to last February’s 36.
Inventory saw a drop year-over-year, with 1.6 months compared to 2.2 in 2019.
Though there were fewer homes listed in February of 2020 than 2019, there were over 50 more sales, leading to the drop in inventory and the lower than average dip in median sales prices over the first couple months of 2020.
The end of a decade is always an excuse for reflection, and in Denver’s real estate market there is much to reflect on. The events of the last year alone are a lot to take in… luckily, Love Your Hood is here with your easy-to-digest 2019 Denver market highlight reel!
The Most and Least Expensive Denver Neighborhoods
Denver County as a whole saw a median home prices just over $442k last year. Flashback to 2010, Denver had a median price of $203k. This statistic has more than doubled since the decade started! Country Club topped the median sales price (MSP) charts in 2019, with a MSP of $1,164,000. Goldsmith took home the most affordable neighborhood position with an MSP of $177,500. Check out how the other neighborhoods stack up in affordability:
- Over 45% of Denver’s neighborhoods have an MSP of greater than $500,000.
- About half of Denver’s neighborhoods are in the $250k-$500k range, and
- Just 3.8% of neighborhoods had an MSP of less than $250,000. Tight budget = tough to find a home.
Map of Median Sale Price by Denver Neighborhood
This interactive map shows the city of Denver broken down by affordability of median sales prices. Scroll over a neighborhood to see its MSP for 2019, and use the buttons along the bottom of the map to share and see full screen. Read on to see Denver’s neighborhoods categorized in a few more useful ways!
Denver Neighborhoods that Appreciated the Most + Least in the Last Year
We ranked Denver’s hottest up-and-coming neighborhoods using historical price growth data. Topping the list for MSP growth in 2019 was Auraria at 28%, driven largely by the proximity to Union Station and low number of total homes in the neighborhood. Cherry Creek, Speer & Union Station (LoDo), three neighborhoods highly sought-after by homeowners and businesses, were also at the top. Notable as well is Marston and Elyria Swansea, two neighborhoods whose median sales prices fell under the Denver Metro MSP in 2019 but their MSP growth was near the top.
With increasingly more opinions on Denver’s housing market there have been varying reports of exactly where we stand. Has Denver finally shifted towards a buyer’s market, or is the market getting even tougher on home buyers?
For the housing market as a whole, the numbers present a not-quite-as-strong-but-still-very-strong seller’s market. But, it’s not quite that simple, as agent Megan Aller stated in her recent Westword interview. Within the Denver market, we’re seeing the luxury market soften significantly, while the median-priced homebuyer almost always has to compete with multiple offers.
Days on the Market
2019 went out just as it started with regards to days on market, averaging about 37 days on market in Q1 and Q4 of 2019. There were fewer days on market during the busy spring and summer season as expected.
Notable here is that even with slightly less inventory than 2018Q4, 2019Q4 homes took longer on average to sell. This is a nod to our theme this year, the market is not quite as competitive for buyers, but this change is marginal.
Inventory in Q4 was lower than in 2018, with about 200 less homes in October, November, and December on average. This is largely due to new homes becoming available towards the end of last year and this summer. Denver reached its peak this September with 2,605 units on the market! As a result, sales last quarter were higher than last year. Since September of 2019 you can see inventory on a downward slope.
Source: Kelcey McClung of 5280
Coming off, yet another, bidding war this past week (oh, Hilltop), the numbers don’t lie! Inventory remains low, demand has picked up over the winter due to low interest rates, and prices keep inching higher. If you’re looking to purchase a new home in 2020, we recommend doing it in the first quarter. The summer is shaping up to be another brutal one for buyers!
Source: Andrew Dodson of the Denver Business Journal
A lot happened in 2019 for the Denver real estate market. Here are a few highlights.
Opportunity Zone Projects
Investors and developers invested around $1 billion in opportunity zones, a plan known as a “once in a lifetime federal economic development program” that allows investors to defer and possibly eliminate capital gain taxes by investing in underdeveloped neighborhoods.
iBuyers Came to Denver
Zillow and Open-door bought hundreds of homes, allowing sellers to close in as little as week. Although we saw more of this is 2019, it actually represented only 1% of the housing market. As convenient as it may sound, ask one of us to tell you about the downfalls (hello 8-10% fees!)
Apartment-community Sales Galore
What happens when you mix low interest rates with increased rental rates? Apartment deals. New construction and old apartment buildings were traded frequently in 2019, including trading Union Denver to Daydream Apartments (with plans to utilize Airbnb ahead) and the iconic Poets Row on Cap Hill to a buyer that made contemporary updates to the vintage sites.
Broadway, Alameda Station Development
South Broadway is about to get a major addition. This 10-acre development will have 887 residential units, 380,000 square feet of office space and 180,000 square feet of retail/restaurant space across the five building layout! As for Alameda Station, 75 acres of land with 1.25 million square feet of retail/residential space will get an addition 8+ million square feet of development. Talk about big changes.
November was an interesting month. Compared to 2018, the median sale price is up quite a bit. But compared to October, there was a slight drop in price, which is to be expected. Home inventory is down, but the average time spent on the market is up. Buyers look to be becoming more disciplined in their decision making. Multiple offers are still happening, but only on pristine, well-priced homes in hot neighborhoods. Buyers aren’t just buying because they’re worried about getting left out of the Denver market! They’re more calculated with their home selection and are using statistical data to justify their offer pricing. As we close out the decade and begin 2020, we’ll keep a close eye on inventory numbers. If year-over-year numbers are significantly lower for the first quarter, buckle up and expect a wild ride this summer!
Source: Andrew Dodson of the Denver Business Journal
Beginning this January, real estate agents will no longer be allowed to market listings as “coming soon.” The driving force behind this? Agents will try to market to their network and score both sides of the transaction. This new rule creates an even playing field for all buyers and agents, but some brokers aren’t happy with the change.