On this week’s episode of “Mondays with Matthew,” Windermere Chief Economist Matthew Gardner provides an update on the forbearance program and what type of effect we can expect it to have on the US housing market.
This week on “Mondays with Matthew”: Now that things have settled down somewhat following the initial impact of COVID-19, Matthew dives into the topic of mortgage rates. Will they go below 3%? Matthew discusses this and the factors that have formed his updated 2020 and 2021 mortgage rate forecast.
In this week’s episode of Mondays with Matthew, Windermere Chief Economist Matthew Gardner kicks off a series of episodes in which he answers questions from his followers. The first deals with how COVID-19 will impact buyer behaviors, especially in more urban markets.
We notice a very interesting dynamic in the market right now.
There was clearly a pent-up real estate demand created during the recent time when in-person showings were not allowed. The numbers back it up.
First, a little background. During a portion of “Shelter in Place,” all in-person viewing of properties ceased. Instead, buyers spent time online viewing virtual tours and 3-D photography.
Even though clients could view homes virtually, purchase activity did slow down.
Today, showings are allowed again as long as clear protocols are followed. We’ve implemented a Safe Showings program to keep our clients protected.
Now, to the numbers.
Through the first two weeks of May 2020, the number of closed properties is down compared to the same time period in 2019.
In most cases these closed properties are a result of purchase agreements that were written in April- a time when in-person showings were restricted.
So, a decrease in closings was expected.
However, the number of new written contracts so far this month is up considerably compared to the same time frame last year.
- Metro Denver closed properties down 47%
- Metro Denver new contracts up 6%
- Northern Colorado closed properties down 41%
- Northern Colorado new contracts up 19%
So, buyer activity is up compared to last year, even in our current environment.
This speaks to the resiliency of our market and the effect of low interest rates.
Job growth is critical to the health of the housing market, so on this week’s episode of “Mondays with Matthew,” Windermere Chief Economist Matthew Gardner analyzes the effect of COVID-19 on employment and what we can expect for the duration of the year.
April represents the first time we can look at the impact of COVID-19 on a full month of real estate activity.
To no one’s surprise, activity in April in terms of closings and new contracts did slow significantly.
Much of this slowing was caused by in person showings not being allowed for most of the month.
(showings are now allowed again by following Safe Showings protocols)
Here’s what the numbers say…
Closed transactions were down compared to April 2019
- 26% in Northern Colorado (Larimer & Weld)
- 27% in Metro Denver
New written purchase agreements were down compared to April 2020
- 48% in Northern Colorado
- 44% in Metro Denver
So, while activity did slow, there was nothing resembling a “screeching halt” that took place.
While the way property is shown has certainly changed, the market is still very active and we expect activity to increase even more with showings now being allowed again.
This week we hosted our clients and friends for a special online event with our Chief Economist Matthew Gardner.
Matthew talked about a variety of topics that are on people’s mind right now including home values.
Matthew sees no evidence that home values will crash and actually sees signs that they may rise this year nationally.
Here’s why he says this:
- Mortgage rates will remain under 3.5% for the rest of the year so there won’t be any interest-rate pressure on prices
- Inventory, which was already at record-lows, will drop even further keeping the supply levels far below normal
- New home construction will continue to be under-supplied and will be nothing like the over-supplied glut of inventory that we saw in 2008
- The vast majority of employees being laid off and furloughed are renters
- Homeowners have a tremendous amount of equity in their homes right now compared to 2008 which will prevent an influx of short sales and foreclosures
If you would like to receive a recording of the webinar we would be happy to send it to you. Feel free to reach out and ask for the link.
An impact we expected from COVID-19 to the housing market is reduced inventory. That prediction is certainly proving to be true.
In March, the number of withdrawn properties from the MLS went up 68% in Larimer County and 38% in Weld when compared to March 2019.
Reduced inventory is one reason why we don’t expect a significant drop in home prices in 2020. We don’t see a glut of housing supply dragging prices down.
So how are properties being sold now? Virtually! We are helping people view homes using virtual 3D Tours and live online walk-throughs.
Our business right now is certainly not business as usual and our industry has proven to be resourceful so we can still help people with urgent real estate needs.
Every Monday Windermere Chief Economist Matthew Gardner provides an update regarding the impact of COVID-19 on the US economy and housing market. This week he discusses what it really means for the economy and housing to be in a COVID-19 induced recession (hint: it’s not all bad news).
Every Monday Windermere Chief Economist Matthew Gardner provides an update regarding the impact of COVID-19 on the US economy and housing market.