Earlier this year, Realtor.com
announced the release of the Housing Recovery Index
, a weekly guide showing how the pandemic has impacted the residential real estate market. The index leverages a weighted average of four key components of the housing industry by tracking each of the following:
Housing Demand – Growth in online search activity
Home Price – Growth in asking prices
Housing Supply – Growth of new listings
Pace of Sales – Difference in time-on-market
The index compares the current status “to the January 2020 market trend, as a baseline for pre-COVID market growth. The overall index is set to 100 in this baseline period. The higher a market’s index value, the higher its recovery and vice versa.”
The real estate market in January 2020 started as a normal market here in Denver. It started with strong interest from Buyers, a little slow on listings which typically gets in full swing by March or so leading into a strong Spring and Summer market. Our one worry on the horizon was that we’d hit the affordability cap which means that incomes weren’t quite keeping up with the strong year after year appreciation…Enter low interest rates, a pandemic, and a roller coaster we weren’t expecting to be strapped into.
So, here’s a look at the Housing Market Recovery Index today:
The graph below charts the index by showing how the real estate market started out strong in early 2020, and then dropped dramatically at the beginning of March when the pandemic paused the economy. In Denver this was largely the time when no in person showings were allowed and the transition had been made from working in the office to non essential workers, working from home.
It also shows the strength of the recovery since the beginning of May. Today, the index stands at its highest point all year, including the time prior to the economic shutdown. Personally, I have never seen a strong market proceed past July. So I largely expected to make up the 4 weeks or so we couldn’t show in person and then to see a slower typical Fall market. How silly was I to think anything would be typical in 2020. Here we are, stronger than ever and still moving along with people’s living situations, family situation, work, school, everything we knew to be important factors in decision making for home ownership are still out there being decided. Locally, this means we’re halfway into September with a real estate market that feels reminiscent of Spring.
The Momentum Is Still Building
Though there is some evidence that the overall economic recovery may be slowing, the housing market is still gaining momentum. Zillow tracks the number of homes that are put into contract on a weekly basis. Their latest report confirms that buyer demand is continuing to dramatically outpace this same time last year, and the percent increase over last year is growing. Clearly, the housing market is not only outperforming the grim forecasts from earlier this year, but it is also eclipsing the actual success of last year.
Locally what we are facing is not enough listings. So, although the demand is still there less listings entering the market has lead to less going under contract.
Frank Martell, President and CEO of CoreLogic, explains
“On an aggregated level, the housing economy remains rock solid despite the shock and awe of the pandemic.”