My overall feeling is that the housing market will easily weather this storm. Of course that will depend on overall economic impacts, job security, etc. Say Denverites are quarantined for 1-2 weeks I think most homeowners will be ok. Being at home for 1-2 weeks is a great way to save money! But it could be tough on those who are not able to work.
I think it might lead to an odd break in our real estate cycle and statistics which has been the same for 7 years now. See how reliable the market has been for 7 years in the chart below. Maybe an extended Spring market? Maybe a break in sold comparables from March and April for appraisals moving into May, June, and July. But, I don’t see that making appraisals difficult.
The market does not heave nearly enough homes for the number of buyers looking. The blue bar represents the total active units we had in February vs. the red bar showing the amount of inventory we would need to offset demand and create a market in equilibrium. In February Metro Denver had 15.6% of the inventory required to offset demand. Due to the overwhelming demand I suspect when the coronavirus situation was over that the market will recover and continue ticking along. This means home value security for homeowners.
Here is what we were expecting for appreciation this year. February’s closed prices demonstrated similar changes as previous years in this cycle. The bulk of price appreciation is established annually between January through June. Now it’s going to have to be a day by day watch on interest rates and appreciation.
Right now interest rates are making larger homes more affordable and leading to an uptick in move up buyers or renters who can buy a great home for a similar payment to their rent.
Just like the economic downturn left Buyers asking specific questions about their investment and trying to secure that they were ok if the worst case scenario happened again. This unprecedented time will leave an impression on this generation. I am wondering if there might be an increased interest in homeownership as renters realize they can’t control much in their rental. Also, buildings with forced air that is circulated throughout will likely feel more susceptible than a single family home or a boiler system. Or maybe Buyers will consider a home garden more valuable. We’ll just have to see.
