Home closings were up over 57% between May and June, and down just 4% year over year, according to the July report from the Denver Metro Association of Realtors.
[Related: What does a ‘new normal’ look like for builders?]
Jill Schafer, chair of the DMAR Market Trends Committee and a broker with Kentwood Real Estate Cherry Creek, noted in the report that the average price for a home in the Denver metro area topped the half-million dollar mark for the first time in March, before the shutdown put a stop to showings. Prices zoomed right back up, though, and in June, the average close price for all single-family homes was $509,736, while detached single-family homes fetched an average $560,435.
What does that mean for would-be buyers when employment is so precarious? Preliminary data from the Bureau of Labor Statistics show employment fell 6.5% from May in the Denver-Aurora-Broomfield area, after a 10% decline in April and an 8.7% drop in May. The June unemployment rate statewide is an estimated 10.5%.
Schafer believes the people most affected by unemployment are renters “because it does seem like the homeowners are doing better,” she told Colorado Builder. She added that homeowners, unlike renters, can fall back on the equity in their homes.
“Right now, we have so much equity in homes in the metro area that if people were running into a little bit of an issue or needed some help to tide them over, they could tap into some of that equity, if they so choose,” she said.
Schafer believes buyers have a bigger appetite for home shopping after spending so long in their current homes — and not just the people who live here already.
“I think a lot of people in other parts of the country are saying, ‘If I’m going to work from home, I can work from home anywhere and perhaps Colorado is a good place to do it,'” she said.
“Unfortunately for these people who are trying to move here, because our inventory is so low, they don’t have a lot of choices. And we’re in that ever-churning cycle of nobody wanting to put their house on the market because they don’t know where they’ll move, and if nobody puts their house on the market, there’s no place for people to move. It’s just an ever-shrinking circle of inventory,” she said.
That’s an opportunity for builders to close the gap between available homes and interested buyers.
Danielle Andrus was previously the managing editor for Colorado Builder, and is currently Editor for the Journal of Financial Planning.