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Writing about a strong first quarter from the middle of a pandemic seems a bit like reviewing the wonderful banquet enjoyed just before a tornado or earthquake. The details are factual but it just isn’t as important as what happened next. I’ll attempt to find some balance in reporting the first quarter of 2019 in context of the bigger picture.
The year started out with a bang! Sales in both January and February were up over 20% compared to a year ago, buyers were out looking, interest rates remained low and we were having one of those early springs. In other words, the Boulder area real estate market was off to a quick start. March sales were not quite as strong (down 9% for the month), but for the quarter closings were up 15%. After a bit of a pause during the later half of 2019 prices were also trending higher. The economy was strong, unemployment was very low and all indicators were pointing towards another strong year.
Just as we were coming into the busiest time of the year for real estate the stay-at-home orders started to spread along with the pandemic. The stock market dropped over 30%, college kids and students of all ages were sent home and restaurants and “non-essential” shops of all kinds were closed. Real estate was deemed essential but in Colorado that meant that functions essential to a transaction already in progress could proceed. Inspectors inspected along and closings took place curbside. Most, but certainly not all transactions made it to the closing table. But by mid-March showings had dropped significantly and by mid-April they took a pause altogether.
During this time, many would-be sellers delayed their plans and many listings were pulled from the market. As I write this in very early May we have begun to show vacant homes and by this weekend we will be showing all homes but with safety restrictions. It is certainly an unprecedented time and like all facets of our society and world real estate is very much affected.
The good news is that real estate was in good shape before this all happened. Tightened mortgage requirements over the past decade have ensured that more people have equity in their homes. At this moment it looks like there will be fewer ‘distressed’ homes which will allow for a quicker recovery. As we look forward I like to go back to the basics of supply and demand. As we started the year the inventory was very low compared to the demand. Currently, with the many homes not on the market (temporarily withdrawn or delayed) the inventory is low. But going forward we may see a stretch of time when the supply of homes outpaces the demand. With over 20 million people unemployed and small business owners hurting it’s easy to imagine a scenario where it will take awhile for buyers to come back in full force. True, that many of the 20 million newly unemployed are renters, but certainly not all. Just like after the last economic crisis, it may take a while for people stop hunkering down and get back to business. The rest of this report is in regard to the strong first quarter of 2020. It’s my guess that a few years down the road we will be looking more closely at the second and third quarter of this year.
Sales in Boulder County increased by 15% during the first quarter of 2020. Although the overall trend is down, this was the fourth straight quarter of increased sales.
Appreciation was modest during most of 2019. Prices definitely had an uptick in the first quarter of this year.
As prices have increased over time the lower price range (sales under $250,000) have been decreasing and sales in the highest prices ranges have been increasing.
For more graphs and detailed analysis take a look at the full report.
