We don’t often like to admit it, but it is true; there isn’t much we directly control in the world around us. However, we can control our responses to events. Amidst the current pandemic that includes stay-at-home orders, social distancing and serious health concerns, the steadying influence on the economy has been real estate. For many, the response has been a swarming into the real estate market, as buyers and as sellers, but mostly as buyers. Sellers are desperately needed to meet the increasing demands!
A wise old grandfather once told his grandchild, “You can’t go wrong owning dirt”. He has been proven right about that on more than one occasion over many years.
It’s possible 8174 grandfathers passed on that same sage advice to their grandchildren, as September in the Colorado front range saw that many homes sell and close! With all the adverse circumstances to overcome, that is an impressive increase over September 2019 closed sales of 6515. Days on Market were equally surprising, sitting at 31, as compared to 2019 statistics of 40. While it is certainly no secret that home prices have been steadily climbing over recent years, the year over year average sale price from $499,180 in September 2019 to a solid 2020 increase of $556,940 is indicative of the years-long upward trend we’ve been experiencing.
In our April Insight we highlighted the strong Colorado spirit evidenced by massive numbers of home buyers in the marketplace. Determined to overcome virus challenges and be homeowners, by our May Insight, we saw that number escalate. As mortgage interest rates plummeted, hopeful homeowner numbers swelled.
By June our Insight revealed Front Range markets struggling to meet the unabated demand on inventory levels already stretched impossibly thin for far too long. New home builders, lagging behind for several years, now toiling to catch up while facing soaring lumber prices.
This combination of ongoing, long-term low inventory and slow supply side reinforcements strained the resilience of our marketplaces to meet the clamoring cry for more homes to buy!
Profits to homeowners who recognized the opportunity and listed properties for sale have typically seen equity gains upwards of $65,000 on average. That’s up from around $58,000 last year, and the housing boom is showing no signs of slowing down. In fact, return on investment in real estate has improved for the last eight consecutive years.
July and August we reported some fluctuations that are normal in annual cycles, but overall the real estate industry has been on a steady, increasing forward march upward.
What’s on the road ahead of us as we move into the fourth and final quarter of what has been a surprising, somewhat unsteadying, challenging and unusual year?
Considering that the housing market is influenced by economic factors, geopolitical factors, and good old fashioned whims of the consumer, the forecast looks to be a bit like this: equity gains move higher, bidding wars push the limit on appraisals, builders embrace rising costs to forge forward and determined buyers rise to the challenges to claim their castle with the help of equally determined RE/MAX Alliance Associates by their side assisting them to overcome those marketplace challenges!