The cliché is March roaring in like a lion, but heading up our fourth quarter of what can only be described as an unconventionally astonishing year, October 2020 roared in! Pertaining to real estate, October was phenomenal!
Historically low mortgage interest rates - check! Rising wages in a strong labor environment - check! Stable housing affordability conditions - check!
All of these impressive real estate milestones have taken place not only during a historical health pandemic, but despite historical low inventory levels.
What is causing such reluctance in current homeowners to move, which is causing anemic sales data as ski season kicks into high gear and Coloradans prep for the coming months of snowmen and snow shoveling?
Taking a deep dive into the market trends of Colorado Real Estate 2020, we see hungry would-be homeowners gobbling up all available housing in 30 days or less.
Which leaves us wondering why anemic inventory persists. One reasonable explanation is that homes bought over the last 10 years were 1000 square feet or larger on average than in previous years, while family size has been shrinking. Even with the need for home offices and homeschooling space increasing, people are finding their current house suitable or easily adaptable to those needs.
Historically, a homeowner remained in place on average 5-7 years. Between 2010 and now, that average has gone up, up, up to 13 years. This unwillingness to relocate was originally thought to be based on low interest rate mortgages people were not willing to give up, but today’s even lower rates would indicate there are other forces at play, keeping people stationary, and it isn’t just 2020. These inventory levels are five years and growing - or shrinking we might say!
Meanwhile, that “happy to stay put” attitude is forcing unhappy rental status on many who would prefer to own a home. This increase in rental demand has led to increased rental costs, which subsequently drives renters out of the temporary housing market and into the real estate marketplace, which continues to drive these desperately low inventory levels!
Thankfully, there are encouraging real estate tales to tell, such as the 8209 happy buyers who closed on their new homes in the Colorado front range area this October. Many of these are a tale of winning in stiff competitive situations out of the 7865 available homes to choose from. The October 2020 buyers who braved the circumstances to claim their homes did so at an average sales price of $577,060, with Days on Market average of 31.
Moving into the colder weather and general end of the year winding down, the number of buyers hoping to secure their new home for the New Year remains high. No one would find it strange for us to expect these numbers to be so much lower, based on the volatile circumstances of 2020. But 2019, with its fairly normal circumstances, saw only 7715 homes available for sale during October, with just 6627 of them selling and closing in the same time frame. The year-over-year average sold price was $492,660 with a Days on Market average of 42.
Predicting trends are a roll of the dice at this point, and anyone’s guess is as good as the next person. RE/MAX Alliance Associates are working hard to stay on top of and ahead of market trends to give their clients the edge in a market that appears to follow its own path, rather than the historical peaks and valleys we have grown used to in the past decade across our Front Range markets.