Mid April Amid Quarantine
As I jot my blog this week, I’m focused on the twin realities we are facing. Our nation is in the midst of an unprecedented lock down to mitigate the spread of Covid-19. Scary times. And simultaneously, Boulder County, Denver, really the entire Front Range is in a strong Sellers’ Market. So how to balance home selling in the age of Coronavirus with all the new limitations. That is, how do we keep one another safe by staying home while also selling our homes?
The best place to start is where we find ourselves today, in the midst of this pandemic. I’m going to focus on Lafayette. It is one of the popular L-Towns surrounding Boulder. Louisville, Lafayette, Longmont (and Superior, alas, doesn’t start with the letter L). These communities offer affordable choices for families centered in Boulder! And I’ll dive into a popular price point, a quarter million dollar wedge that represents trade up family homes.
The Overall Lafayette Colo Marketplace During Covid-19
There are currently sixty nine listings in the Lafayette Colorado marketplace for single family homes. These range from a low price of $360,000 for a single story ranch layout with less than seven hundred square feet to four million dollar bi-level home.
Of these properties, about half are under contract/pending while the remainder are available for sale.
New COVID-19 Regulations Impact Home Selling In The Age Of Coronavirus
In the past week, the state of Colorado government has issued new regulations regarding home showings and what is/is not considered essential real estate activities.
Making the essential list:
- Real Estate Closings of existing transactions
- Home inspections for existing transactions
- Home Buyer visits for under contract property
What failed to make the list, or is considered nonessential are in person home visits. Think of all the ways people might have an in person showing. A month ago, I was meeting potential buyers outside my newest listing to give them a private home showing. The first weekend I list a home, I always like to host an open house.
When not showing my own listings, I like to preview the newest homes to come on the market to be well informed of the inventory.
Office Tours Are Home Showings Too
Our office tours new listings in a group – after all, Berkshire Hathaway HomeServices Rocky Mountain Realtors, just named one of the top American real estate offices, has some of Boulder’s best agents. Why not show your house to everyone in the office!?
There are more in-person visits to a listing than you might realize, many of which are equally important!
IMHO, there is a possibility some under contract home sales will be used to create in person showings. Will have to watch the data, but the State of Colorado does allow in-person showings for under contract property. So, a house that looks right on paper, in a drive by, in video and virtual tour might go under contract and then have that contract terminate as part of the in-person showing.
Sellers Market Doesn’t Recognize Virus
But, in general, with the strong Sellers’ Market we are continuing to experience, and the annual “Spring time” demand, it is very likely homes will come to the market, go under contract and close with more limited in-person viewings being the norm in this challenging time.
Homes Go Under Contract Sight Unseen
Though it may seem counter-intuitive, homes do go under contract without in person visits quite often. International relocation, a single spouse/partner viewing in person and the other seeing photographs, new construction of models not offered onsite.
And in this challenging time, we are continuing to see houses go under contract in Lafayette.
New Listings Last Seven Days
Going back to mid April, snapshot of the market in the midst of Covid-19 issues.
Nine new houses came onto the market last week. These came to market even as the new Covid-19 restrictions were impacting the local housing market. Of these homes, four immediately went under contract, and five are available as I write this.
Think about that! Hot listings are selling in under seven days regardless of the Coronavirus impact on housing market!
It is likely we will continue to see well valued homes, in popular locations, continue to come to the marketplace and receive offers. Why? All the things that make this a great place to live still exist. What about all the lost jobs? I feel terrible for what’s happening to the workforce of America. But is a temporary setback and it is not fundamentally changing the housing metrics for the Boulder Colorado region.
Home Selling In The Age Of Coronavirus Makes The Virtual Tour King
Here is a virtual tour of a home that sold before hitting the MLS – it never had an open house or MLS driven showings (but did have an in-person showings).
For this property I also created a top flight 3D virtual tour using Matterport. Check it out (CLICK photo to see 3D tour):
Diving Deep: $600,000 to $850,000
This particular price point, for Lafayette Colorado, represents the trade up and larger single family home market. There are currently twenty six homes for sale in this price point. Of these, half are under contract and half are available.
Under Contract In Seven Days, 30 Days, Not Under Contract
Looking at the data, six of the listings in this price point are less than a week old and of those newest to the market, 1/2 are under contract. The majority, about eleven houses, have been on the market around a month or less. Four of these are under contract, the other seven are not.
Listings that are over sixty days on the market tend to be more under contract than not. Those would be homes that went under contract during the traditional Winter-Spring market and are now on the path to closing. Some of those transactions may be impacted by the current health crisis.
For instance, Wells Fargo has changed its guidance regarding Jumbo financing. And some secondary markets are less inclined to purchase locked loans with low rates. What does this mean?
Low Rate Mortgage Resales
Your average mortgage lender processes your loan, but then that organization post closing sells the note to a bank or institution that makes its profit by managing loans. This is very common.
Banks see risk in this age of home selling in the age of Coronavirus. Risk makes banks think twice about buying loans with very low interest rates – there is less profit margin for them. This could potentially slow some transactions.
Jumbo Financing Impacted
Another change impacting the housing/mortgage markets are banks no longer doing jumbo notes. A jumbo note is considered one over the Fannie Mae limit. In Boulder County, this limit is $644,000.
Wells Fargo as an example is no longer offering jumbo mortgages on new contacts. I’m not exactly sure why. Probably this is related to bank risk tolerance.
Similarly, but in a very different aspect of the finance world, I spoke with a neighbor who is doing a major property development in Louisville. She said her current biggest challenge is the availability of bond funding.
Self-Isolation Impacts Business World
Six months ago, a project like hers with its $200 million dollars of infrastructure would be a slam dunk. But now, the rates for twenty million dollars of bonds are through the roof. What changed? The uncertainty associated with a new project is the number one issue.
Her hope – and I think this is probably the general consensus in our country – is that once this unusual time period of social distancing is past, we will see a return to the way things were. Even President Trump alludes to this, that once we get America back to work, it is going to be a like a Big Bang of economic activity.
Forget the big picture, what can an owner expect today with showings on a new listing in the age of Coronavirus?
Virtual Showings Replace Home Showings
The number of showings, as tracked by Showing Time, a popular service for setting home showings, is off dramatically. The stats I’ve seen show that four weeks ago, we had the normal lots of showings and then each week into this crisis, the number was being cut in half.
And, for ethical agents and those practicing social distancing to protect family and loved ones – showings are going to really drop off. Replacing these traditional property viewings will be the virtual showing. There are several great avenues to getting your home presented to would be home buyers.
Matterport home tours are one great option. This is an immersive 3D experience where the viewer can decide where to go and look about in a 360 degree view. Another sharp option is a virtual home tour. I like these better. The videographer does a walk through of the property and then stitches together several short video and photo clips allowing home buyers to really get a sense of the layout.
Another solid product? Floor plans. These can be created for any listing and give potential home buyers a good idea of spaces and room sizes. Of course, you can’t smell cat pee in a virtual tour. But, you can visit the house once it is under contract, that’s totally allowed per the state’s “essential business” rules.
Showings of Your Home Selling In The Age Of Coronavirus VS Last Month
If you look back to before the pandemic began to impact our community, there were thirty six showings for the week in the $600,000 to $850,000 price point. See graph:
Overall, there were thirty six showings in this price range. This is considered a good amount of showing activity. Not every listing in the IRES MLS is represented by this data. Some of the listings use a different service. And some showings occurred during open houses (which have really been upended by Covid-19). Here’s what last week looked like – keeping in mind about midweek the government officially changed the rules for showing homes.
Showing numbers plummeted. This is 25% of the showings we saw a month ago.
The numbers should be going the other way.
Spring is a hot time to sell and we generally have more showings in April. Especially with Spring break travel bringing home buyers from all over the nation to the Boulder CO area.
But this is a knowledgeable outcome when you consider what happens when home selling in the age of Coronavirus. People don’t set showings. But they want to move. They need to move. Home Buyers are making the move regardless of the pandemic.
So, a home entering the MLS in today’s market can expect far fewer – if any – in person viewings prior to going under contract. But at the same time, in this price point with all the showing changes, one in two new Lafayette listings went under contract last week. That is, the lack of in person showings did not dissuade home sales entirely.
Just Wait For The World To Re-Open
And then there is always the choice to just wait. After all, for many home buyers, the best way to find the house that feels right is to have the opportunity to walk through it. You’ll know it when you see it. Once governor Polis gives the all clear, I suspect we will see an influx of new listings to hit the market.
And though the government will be saying, “its all safe now,” I’m not sure everyone will immediately be open to having strangers into their homes. You know what I mean? That is, things will change, but it might be a slow process back to letting showings occur as they did before the Coronavirus arrived. So, I would plan for virtual showings and such to be the predominate way homes are viewed for awhile.
The End of The Open House — You Can Shake On That
For instance, even with the market reopening at some point in the not so distant future, I wonder if the open house and the hand shake will see a return to prominence.
It may well be, that for public safety, open houses are no longer something we see. Or, maybe everything will just go back to the way it was.
After all, if there is one truth to the moment we find ourselves living in, it is simply that no one could have imagined the social distancing we have been experiencing for weeks now.
What to Expect?
In this market, some owners will list. Why? Home mortgage interest rates remain low. As confidence returns to the marketplace and self isolation restrictions are lifted, I would expect to see home mortgage rates increase. Less risk will cause money to flow to stocks, rates to increase. This is what has happened in the past, if that is any indicator.
Post Coronavirus Home Selling Adjustments
Also, I would expect both more listings and more buyers. There are probably some fence sitters waiting to see what happens. As life returns to normal, I would expect the competition for listings to increase. So buyers waiting for the end of house selling during the age of Coronavirus risk running into a horde of buyers competing for the same limited inventory.
I think we will also see homes continue to come to market in this challenging time and go under contract without having an in person showing. There are no wrong decisions here. This is all a new time, for Realtors and home buyer and home sellers. Stay safe!