Real estate sales have shown remarkable growth this year, not only in the Pikes Peak Region, but across the country. During the month of September, sales were up nearly 30% compared to last year in our area. Despite these record-breaking sales, inventory continues to dwindle, significantly impacting price and the availability of homes for buyers. According to Mark Fleming, Chief Economist for First American:
“Since hitting a low point during the initial stages of the pandemic, the only major industry to display immunity to the economic impacts of the coronavirus is the housing market. Housing has experienced a strong V-shaped recovery and is now exceeding pre-pandemic levels.”
Our local inventory has been shrinking this year. We had the lowest inventory recorded last month, at only a 0.55-month (or 16 day) supply of homes in the entire Pikes Peak Region. Looking at homes with a Colorado Springs mailing address, there was only a 0.44-month or 13 day supply of homes! This tight inventory continues to put pressure on price and has contributed to bidding wars and extremely short time on market for listings. Purchaser demand is so high, the market is running out of available homes for sale. Just last week, realtor.com reported:
“Since the beginning of the COVID pandemic in March, nearly 400,000 fewer homes have been listed compared to last year, leaving a gaping hole in the U.S. housing inventory.”
In the spring when COVID first began, home sales dropped significantly in April and May. This was almost completely due to the showing and COVID restrictions imposed on the county. However, this drop in sales was very short lived as we rebounded in June and then soared in July, August, and September in terms of sales. We had double digit sales growth in the last three months, with September showing a record-breaking 29.41% increase in sales from last year. The chart below shows the sales growth (%) year over year in our region.
Despite the pandemic, home prices are continuing to rise, especially in the last three months. July, August and September have shown double digit median and average price increases over last year! Prices are increasing due to lack of supply and high demand from buyers, partially driven by the record-low interest rates. Buyer demand is still strong even heading into the fall. ShowingTime, which tracks the average number of buyer showings on residential properties, just announced that buyer showings are up 61.9% compared to the same time last year.
The first graph belows shows the median price increase (%) year-over-year in our area.
On Tuesday, October 20, 2020, according to Bankrate’s latest survey of the nation’s largest mortgage lenders, the benchmark 30-year fixed mortgage rate is 3.040%.
Lower interest rates can significantly impact a buyer’s purchasing power. The lower the rate, the more home a buyer can afford, and right now buyers can afford more home now than ever before! With such low rates currently, buyers are more eager to buy. With this increased demand but low inventory, homes are flying off the market and sellers are seeing multiple offer situations.
Economic Growth and the Future
According to Keeping Current Matters:
Zillow’s predictions for seasonally adjusted home prices and pending sales are more optimistic than previous forecasts because sales and prices have stayed strong through the summer months amid increasingly short inventory and high demand.
The pandemic also pushed the buying season further back in the year, adding to recent sales. Future sources of uncertainty including lapsed fiscal relief, the long-term fate of policies supporting the rental and mortgage market, and virus-specific factors, were incorporated into this outlook.
What Does This Mean?
The future looks bright for real estate. Sales are holding strong, along with buyer demand. Pending home sales just last month were the second highest, at 2,447 homes. If you are thinking of selling, NOW is the time! Buyers need more homes to choose from! If you are thinking of buying, you really need to be prepared. Get pre-approved from a local, reputable lender and have the right team on your side to negotiate for you!
If you are thinking of buying or selling, please contact us! We would be honored to help!