The coronavirus pandemic has hit the global and national economy, but as stay-at-home orders have been gradually lifted, changes are taking place in the real estate market. To learn how COVID-19 has affected our local residential real estate market in Boulder County, I interviewed Todd Gullette, managing broker of RE/MAX of Boulder. Todd is a sought-after speaker for the Boulder area market and oversees the operation of over 100 Realtors® at RE/MAX of Boulder. He has his finger on the pulse of our local housing market.
Can you give us a brief update about our local market?
Todd Gullette: Certainly, our local market is showing signs of strength. Lower priced homes have been selling consistently and at very strong prices, and we are seeing multiple offers when a home is priced aggressively.
For the most part, Boulder County has recorded a median price drop from March to May of 1.3 percent. Average prices were affected more and were down a total of around 9 percent because high-end home buyers are being more cautious about returning to the marketplace.
What metrics do you look at to peer into the future?
Todd Gullette: I look at a lot of things, but specifically, inventory and percentage under contract.
Why are these metrics significant and what are you seeing with regard to single family homes in Boulder County?
Todd Gullette: When you have low inventory and a high percentage of homes under contract, it can be unclear how deep the market is. When you have relatively high inventory in combination with a high under contract percentage, that is simply going to be increased sales the following month. Locally, we have dropped from around 51 percent in mid-March to about 41 percent as a result of COVID-19. 41 percent is still a fairly respectable number and some experts argue we don’t start to see a depreciation of prices until 30 percent to 35 percent under contracts are recorded.
Great, so is low inventory a cause then of the high under contract percentages? Why are we witnessing a fairly competitive market right now?
Todd Gullette: My numbers show an increase in inventory of 10 percent to 20 percent more now than prior to COVID-19. I believe the reason we are experiencing pretty solid competition right now is because interest rates are low and there is some pent-up demand from our recent hiatus.
In terms of the next few months, after this pent-up demand has played out, what do you foresee in the housing market?
Todd Gullette: I have my reservations about the general economy as we watch the impact of the national job loss. In Colorado, unemployment is now hovering around the 500,000 mark and while there will be some rebound from that, we just don’t know the extent. Luckily, leading into every other recession I am aware of, our industry has had a period of overbuild. This last housing recession has really strengthened our defenses here. We have consistently under-built for our population and lending practices have been very conservative.
Does this mean your outlook is on the positive side?
Todd Gullette: Yes, absolutely, The National Association of Realtors® has upgraded their outlook on housing sales based on the country-wide numbers they are seeing.
Freddie Mac has averaged the current 30-year mortgage rate to 3.14 percent and that should continue to strengthen our buyers and the investment community. Overall, Boulder County seems to most often outperform the country in economic vitality and resilience.
To see a video of the entire interview, visit the RE/MAX of Boulder YouTube channel at: youtu.be/zjUkzPtdhXw.
By Duane Duggan. Duane has been a Realtor for RE/MAX of Boulder since 1982. Living the life of a Realtor and being immersed in real estate led to the inception of his book, Realtor for Life. For questions, e-mail DuaneDuggan@boulderco.com, call 303.441.5611 or visit boulderco.com.