Pandemic Impacts: A Health Crisis is not a Market Crisis

The real estate landscape is ever-evolving, and in the midst of a national health crisis, it's natural to wonder about the implications for the housing market. Many are drawing comparisons to the 2008 housing crash, but the reality today is markedly different. In this article, we explore key insights and strategies for navigating the current real estate market in the face of the COVID-19 pandemic.

1. Market Health:

In 2008, the housing market faced a perfect storm of volatility. Oversupply of homes, lax lending practices, and a wave of subprime mortgages characterized that era. Many borrowers had little or no equity in their homes, and when the crash hit, it led to a housing crisis.

Today's market is in a much healthier position. Sellers have enjoyed about eight years of appreciation, and we've seen a sellers' market with low inventory levels. The loan process is far more stringent, ensuring that buyers are genuinely qualified.

While we are witnessing a drop in showings and pending sales due to the pandemic, the balance of supply and demand still favors sellers. Buyers in this climate are highly motivated and are leveraging digital tools like video tours and 3D scans to make informed purchase decisions. As of now, Colorado's housing market remains stable, with some pending contracts closing at or above the asking price.

Unlike 2008, there's no wave of foreclosures, distressed sales, or steep price drops. Low inventory levels and current data do not indicate an imminent shift to a buyers' market.

2. Mortgage Process:

Social distancing measures have led to processing delays. Appraisals are backlogged, and lenders are tightening restrictions. Communication with your lender is essential, as requirements can change rapidly. Be prepared to provide additional documentation, as verification of employment is now done multiple times during the process.

3. Showings and Marketing Listings:

The real estate industry is adapting swiftly to our virtual world. To showcase properties effectively, realtors are employing digital tools like professional videos, interactive 3D scans, and virtual tours. Meetings with clients often occur on platforms like Zoom, and brokers are becoming increasingly creative with online marketing strategies.

4. Sight-Unseen Sales:

In response to shutdowns, some buyers are making offers without physically viewing properties. While this trend comes with pros and cons, it's becoming more common, and transactions are successfully closing with careful contractual and procedural handling.

5. Title Process:

The title industry has embraced the virtual realm to limit personal contact. Transactions are largely digital, and sellers can sign via remote notary. Buyers, however, may still need to sign "wet" signatures in front of a notary. Some title companies even offer curbside or drive-up closings, allowing for minimal physical contact.

The real estate industry has been deemed "essential" in most states, including Colorado, recognizing that some individuals have pressing housing needs. The industry has adapted quickly, maintaining a strict adherence to social distancing rules and CDC guidelines.

In these challenging times, maintaining hope is crucial. While our current reality is far from normal, there is a belief that we will emerge from this temporary crisis stronger and healthier. The real estate market and the Colorado economy are expected to recover.

Above all, the well-being of our communities remains the number one priority. Please stay healthy and safe as we navigate these uncharted waters together.