Real Estate Consumer Behavior has Shifted in the Last Two Weeks

Matt Hudson, CEO Denver Market Stats

We are analyzing the most important leading indicators of the Denver real estate market each week. Yes, we have seen massive reaction in the market from recent societal and economic disruption. 

See this weeks market update we sent to CHR clients and the “agent talking points” (attached). Use these to support your business, your clients and the database of people you know. 

Under Contracts:

We saw an average decline of 14.1% in the number of properties going under contract over the last two weeks.  11.1% two weeks ago and 17.1% last week. We do expect this slide to continue.  However, our current pace is still to sell more than 50,000 homes in the metro area with the average over the last 5 years being just over 51,000. Don’t be reactionary to what you see over the next three weeks, and keep your clients calm.

Showings per Listing:

Showings per listing were down the last two weeks, dropping to the lowest level in the last two years, for this time of year. The shelter-in-place order will affect showings over the next few weeks. Set great expectations with your sellers. Also note however, buyers that are out looking, are going to be VERY SERIOUS BUYERS.

Withdrawn and Back on Market:

Massive shift.  Sellers pulling their home off the market and buyers terminating contracts has increased markedly.  This is most likely short term emotional reaction to fear of the virus and economic disruption.  Be prepared for at least a few weeks refractory period as more jobs are lost, businesses and consumers try to understand the benefits of the $2Trillion stimulus package and we’ll see how the equities markets respond. 

NOTE: Back on the market properties will likely level off over the next week as the people who wrote offers and freaked out, are for the most part out of the buyer pool for now.

Inventory:

As of  Friday, March 27, 2020, there were 5,299 homes on the market. Same time last year, inventory was 5,537 homes. Yes, buyer behavior has changed for the moment, but will that last? Probably not. If/When relatively normal market conditions come back, we will need 18,000 or more homes listed for sales for the market to be “balanced” (neither a seller’s, nor buyer’s market). With current inventory levels and a 50% reduction in buyer activity, that means we have an effective 10,600 homes on the market, which is still a seller’s market. 

NOTE: We started seeing builder incentives and seller concessions in the last two weeks. Never hurts to ask. 

REMIND YOURSELF OF DENVER MARKET FUNDAMENTALS

Denver is arguably the strongest real estate market in the country. 

Your Action:

Active engagement with your database, prospective clients, and active and under contract clients with good information today could turn a challenging time into deeper relationships with the people you care about and a business that is stronger than ever before. 

Be educated and educate others, and you’ll be just fine. But take action. 

Prediction:

Thousands of Denver agents will be getting out of this business because they never learned how to be a true professional. They won’t know how to handle a listing on the market for more than 30 days (or 5 days). They don’t know how to write good contracts (let alone great) and they don’t have the confidence, knowledge or courage to have proactive consultative conversations with their clients. Discounters won’t survive, they cannot afford to serve a client for 6 months, if that’s what it takes. We’ve seen this cycle about every 10 years. 

If you are a pro, now is the time to show up for your people. Invest more than you ever have. 30-90 days of intense care for and investment in your database and clients will establish a whole new level of business for your future.   

Matt Hudson

CEO/Founder – Colorado Home Realty