Time will tell: Local real estate agents hope pandemic won’t have huge, lasting effect on housing market
STEAMBOAT SPRINGS — People are still buying and selling homes during the COVID-19 pandemic but, like most other industries are experiencing, there’s much uncertainly on how long that will continue.
While local real estate experts are trying to keep optimistic that there won’t be a market free fall like the nation witnessed during the 2008 Great Recession, it’s already evident sales have started to dip.
As of now, it’s not all doom and gloom, according to Jon Wade, broker and owner of local real estate firm The Steamboat Group.
“It wasn’t an off switch like some people are saying,” Wade said.
An examination of the current market’s metrics show strong sales heading into the second fiscal quarter. The first quarter had $101 million of total sales in Routt County compared to $86 million in the first quarter of 2019.
Then COVID-19 started to break out in the U.S. Though, it wasn’t an initial panic for the real estate market. March saw $40 million in total sales versus $27 million in March 2019.
“The situation affected March, but March was still pretty good,” Wade said.
The effects of the pandemic were most seen in the last two weeks of March, specifically when Steamboat Resort closed operations and Gov. Jared Polis issued a statewide stay-at-home order.
“In the last two weeks, everyone was thinking they should close those sales that they were already under contract for — basically nothing new went under contract then,” Wade said. “Most people still closed, a few people renegotiated and a few people opted out.”
Omitting some outlying high-dollar property sales in March, total sales in those past two weeks were considered relatively flat compared with that same period last year.
While the second quarter won’t look as good, Wade said interest in the local market is starting to return. An encouraging sign, as he called it.
The Steamboat Group has helped a number of local people in the beginning weeks of April, Wade said. Right now is a time for entry-level locals to find a home and potentially not be outbid when submitting an offer.
“There’s a period of time here where there won’t be as much competition for them,” Wade said.
While Wade said the Steamboat market isn’t suddenly going to become affordable, the current climate is helping.
Wade said he’s optimistic if the economy reopens by June, that normalcy will return.
Doug Labor, associate broker and general manager of Steamboat Sotheby’s International Realty downtown, doesn’t believe home prices will drop significantly or bottom out as they did during the Great Recession.
“People think that with this pandemic, property values are going to drop, but seeing that owners aren’t panicking and throwing their property on the market means that the market is still going to be tight,” Labor said.
COVID-19 has certainly changed the local real estate market, Labor said, as well as its procedures to secure transactions, inspections, appraisals and closings.
“We’re still seeing activity,” Labor said. “But it’s almost a day-to-day basis as to how real estate is transacted in Colorado now, from showings to closings.”
According to Labor, there are currently 978 listings in Routt County. That’s down about 7% from last year. That means sellers are looking for a good price for their property, not selling because of need, he explained.
The real estate market is not as quick to react to situations as the stock market is.
“You can lose 20% to 30% value in a couple days trading but real estate moves a lot slower than that,” Labor said.
The second and third quarter go back and forth as the top quarter for number of closings, Labor said. And there will likely continue to be a drop in the number of transactions going through the second quarter.
Public health orders dictate that if a property is occupied, it cannot be shown to prospective buyers. That’s put further strain on the number of sales.
For buyers, Labor said there are opportunities, and they should remain reactive when properties come onto the market. For sellers, they may have to take a bit of a price drop for their property to stand out.
“We’ve seen sellers that have decided to pull their property off the market, because they feel they’ll come back in when the timing is a little bit better,” Labor said.
Those properties will most likely all come back to the market once the situation changes for the better, according to Ulrich Salzgeber, CEO of the Steamboat Springs Board of Realtors.
In a recent survey conducted with the board’s members on the outlook of the local market, the consensus found the immediate impact of COIVD-19 was that sellers pulled their listings off the market to disallow showings.
“When you make this major of an investment, you naturally want to see the property that you hope to purchase,” Salzgeber said. “Currently, there is no avenue for this to happen whether they are locals or second home purchasers.”
The initial impact on buyers will be based on the economy and the ability for them to afford their mortgages. While there might be a short period of downward price adjustments, that doesn’t solve the local dilemma of low inventory, Salzgeber said.
From the survey, two major questions emerged: Will COVID-19 be the impetus for people to escape urban environments and seek the safety and solitude of the mountains, or will it damage the economy to a scale where new homebuyers or second home purchasers no longer have the ability to purchase?
Those answers remain to be fully seen.
To reach Bryce Martin, call 970-871-4206 or email bmartin@SteamboatPilot.com.
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