As the COVID-19 epidemic and economic shutdown stumbles into its second month, more and more sellers of residential real estate are deciding to wait on the crisis from the sidelines.
“Withdrawn properties are up significantly since mid-March, which is to be expected under the circumstances,” Information and Real Estate Services LLC CEO Lauren Hanson said. IRES is a Loveland-based multiple listing service that operates in Northern Colorado and the Boulder Valley.
In IRES’ operating area, which includes Boulder, Broomfield, Larimer and Weld counties, 92 sellers withdrew their homes during the week of March 15. By the following week, that total was 121. During the week of March 29, 83 homes were withdrawn in the four-county region, according to IRES data. The multiple listing service doesn’t currently track county-level withdrawal data.
On average, fewer than 60 homes were withdrawn weekly over the prior three-week period.
The uptick in withdrawn homes isn’t a phenomenon limited to Northern Colorado or the Boulder Valley.
“There were an unprecedented 761 home sellers who withdrew their homes from the metro-Denver real estate market in March,” according to a market report recently released by the Denver Metro Association of Realtors. The report includes data from Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson and Park counties. “The largest number of homes, 625, were removed in the last two weeks of March amid fears stemming from the coronavirus pandemic.”
DMAR Market Trends Committee chairwoman Jill Schafer attributes the spike in withdrawals to fears of strangers touring and contaminating the home and general anxiety about employment and the economy.
Sellers deciding to leave the market is a sharp contrast to the strong real estate market that existed just prior to the coronavirus outbreak.
The first half of March “continued pace with an incredibly strong January and February,” Nicole Rueth with Fairway Independent Mortgage Corp. said in a video message that accompanied the DMAR report. “This spring was poised to be record-breaking.”
While the real estate market isn’t going to be breaking any records any time soon, it’s not expected to be down for long.
“What [recent home withdrawal data] doesn’t reflect is how many of those same properties will come back on the market when all of this is behind us,” Hansen said. “We are in a unique situation, unlike the devastation of fires or floods that destroy homes and reduce overall available inventory. That is a significant distinction. Sellers are likely to remain interested in selling down the road for a variety of reasons — a different job in a new community, needing a smaller or bigger home due to changes in family dynamics.”
Rueth said she expects withdrawals to peak in April with more sellers reentering the market as summer approaches.
There are several factors, she said, that ought to work in the market’s favor: low interest rates; tight housing supply, especially for entry-level homes; and demographics creating demand as millennials start to reach the average age of first home purchase, 33 years old.
“This will be short-lived. This is not a recession or a housing bubble,” she said. Rather, “it’s a pause on our otherwise healthy growth.”
Still, the COVID-19 crisis could permanently change the way real estate is bought and sold.
“IRES is in the process of adding a specific search related to listings with virtual tours, so that homes can be viewed virtually rather than in person. It will be interesting to see how popular that option [that is set to launch this week] becomes with the brokerage community as well as consumers,” Hanson said.