Inventory has Become the Unintended Consequence
On June 3rd, economists declared optimistically we were out of the recession before it was formally confirmed we were in one on June 8th. As June ended, COVID-19 cases started spiking in all but three states and economists are once again nervous about whether the initial recovery has enough momentum to push us through however long the virus remains. The job gains we saw in May and June will turn to job losses in July if states shut down their economies and implement strict social distancing measures.
Chairman of the Federal Reserve Jerome Powell warned a House committee at the end of June that greater market actions like Forward Guidance, Asset Purchases, and Yield Curve Control may be needed to keep interest rates low and insulate the overall economy. He cautioned lawmakers not to become complacent in dealing with the coronavirus as the current economic stimulus packages are set to expire at the end of July.
A fourth and final COVID stimulus package is expected.
Maybe I’m just speaking for myself, but I’m feeling a little queasy on the roller coaster ride that is 2020. Speaking of rollercoasters, Disney World employees are petitioning to delay the reopening and Governor Polis closed Colorado’s bars and nightclubs after reopening two weeks ago.
Job Gains Amid Dire Forecasts
Recent job numbers continued to show strength. The National Household Jobs Survey and U.S. Bureau of Labor Statistics (BLS) releasing their reports for June surprising the market with 4.8M new jobs - almost doubling May’s numbers - and unemployment dropped from 13.3% to 11.1%. 40% of the jobs created were in leisure and hospitality. The ADP Private Payroll Employment Report showed 2.3M new jobs were created, mirroring a similar job trend led by the hospitality and leisure industry.
Small businesses continue to be propped up by the PPP funds, which were just extended another five weeks by the US Government. Locally, Colorado has successfully regained 20% of the jobs lost in March and April, with the state’s unemployment rates now hovering at 10.2%. Not ideal, but we’re further ahead than many states!
Seeing big numbers on the board should not surprise anyone as the pandemic brought the economy to a screeching halt, which came roaring back to life as businesses were allowed to reopen when we thought we were out of the clutches of COVID. While many businesses did survive to the reopening phase, I do not expect many of the same businesses to survive another prolonged shutdown period - even with government assistance.
On the housing front, strong demographics and low-interest rates led the way as mortgage purchase applications continued to show strength year over year, but experienced declines in the past two week over weeks. During a “normal” year, applications fall after May, so the recent declines do not bother me at all considering the strong 18 and 15% year over year gains are robust and 30-year mortgage rates are still three quarters lower than they were a year ago, giving buyers an additional 10% purchasing power.
Metro Denver’s Resilient Housing Market
The resiliency of our Denver Metro buyers is the theme of July’s DMAR Market Trends Report. New Listings were gobbled up as Pending Home Sales show strength growing 16% month over month - on top of May’s 115% surge. We saw Closed homes recover to within 11% of 2019’s year to date numbers, resulting in a difference of only 3000 homes sold this year compared to last year. Considering we sell an average of 57,500 homes a year, we’ve recovered to within half a month’s sold homes. The Median Closed Home Price recovered from its slight dip last month, landing at a 4.53% gain for our homeowners.
The market gains came at a cost: inventory. We know prices go up when supply is scarce as Months of Inventory dropped from two to one month with the biggest drop in the $1M+ homes going from 9.5 months to 4.36. $300 and $400K’s priced homes also saw their months of inventory cut in half as sellers stayed on the sidelines as confident buyers engaged in bidding wars.
To say Active Inventory became scarce is an understatement and with an 11% decline month over month and 33% year over year - after an almost 20% year over year drop last month from 2019.
Today’s housing market offers far more for sellers than the future
The Federal Reserve Board wants to keep rates low through 2022, but we will see rates start to turn up if a vaccine is found and the economy improves. My two cents: don’t let your buyers re-sign a year-long lease as interest rates could be headed up and homes will most certainly cost more. Agents, get those sellers moving. Not only does the market need their inventory, but it is also willing to pay premium prices for it and their repurchasing power is strong as long as rates remain low.
As the virus rampages throughout the nation and the economy attempts to recover, the housing market will be its guiding light, strong, stable, and willing to provide financial security to those who participate.
Your Partner in Building Wealth through Real Estate,
The Rueth Team of Fairway Independent Mortgage Corporation
The Rueth Team is dedicated to our clients success. It is this driving mission that keeps our team constantly learning and pushing beyond our boundaries. We find the solutions other lenders simply can’t (or won’t). We make a commitment to each borrower, fulfilling it with hard work, constant communication and creative problem solving. When a referral partner gives our name, they are confident knowing they are giving their clients the best chance of a smooth, successful experience.Learn More
NO OBLIGATION TRAINING: Market Mastery & “Done for You” Marketing tools delivered every 3rd Thursday (occasionally Tues) of the Month so you MAKE MORE MONEY! Nicole Rueth with Fairway Independent Mortgage Corporation, together w/ guest speakers from a range of professional disciplines, will be presenting monthly updates on industry statistics and market news you can use to help educate and motivate your buyers and sellers. Walk away with talking points, slides & information to set yourself up as an industry expert.
Alison P. from Wheat Ridge, CO
Nicole was wonderful to work with! The experience was so much better and more personal than working with a large company where you might not have contact with the same person throughout the process. Nicole was extremely communicative, easy to reach and talk to, and went out of her way to make this the most positive experience for my family. She worked so hard to meet our tight deadlines and made the entire experience smooth and stress free. I would 100% recommend working with Nicole and the Rueth Team!
stacieandtomwedding from Denver, CO
Nicole and her team were responsive, professional, and supportive as they walked us through every step of the loan process. We highly recommend the Rueth Team and will reach out to them with any future needs!
Natalie W. from Idaho Springs, CO
We’ve used The Rueth team twice now and have had a seamless experience both times. She and her team are knowledgeable, friendly and helpful. When I contact them they are very quick to respond. I would continue to work with The Rueth team in the future!
Shelby from Denver, CO
I used Fairway and Rueth’s team when purchasing a home recently and they were outstanding throughout the entire process. One of the staff on the team was even out on leave for most of the process and you wouldn’t have even noticed. Everyone I worked with provided very friendly, personable and knowledgeable service. I knew what my options were and everything was done in a very timely fashion. They even were able to find me some closing clost assistance so that I was able to have some money in my pocket left at close to do some work on the house. This was the third home I’ve bought and Rueth’s team was by far the best mortgage company I’ve worked with and I would recommend them with my full confidence.
Andrew C. from Wheat Ridge, CO
Nicole was fantastic to work with. She's responsive, knowledgeable, and able to make last minute changes when necessary. Working with her was a nice change from big-box mortgage companies. When last minute things needed to be fixed she did them promptly, and made sure we made it to closing without a hitch!
Mr. and Mrs. Walls from Idaho Springs, CO
We were impressed with the professional, personable service we received from Nicole and would recommend her to other home buyers. She helped us get pre-qualified quickly, making our search more productive.
Kathleen Cain from Palmer Lake, CO
Excellent team! Would highly recommend! If I ever have to do this again I would call Nicole Rueth! Her response to any of my questions was answered immediately and with great accuracy! Couldn't have been any better!
Paige M from Morrison, CO
Nicole and her team did an amazing job not only in keeping me informed of all the processes that go into selling and buying a home, but they were professional and knowledgeable! They answered all my questions, and made it easy to understand! I will never use anyone else!
april3lynz from Colorado Springs, CO
Absolutely AMAZING group! I had a really rocky start with my home buying experience. I had a horrible realtor and I was going to go through a different lender. I dropped my horrible agent and found an amazing realtor who was just phenomenal, and she referred me to The Rueth Team. My experience with them was quick, painless and simply amazing. I had very little stress and their team was so helpful. I had a moment of panic and I called, they were able to explain everything to me without confusing me more and went over every detail of my process moving forward with me. They had no hidden fees and were straight up and up front with me the whole way. I'm extremely grateful to them. In less than a month I am moving into my new home!!
Jeff D. from Denver, CO
I've closed two mortgages prior to this one with The Rueth Team, and this was by far the smoothest lending process I've had. Nicole, Peter, Emily, and Robbin were terrific communicators, provided me with honest feedback, and were simply easy to work with. They're true professionals and I'd happily work with then again on my next loan.