The COVID-19 The Perfect Storm for Sellers in School District 20 Neighborhoods
COVID-19 has wreaked havoc on the real estate market for Colorado Springs, but not in the way one would expect, at least not yet.
My primary market is the neighborhoods in Academy School District 20. This is the area in which I live and where my boys went to school. Every month I monitor the market for District 20 as a whole, as well as several neighborhoods, this helps me to keep on top of market trends for my own neighborhood.
In 2019 there were concerns that we were expecting a shift in the market with prices dropping and fewer buyers entering the market. I reported month after month, that I was not seeing this shift. It remained a very strong seller’s market with increasing prices, lower days on market, and no increase in seller paid concessions, all indicators of a shift toward a buyer’s market. Then COVID-19 hit.
As a result of COVID-19, many of my buyer clients decided that they would wait for the foreclosures that are expected due to job losses and missed mortgage payments. In my opinion, they will be waiting for a long time.
During the months of March and April, we saw a record low number of properties entering the market, but those that did sold quickly and often above list price. Sales price to list price ratio jumped from 99% in February to 99.85% in March and 100% in April. In June the average sales price is well above the median sales price as more homes above the median of $467,000 sold, driving up the average to $532,000. Average Days on Market dropped each month after the peak in February of 67 days to a low of 29 days in June and months of inventory is down to 1.3 months.
Sellers are still reluctant to list their homes for a couple reasons, not wanting to show their homes during the pandemic and the fear of not finding what they would like to buy when they do sell. My experience is that many of the sellers today are selling because they already have another property to move to or are moving out of the area.
With average sales price up 16% over one year ago for District 20 neighborhoods, those that must sell due to a job loss, more than likely have enough equity in their home that they can sell it above what they owe and not risk a short sale or foreclosure. When we do have a foreclosure, it won’t be a bargain. Short sales are required to start at market value and foreclosures that are owned by the bank will also start at market value and may even put money into the property to maximize their sales price. If there is a bargain, you will see strong competition from investors who buy with cash which will make it nearly impossible for the typical buyer to win the property.
We still have buyers in the market driving prices up and days on market down with no end in sight. The perfect storm for sellers.