The real estate industry is vital in the global economy, covering essential areas such as housing, land, storage space or offices. The real estate market is one of the first to react when there are factors that lead to either crises or booms. In the context of the current pandemic, the Front Range of Colorado market is doing good, which was somewhat expected given that the real estate market is opportune in almost any crisis.
Real estate has always been and will continue to be one of the most popular investment options, and crises have shown this. Even if it is one of the first industries to be impacted by economic growth or recession, real estate has surpassed crises every time and it stayed at the top.
In the Front Range of Colorado, the real estate market is not in a crisis
In the US, the price per square meter increased faster in the second quarter of 2020 than in any other period before the financial crisis of 2008. One thing that can explain this trend: buyers’ preferences have changed.
In the Front Range of Colorado, people continue to actively search for houses for sale Southlands properties and view homes online, even during the pandemic. Or maybe even more so during this period, when there are some observable trends throughout the entire state: historically low mortgage interest rates, rising wages due to a strong working environment and stable housing affordability conditions.
While some have been directly affected by the effects of the pandemic and have migrated to a smaller home to cut costs, there are many other cases where people pack up and move to larger houses. Of course, the socio-economic dynamics between these two very different behaviors is important to consider.
Real estate market indicators are difficult to predict in the context of the coronavirus pandemic. The experiences of the financial crises of 1933, 1980 or 2008 are partially different, as they were due to either overproduction or excessive indebtedness. However, real estate markets are closely dependent on the banking system. Therefore, messages of support from all monetary authorities (central banks, treasury, etc.) are vital for maintaining confidence.
Statistics this year show that prospective homeowners in the Front Range gobbled up the available housing very quickly, which is mostly due to the very low interest rates that allow people to afford bigger homes. This October, there were 8209 people who bought new homes in the Colorado Front Range area, at an average price of about $570,000. Days on Market average was 31.
As about the constructions of new homes, builders try to keep up with current demands by ramping up the new construction rate. Competition for building lots is one of the factors that cause pricing pressure, followed by the escalating costs for materials. For example, compared with this time last year, lumber prices are up 130%, which adds about $15,000 to the price of a new home.
However, as long as long as interest rates stay low, real estate specialists estimate that the demand for housing in the Front Range area is not going to fade away, even if the pressure on prices will remain high.