Local home sales took their biggest plunge in a decade during May amid fears and restrictions related to the COVID-19 pandemic.
Sales of Colorado Springs-area single-family homes totaled 1,132 last month, a nearly 28% drop over May 2019, according to the latest market report from the Pikes Peak Association of Realtors. That’s the largest percentage decline in home sales since they fell almost 32% in November 2010, historical data show.
To combat the spread of the novel coronavirus, Gov. Jared Polis’ administration prohibited home sellers and their real estate agents from conducting open houses and in-person showings of properties for sale during most of April, which left buyers to glean information via video presentations.
At the same time, many sellers pulled their homes off the market rather than have strangers walking through, while some buyers remained on the sidelines because of uncertainty over the economy and their jobs.
“There was a COVID-related slowdown in listings coming on the market, listings being shown and listings selling,” said Bruce Betts, broker-owner of Re/Max Advantage in Colorado Springs.
Through the first five months of this year, home sales totaled 5,518, trailing the number sold last year during the same period by 7%.
Even as home sales slowed in May, prices continued to rise.
The median price — or midpoint — of area homes that were sold in May rose to $350,000, climbing 6.3% on a year-over-year basis though dipping from April’s record of $360,000.
A shortage of homes for sale contributed to May’s year-over-year price gain, Betts said. The supply of homes for sale totaled 1,546 in May, down 16.4% from the same month a year ago, the Realtors Association report shows.
Homes in lower-price ranges are especially scarce, Betts said. A check of homes listed for sale on the local Multiple Listing Service at midweek showed there were just 599 properties priced at $500,000 or less available in El Paso County, he said.
“For 720,000 people roughly (the county’s approximate population), that’s nothing,” Betts said.
Even with jobs lost because of pandemic-related business closings, Betts said demand for homes remains relatively strong.
The Realtors Association report shows that homes under contract — pending sales whose transactions haven’t closed — totaled 2,760 in May, almost 5% more than a year ago and up 41.2% from April.
Before the pandemic, Colorado Springs’ strong job market helped propel housing activity, Betts said. Now, despite local job losses, many people still are working, he said.
Also, local homebuying continues to be fueled by Denver-area residents who are seeking less expensive housing in northern Colorado Springs and El Paso County and commuting north to their jobs, he said.
It’s a trend that’s been in place for several years as Denver-area housing costs skyrocketed and Springs-area homes remained tens of thousands of dollars cheaper. In May, the Denver-area median price was $470,000, according to the Denver Metro Association of Realtors.
Low-interest mortgages also continue to drive the market, Betts said. The average mortgage rate nationally for a 30-year, fixed-rate loan ticked up to 3.18% this week, up just slightly from last week’s record low of 3.15%, according to mortgage buyer Freddie Mac.
One more factor might drive homebuying, especially over the summer, Betts said.
Some people worried about a potential second wave of COVID-19 cases later in the year might decide now is the best time to find the home they want, he said.
“There are people that have underlying health issues that are going to be more cautious going forward, no matter what. And other people that maybe have changed their minds through all of this,” Betts said.
“And other people that are more motivated to get that purchase done or get that sale done, whatever their motivation is, because of this,” he said. “Because they might be thinking this is going to come around again next fall or next winter, and I want to be where I want to be before that happens.
“So if you’re selling and downsizing or buying something bigger for a growing family, or if you’re moving out of your rental to become a homeowner, whatever you want to do, I think you’re going to be more motivated to get it done now.”