Above-average snowfall and rising concerns about the coronavirus didn't put a damper on local home sales last month, according to a monthly update from the Denver Metro Association of Realtors.
"While the stock market struggled with fears of the spreading coronavirus, real estate stayed strong," said Jill Schafer, chair of the DMAR Market Trends Committee and a local Realtor, in comments accompanying the report.
Sellers in metro Denver listed 5,122 properties in February, up 5.6% from January and on par with year-ago levels. Buyers closed on 3,429 homes in February, up 3.16% from January.
The number of listings available for sale in metro Denver at the end of February fell 2.5% from January and nearly 20% from year-ago levels to a tight 4,835.
Over the past two decades, the inventory of homes and condos available for sale has risen an average of 1.84% between January and February, not fallen, according to DMAR.
The increased competition caused new listings to sell faster and lifted home prices. The median number of days listings spent on the market went from 27 in January to only 12 in February, Schafer said.
The median price for a single-family home sold in February rose to $469,900, up 2.3% from January and 8.02% from last year. The median price for a condo sold in February rose to $315,000, an increase of 3.28% month-over-month and 5.35% year-over-year.
February, by most measures, was a good month for the housing market in metro Denver. What happens next is less certain.
In response to the spread of the coronavirus in the United States, investors have sold equities and piled into fixed-income investments. That had pushed down interest rates and on Tuesday, the Federal Reserve made a surprise 50-basis-point cut in its key benchmark rate.
Mortgage rates are now approaching record lows, creating a strong incentive for buyers to lock in a home. At the same time, those rates are low because bond markets are pricing in a higher chance of economic disruption, even a recession.
Buyers must juggle the desire to take advantage of improved affordability with the possibility that a slow down that could push down home prices or even push them out of a job. And in the short-term, there is the prospect of quarantines and other restrictions on movement if the virus spreads.
"If consumers can look past the uncertainty, the entry-level market will benefit the most from this trend as the monthly payment is of critical importance to this group," Ali Wolf, director of economic research at Meyers Research, said in a research note.
Nicole Rueth, producing branch manager of The Rueth Team in Denver, predicts low mortgage rates could accelerate demand in an already tight market.
"For the housing markets with tight inventories like Denver, the rate cut will indirectly lower mortgage rates further and aggravate a more intense seller's market," she said.
The equation is different for the luxury end of the market. Buyers of more expensive homes are more sensitive to losses in their stock portfolios, which have been heavy in recent days. They may decide to wait things out, Wolf said.