Real Estate Investing amidst the COVID Crisis

We can all agree that these past couple of months can be categorized by a few key terms: unprecedented, uncertain, and unstable. We have effectively been told to shelter at home and wait until better news arises. And while no one can be sure what’s in store for us in the future—both with near-term policies and long-term economic effects—we can now begin to look back at these past couple of months to reflect, feel thankful for our loved ones, and continue working towards recovery as a community, nation, and world.

As we now have about seven weeks of “Stay At Home” orders under our belt, we are looking at market data over this period, aided by expert insight, to better gauge the current landscape at hand, specifically in regards to real estate investing. Because rest assured, real estate investing has still been active over the past couple of months. Furthermore, we expect to see investors take advantage of the lifting “Stay At Home” orders to continue buying, flipping, renting, and/or selling homes. 

According to REALTOR, March showed strong results with home prices rising in every region of the U.S. last month. On a more local basis here in Denver, residential home prices rose 7.3% on average in March, compared to March 2019 (DMAR). However, given the mid-month “Stay At Home” order, active listings ended the month with an 8.2% decline when compared to the prior year. This was due to Sellers taking their houses off the market due to the public orders, and perhaps even more so, due to the general uncertainty of what was to come. Per DMAR, 761 homes were withdrawn in metro-Denver in March alone, with 90% of those withdrawn within the last two weeks of the month. These actions—paired with already incredibly low inventory levels in the Denver metro area—have only perpetuated the Seller’s market.

As “Stay At Home” orders are slowly lifting and transitioning into “Safer At Home” (Denver County is set to lift on May 9th), we expect to see an influx of listings back onto the market. Nonetheless, even with this influx, we still expect the Denver market to remain a Seller’s market given the overall low inventory. Interestingly enough though, we have started seeing more Seller Concessions such as price reductions (typically $5K-10K), perhaps as Sellers try to appease wary buyers or expedite the transaction. Overall, housing prices are projected to remain relatively stable and by no means do we expect to see the type of price reductions that crashed our markets in the last recession. While we are in a slower market right now, homes that are accurately priced and show well both online and in-person should continue to sell. Furthermore, investors with good financial standing are continuing to refinance their existing loans.

We will continue monitoring the landscape by keeping a close eye on unemployment levels, government policies and aid, as well as localized market data for every region we lend in. As for our lending landscape here at Merchants Mortgage, we are still actively lending to qualified applicants. Investors with good credit, good liquidity, and prior investing experience will still find success in their search for a loan. Please reach out to one of our Loan Officers should you have any questions or concerns about your local market, would like to know more about our lending practices and underwriting criteria, or if you would like to apply for a loan.

Please take care, be well, and know that the Merchants Mortgage team is here for you at every step of the way.

The Merchants Team              

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