Denver Coronavirus updates and Q&A

[Chris Lopez]

Over the last week (man how fast the world can change!) I've had clients and fellow investors and agents reach out to ask questions on the market. I share what I know and often learn tidbits from them.

It's been a great way to share knowledge, but it's over one-on-one phone calls. Add in the fact that news and the market are changing by the hour = inefficient ways of sharing knowledge and staying up to date. Frankly, I'm having trouble keeping up with everyone.

I started thinking of better ways to share ideas and information... then it hit me to start a BP thread! The forum is easy for sharing ideas and collaborating.

There are quite a few smart people around town that can share their knowledge and what their hearing from their network. It should be a great way for all of us to learn and help get through this.

At this point, it's us versus the damn virus.

Tagging people that I know around town who are frequent posters to BP with great info. Add anyone that I don't know or forgot

@James Carlson

@Erin Spradlin (just saw a google hangouts you're hosting. Hopefully you'll share notes!)

@Matt M.

@Craig Curelop

@Dan Mackin

@Scott Trenchfor north Colorado @James Orr

Hopefully, they and others join. if not, I'll keep posting updates. I'm pretty isolated at home, so being isolated on BP will just add salt to the wound. :)

Be safe and stay healthy!

[Dan Mackin]

So far things have been going the same as before from my perspective. There of course has been more questions regarding the upcoming status of things are where we are heading, but I've always worked to make sure my investors buy places that they can take some hits and still cover the expenses fine. 

I'm UC for a property with my brother in Westminster currently and have no qualms about purchasing it even with all of the changes. In the grand scheme of things it will do well for us and we have the funds to support it for a while in a really bad scenario. (P.S. House hack with siblings if possible. I'm helping my brother with the down payment and he is getting the owner occupant loan. Win/Win in my book.) Interest rate fluctuation has been super obnoxious. Went from $2500 lender credit to $400 fee by the time the lock went through. Still makes sense to do though.

My wife and I are sitting on a good amount of funds to cover ourselves for a while. We learned a few years back how hard it is to be right at the limit all the time and have worked to pull back from that scenario and it is paying off now. 

I listed a home in Highlands Ranch just over a week ago and had over 30 showings and 3 offers within 2 days and it wasn't a perfect property. A few others that are in the works have been asking questions and the best advice I can give for now is list sooner than later while the demand is still showing high levels. Especially if others are not listing due to concerns, this will drive even more traffic to your property.

Thanks @Chris Lopez for starting this thread. Good to read what others are seeing. Looks like you and I will need to wait a while longer before meeting up again...

[James Carlson]

The Colorado Bar Association, in coordination with the DORA, just released a new form/contract for "real estate contracts that real estate brokers can use to 'pause' pending real estate transactions where the parties want to close but cannot due to circumstances caused by COVID-19."

Essentially, if appraisers, lenders, title companies, etc. are delayed due to closures or stay-at-home orders, then this form would help buyers and sellers in Denver, Colorado Springs and elsewhere in Colorado get on the same page. 

The form can be found here.

As of now, real estate work -- agents, appraisers, etc. -- is exempt under Denver Mayor Hancock's shelter-in-place order that came down yesterday. So who knows if the above is necessary yet, but it could be. 

[Colin Smith]

Good luck with your shelter in place Denver! I am guessing Colorado Springs, if not all of CO is shortly behind you.

Stay Safe! Stay Healthy!

[Chris Lopez]

@Erin Spradlin and @Gray Hall I finally got my appraisal scheduled for my rental property. My lender said all investment properties still require a full, in-person appraisal. 

@Dan Mackin yea, it looks inventory is going down even more! Not a bad time to list. It'll probably turn into a bigger catch-22 of sellers having trouble finding their replacement property.

Your Castle emailed out internal stats today for showings per listings from their agents. They have a 500+ agent firm. Good sample size: 

Showings per listing March 9-March 23 2020: 7.0
Showings per listing March 9-March 23 2019: 7.6

I'm closing on refinance on Friday and will get to do my first drive through closing!

[Erin Spradlin]

@Chris Lopez... interesting. This is a quote from my source, Lonnie Glessner (loan officer):

Fannie and Freddie yesterday released guidance on appraisals from now until May 17th. They both will accept a desktop appraisal in which an appraiser does not view the home or a drive-by appraisal and will not require a physical interior inspection of the property. The appraiser may rely on public records and the MLS pictures and descriptions instead of their own personal observation. However, if a borrower is buying a second home with less than 15% down a full interior inspected appraisal is still required.

[Chris Lopez]

@Erin Spradlin Yea, I saw Lonnie's email newsletter with that. Perhaps my rental is different than most, but I'm doing a 15% investor loan, it's not MLS, and public record info is jacked up. I'll double-check with my lender to make sure it wasn't unique to my rental situation.

[James Carlson]

@Chris Lopez

At the risk of diving further into the weeds here, I got another email from DORA compiling the guidance being given to appraisers.

For instance, Fannie Mae's temporary guidance that includes allowance for exterior-only appraisals for many deals.

There's that and more of the info for those want to bore themselves here: http://www.appraisalfoundation.org/iMIS/TAF/Coronavirus_and_Appraisers.aspx

Haven't seen a Denver or Colorado Springs deal like this, but I'm sure they're coming. 

[Robin Searle]

No shelter in place as of now in Colorado Springs per The Gazette! 

[Matt M.]

Adams, Arapahoe, and Douglas counties are coming out with stay at home orders today. We'll see if they stop showings on homes (they should). They should allow the pending deals to finish and that's it. People still aren't taking this seriously. Watch what happens in New York over the next two weeks. 

The stimulus bill just came together, but its effects will just be temporary. How far will $1200 get you... We'll see a yo-yo type (health) recovery. As they ease restrictions, more people will get infected, and they'll shut us down again. This will happen over and over until almost everyone has been infected over the next 18ish months.

Most people and businesses don't have the reserves to weather the storm. We'll see short sales and foreclosures again as people lose their jobs. Most of you weren't in the business or in Colorado last time this happened back in 2008. We were hit really hard here in the Metro area. It was not a fun time to be in this business. Sure there was opportunity, but there was a real human cost. I was working with REOs/short sales and doing "cash for keys." It was devastating. We'll see a lot of people with FHA loans and other low down payment loans just walk away from their homes. The commercial and investment side will get hit hard as well as tenants won't be able to pay rent.

I'm not investing in real estate for the rest of the year unless it's a spectacular deal. My last flip gets listed this week, and I'll update on what happens. 

I hope I'm wrong and everything clears up soon, but I'm not very optimistic. Please take this virus seriously and plan accordingly. 

[Colin Smith]

Got Polis just announced a Stay At Home Order for the entire state. This will make for very interesting times for real estate. I will be curious to see how appraisals and closing go, assuming they do or if they shut down entirely. 

[James Carlson]

@Colin Smith

Any word about whether real estate dealings will be exempt? I can't find that anywhere. I don't necessarily think they should be, but I know under Denver's shelter-in-place order, agents, appraisers, inspectors, etc. were exempt for real estate transactions.

[Colin Smith]

@James Carlson - He didn't specifically talk about exempted industries yet. I did find this snippet from a CA news article talking about their  shelter in place orders:

"San Francisco’s shelter-in-place ordinance allows work to continue on construction of public works, housing, airport operations, water, sewer, gas, electrical, oil refining, roads and highways, public transportation, solid waste collection and removal, internet and telecommunications. Work must comply with social distancing standards where possible."

Maybe we will get the same exemptions!

[James Carlson]

Not only related to the front range here, but this might interest Denver Airbnb hosts. (Or Colorado Springs hosts or any short-term rental host.) 

Airbnb is saying the coronavirus stimulus bill includes relief for STR hosts in the form of small business loan eligibility and unemployment eligibility for any hosts that contract CV19.

[Matt M.]

The Governor's order doesn't mention RE as essential, but Denver and tri-county do. We'll see if the State adds it in. CAR sent him a letter on Wednesday asking for RE to be essential. Few listings already this morning including my flip. I'm screening every buyer and speaking with the showing agents. 

[Colin Smith]

I will be curious to see what CAR comes out with today. RE and regular housing did not make the exemption list. At the moment it's unclear what can and cannot continue to do.

[James Carlson]

@Matt M. @Colin Smith

CAR is saying real estate is now included as an exempted critical business. Translation: Business can go on. Not sure I agree with this, but it is what it is. I would say it's lobbying, but I'm the sure the Colorado Restaurant Association is no slouch at the capital, and they're not considered critical, so who knows.

You can read the Colorado Association of Realtors page here.

You can also read the exact language in Public Health Order 20-24. Sec. III (C)(7) ... It's on page 8.

[Colin Smith]

They did state no more open houses. I imagine most things will be done with remote access or very limited contact.

[Chris Lopez]

They really need to limit real estate and housing activities. I'm not sure where the balance is with people who need to move with a lease coming up or a real reason to move....

But I do know all these stupid realtors need to stop posting FB pics and captions while wearing a mask bosting about "I'm an essential business... business as usual!" Give me a freaking break, use common sense and shut up. Give the masks to healthcare professionals for goodness sake.

[Chris Lopez]

Here are some updated market stats that Lon Welsh at Your Castle compiled.

Team

Cassandra pulled the Denver MLS and showing data for March 2019, by week, and then matched it to the first three weeks of March 2020. Here’s the actual results and an estimate for the 4th week of March.

This was all compiled before the governor signed the executive order last night. At the moment, real estate is NOT classified as an essential service. IF that is the case, we’d expect the next two weeks to be a lot lower in the categories of showings, new listings, and UC count. The sales will continue on trend for a few weeks as long as they are past appraisal. You can still use the charts to get an idea of where we will resume at once the lock down ends in about two weeks.

It’ll certainly give you some great info to share with clients. The market has slowed down, of course, but not nearly as badly as the media makes it out to be.

[Chris Lopez]

Part 2 of the stats...

[James Carlson]

@Matt M. @Chris Lopez @Colin Smith @Robin Searle

Interested in the agents' thoughts on this thread about the ethics or morals of listing a place right now in Denver. I've got a seller who needs to list. I've got all sorts of thoughts on this, some of them conflicting:

• I want to help her sell when she needs to sell
• Right now is a more attractive time for her to sell when the Denver market might still have buyers looking
• But then I'm conflicted about helping to sell to someone who might be buying just before the price go down
• I'm also conflicted about in anyway contributing to people continuing to go outside. We can offset this by virtual tours, booties and sanitizer at the house, having all doors open for showings so people don't touch knobs, but still ... 

Have the other Denver or Colorado Springs agents on here confronted this? How are you thinking about it? 

[Matt M.]

I just had this conversation with a client. If I was selling, I wouldn't want people in my home while I lived there, and that's what I told him. My next few listings coming up are vacant, and I'm ok with that personally. I've been screening buyers by speaking with their agents and encouraging drive-bys first. 

However, I'm not too bullish on the rest of the year. I mentioned that I think it's going to get worse and drag on, which will reduce prices. However it could bring prices down on the buy side as well, depending on inventory. 

There are people that will NEED to sell during all of this, and we'll have to work it out somehow. Each situation will be different, and it will just depend on what you are comfortable with. I just told some out of state buyers that I wouldn't show them homes while they were in town. It's not worth the risk to my family.

So I guess it comes down to using your best judgement and taking the proper precautions. Stay safe!

[Colin Smith]

Personally I feel housing is under the exemption list for good reason. We cannot be the judge of a persons financial or otherwise life circumstances, and making a move may be a critical decision in their life. I've seen some sellers state they will only allow for showings after MEC and using Matterport for all showings - I think that is a great idea! Plus if you truly believe the market is about to go down, then people should be fire selling if that is their intention to do so in the next few months.

[Robin Searle]

I’ve decided for myself I’m not showing right now but I have other agents who are willing to who I compensate if a buyer wants to go out. Fortunately all of my sellers are not in a rush to sell so are holding off. I do not think this will impact prices in the Springs as we have so much pent up demand. I could certainly be wrong. I am continuing to close my current UC clients - just had one today!! 

[James Carlson]

@Matt M. I like your perspective. I'm having that conversation as well about my feelings on showings vs. their feelings. We're going to do use Matterport and are still discussing whether to allow in-person showings as well. And I'm being as upfront with buyers and sellers about what I would do and wouldn't do and allowing them to use that information however they want to make their decision. 

@Colin Smith Thanks for your thoughts. You sound skeptical that prices will go down, no? I tend to agree with Matt about this. I just don't see how the layoffs that are coming don't ripple into home prices ... More out-of-work sellers who can't cover their mortgage and fewer buyers who now don't have the income to qualify. More supply, less demand and prices go down. What am I missing?

Stay safe.