What effect will COVID-19 have on the Park City real estate market?
Things have dramatically changed over the last few weeks as locally, nationally, and globally we settle into our new (temporary) lifestyle with limited face-to-face social interaction. On March 13th, 2020, the President invoked, for only the second time in history, a National Emergency through the usage of the Stafford Act in response to the global COVID-19 pandemic virus. On March 14th, both Deer Valley and Park City Resorts announced their early closures, starting on the 15th, thereby eliminating four valuable weeks of the ski season. March 15th, the Summit County Health Department issued a Public Health Order prohibiting all dine-in food service, and followed up with a Stay at Home Order on the 25th, effectively shutting down all businesses in Summit County. The State of Utah followed with a similar "Stay Safe, Stay Home" directive on March 27th. Fortunately, however, real estate and construction have been deemed as "Essential Business."
If you are in the market to buy or looking to sell, this uncertainty may have you worried about the housing market. Our sparse inventory and historically low mortgage rates would typically lead to a busy and competitive home buying summer season. The effects of the Coronavirus on the real estate market are yet unknown, but what is known is the landscape is quite different from the recession of 2008.
In 2008, much of the economic turmoil derived from a failed real estate industry. Low-document, sub-prime loans, and over-leveraging of unqualified buyers lead to a housing bubble. The bubble popped, resulting in a wave of foreclosures that caused massive price reductions across the country. Historically, recessions have only a minor effect on the housing market. The difference in the recession of 2008 is that the unstable real estate market was primarily the cause.
Fast forward to today, and we have a global pandemic wreaking havoc on all commerce. There are a few assurances for the housing sector. According to the Park City Board of Realtors, about 75% of real estate transactions in Park City are cash sales. When owners do not carry a mortgage on their properties, they are less affected by the emotions of the market. Also, they are less swayed to sell at a discount if the market was to decline. For homeowners with a mortgage, the federal government has implemented a moratorium on foreclosures and directed mortgage servicers to offer forbearance or reduced payments on any mortgage backed by Freddie Mac, Fannie Mae, or the Federal Housing Administration (FHA). On March 27th, the President signed the $2 trillion coronavirus stimulus bill designed to provide relief for workers and businesses that have been devastated by the outbreak. Hopefully, these funds can provide much needed financial aid to those in need over these next few weeks and months.
The market continues to move, but will we see significant price reductions?
It is still too early to identify trends resulting from COVID-19. It was only in mid-March that we saw news of the pandemic take hold on the market. Once the ski resorts made the tough decision to close early, that was the point in time when most Park City residents started our new "shelter in place" lifestyle, potentially affecting activity for real estate.
For Q1 of 2020, compared to Q1 of 2019, the Park City MLS (all property types) experienced a 10% decrease in active listings and a 16% decrease in new listings taken. For sales, there was a decrease of 8% for pending sales, but a 16% increase for closed sales. The total dollar volume was up by 6%, with the median price remaining flat. With the start of the Coronavirus "quarantine" on March 15th, we lost two very productive weeks for new sales out of Q1. This lost time largely explains the decrease in pending sales. The closed sales numbers reported higher, likely produced by contracts signed before the mid-March pause.
As of Sunday, April 5th, it has now been three weeks since the ski resorts closed, and most of Park City began to shelter in place. If we focus on these three weeks, compared to the same time last year, we start to see a preview of how the Coronavirus may affect activity.
Looking at March 14th through April 5th of 2020, compared to the same dates in 2019, we quickly see the initial effects of the pandemic. The total number of active listings is down by 14%, and new listings taken is down by 40%. For sales activity, the number of pending sales is down by 59%, and closed sales are down by 27%, bringing the total dollar volume down by 28%. Interesting that the median sales price is up by 20%, indicating that we are likely seeing more fallout at the lower end of the market, and continued transactions in the higher end.
Even with lower levels of activity, we still had 75 new pending sales, and 110 closed sales for just these three weeks. We also continue to see some significant sales in our market. A few new pending sales in the last couple weeks include a Flagstaff Lodge condo, an Arrowleaf condo, an Apex condo, a Shooting Star condo, a $2.2M home in Old Town and a $4.5M home in Park Meadows. Recent Closed Sales included a $3.8M home in Old Town, a $3.3M home in the Timbers, a Black Diamond Lodge condo, a $2.75M home in Promontory, a $3.4M townhome in Deer Crest, a $3.5M home in Sundance, a St. Regis condo, and a ski-in/ski-out home in Bald Eagle at $5,700,000.
Now more than ever, our home is our sanctuary, our safe place. With shelter in place orders and financial markets in turmoil, people are looking at their homes in a new light. Never before has our home been viewed as such an essential asset to our family's lifestyle and financial stability.
We are now spending the vast majority of our time in our homes. We are now confined to travel, mostly within our local community. For ourselves, we are grateful to reside in Park City, Utah. If we must practice social distancing, Park City is the place to be. The mountain town setting offers easy and uncrowded access to the outdoors. Wide-open spaces, mountain trails, fresh air, and natural beauty encourage us to venture outside and get much-needed exercise.
Notwithstanding new obstacles, every day, our dedicated team at Summit Sotheby's moves us forward. With our current roster of active buyers and sellers, we are changing how we conduct business to ensure we remain productive, even as we maintain the health and safety of ourselves and our clients we serve. As we adapt to help our clients today, to keep our markets moving forward, we are confident of better times to come, hopefully soon.
Sean Matyja - Realtor® / Associate Broker
Mobile: (435) 901-2158 | Email: firstname.lastname@example.org