The easiest way to tell if the market is turning is by looking at the # of pending sales and the # of new closings. However, these are lagging indicators. Sales were under contract 30-45 days ago and buyers started shopping 1-6 months before they put a property under contract.
Can we determine that the market is turning prior to these lagging indicators?
More than likely, we can. Search traffic, overall web traffic, property/agent inquiries, & mortgage pre-approvals all happen well before a buyer puts a property under contract.
We’ve set the “COVID Crisis” start date as March 16. This is when the Colorado Governor shut down all ski resorts, which was a crushing emotional blow. It’s also midway through March (and a Monday), which is really handy for reporting.
Our good friends/partners, the Leamans, were kind enough to share their purchase inquiry data. January/February purchase inquiries were up a combined 12% over 2019. They don’t have March sliced into pre/post-COVID (or mountain closure). The entirety of March was down 20% from 2019. Based on expectations from Jan/Feb (up 12%), you can extrapolate that March inquiries were down 32% (where half of March is considered “COVID Crisis.)
Our own inquiries show a similar pattern. From Jan 1 to March 15, 2020, we saw a 5% increase in inbound inquiries over 2019. From March 16, 2020 to April 9, 2020, we saw a 36% decrease in inquiries. Accounting for expectations, this is a 41% decrease in inquiries.
Web traffic is likely the earliest indicator we can watch. Buyers & sellers will typically search online for some time before they reach out to an agent to help. Our overall web traffic tells a similar story. Pre-COVID, our overall traffic was up 39%.
Post-COVID, our overall traffic was down 8%.
Accounting for expectations, our overall traffic is down 47%.
Search traffic is highly targeted, so is an even better indicator. When people are searching for real estate and service providers, you can assume that they’re engaged in the market at some level. Again, this tells a similar story. Pre-COVID, paid search was up 11% and organic was up 35%.
Post-COVID, paid search is down 60% and organic is down 45%.
Without doing too much math, we’ll just average the two and account for expectations. Search traffic is down 76% during the crisis.
Great numbers, Eric! Why does any of this matter?
The reason we want to monitor these numbers is because they will be the earliest indication that the real estate market is recovering. When buyers and sellers start to search for real estate & providers, reach out to agents for help, and apply for loans, you can assume that they’re getting back into the market. By recognizing that early – before properties start to go under contract – you can adjust your decisions accordingly.
We’re here to let you know when that happens!