By: Nikki Giordano, Executive Officer, NoCo HBA
Colorado homebuilders expected 2020 to be a strong year, but COVID-19 had other plans. Most of the country was in complete lockdown by April and the economy was headed toward a recession. Colorado’s construction industry kept its doors open because of its critical infrastructure designation but with homebuyers facing layoffs and a recession, sales stalled and contracts fell through.
Nearly half a year later, the worst is likely over though for Colorado’s economy, according to Robert Dietz, the chief economist for the National Association of Home Builders. But it will probably take about two full years for Colorado to get where it was economically before the virus, predicts Dietz. He believes the housing market will help lead the economic comeback because its foundation was strong at the beginning of 2020.
According to NAHB, 15% of Colorado residents planned to purchase a home within the next year. These homebuyers will most likely be able to take advantage of the historically low interest rates. Dietz predicts interest rates to remain around their current rate for the next two years. But even with low rates, unemployment and the cost of housing are two of the biggest barriers prospective homeowners face.
The U.S. unemployment rate skyrocketed during COVID, however it never reached 25%, which is what some economists were predicting. As states began to open, the homebuilding industry played a role in helping people get back to work. Colorado has seen a steady stream of people moving to the state in recent years. And that trend will likely continue. However it will probably stall a little during 2020. When the economy faces a big shock, people usually stay put for a while. However, because COVID hit large cities the hardest as the uncertainty settles there are predictions that many people will move out of large, urban areas and relocate to smaller communities.
Northern Colorado is currently underbuilt, meaning new construction is in demand. As current and incoming Colorado residents seek new housing, new construction will help lead the economic rebuild. Although most homebuilders won’t likely meet their initial goals for the year, many are now predicting roughly 80% of their original plan.