Aurora homes are still in high demand, despite a pandemic-induced recession. Experts say Aurora's longtime affordability is part of the reason why. Photo by PHILIP B. POSTON/Sentinel Colorado

AURORA | Despite the COVID019 pandemic, which has had harsh effects on the economy, Aurora still remains one of the strongest housing markets in the country, underlining a trend real estate agents say they are seeing across the country. 

A top 10 list from RealtyHop, which watches and ranks housing markets across in all 50 states, puts Aurora at No. 10, right behind Colorado Springs. The prices of homes in Colorado’s third largest city dropped about $10,000 over the last month, or 2.14%, according to RealtyHop. 

In a survey of 100 of the country’s biggest housing markets, Detroit was the coldest this month. Home prices dropped about 7.15% over the last month.

Aurora lands on RealtyHop’s list of most affordable markets at no. 34, with the average home price at $410,000 and the median income at $58,000. Neighboring Denver is the 17th most affordable market in the country, according to the list. The average home price is $519,500.

That affordability has served Aurora’s housing market well, said John Mitchell, past chair of the Aurora Association of Realtors.

“There’s no lacking in demand and even with the COVID-19 situation the only thing it did was cause the demand to slow down a little bit, once we went back into opening up the demand picked right back up,” he said.

For sellers that’s been good news. For buyers, that’s meant maybe being edged out of the market.

“I would love to say that it’s people flocking to Aurora, but it’s people flocking to Colorado, and Aurora offers the most affordable housing,” Mitchell said.

Tens of thousands of buyers across the country dove into the housing market this spring and summer even as the coronavirus upended the U.S. economy. The presence of these buyers, plus a sharp drop in the numbers of homes on the market, drove home prices to record highs in most parts of the United States, according to an analysis of housing price data by The Associated Press and Core Logic.

The average home price in the U.S. in May rose 4.2% compared to a year ago. The data shows that prices for cheaper homes — those found in the lower third of prices in metropolitan areas and a typical target for first-time buyers — grew faster than the rest of the market, rising 6.7% from a year ago.

The coronavirus pandemic helped shape the housing market by influencing everything from the direction of mortgage rates to the inventory of homes on the market to the types of homes in demand and the desired locations.

Locally, Mitchell said he saw instances where lenders were more skittish to offer loans to people who were more likely to be furloughed because of the pandemic.

The pandemic pushed the U.S. economy into a deep recession as many businesses shut down, which in turn forced the hand of the Federal Reserve to dramatically lower interest rates. The average mortgage rate fell from around 3.75% at the beginning of the year to under 3% in a matter of weeks after the pandemic struck the U.S.

That sudden drop in mortgage rates was an instant boon to home affordability, economists said, allowing many buyers to afford much more expensive homes while keeping the same monthly payments.

“A 0.75 percentage point drop may not seem like a lot, but it’s like handing $40,000 to a buyer of a $475,000 home, who is able to get more house for the same monthly payment,” said Taylor Marr, senior economist at Redfin.

The pandemic also caused sellers to delay putting their homes on the market. Sellers, who are typically older than buyers, were either concerned about the economy, worried about their jobs, generally reluctant to have strangers enter their homes, or some combination of all three. The supply of homes available for sale in May dropped nearly 30% from a year earlier.

Like nearly every other industry, real estate came to a halt in March when the country’s governors put stay-at-home orders in place. But once those orders were lifted, buyers who were intent on buying in 2020 before the pandemic came back in the market, Realtors said.

The boost in home affordability likely played a part in driving up prices for starter homes, or those priced in the lower third of the market.

It’s too early to tell whether an exodus from cities to the suburbs will be long-lasting. Many employers have told employees to expect to work remotely until early 2021, with some companies now talking about at least some work done remotely indefinitely.

The pandemic has also temporarily changed the type of homes in demand, some realtors say. Families are looking for homes with rooms, especially if children may be doing remote learning for the foreseeable future.

It’s hard to tell if that’s the case in Aurora specifically, as the market, due to affordability compared to other communities in the region, has been hot for a while now, Mitchell of the Aurora Association of Realtors said.

Experts see some threats to the housing market’s resilience, however.

Home prices have been rising while the nation is in the grips of a deep recession. Many protections put into place in the early days of the pandemic are now coming to an end – evictions are starting back up, and foreclosures are likely to follow. Enhanced unemployment benefits have also expired, with unemployed workers left to hope Congress can reach an agreement to extend them.

An analysis of mortgage data shows that roughly 7.5% of all active mortgages remain in some sort of forbearance program, according to financial data aggregator Black Knight. Roughly 2.2 million 3-month forbearance programs will expire in September.

With fewer protection, and the certainty of the pandemic lasting the rest of the year, potentially thousands of homeowners could fall behind on payments and have their homes foreclosed upon. A sudden rush of supply could dampen home prices in the second half the year.

Further, those looking to buy recently have largely been first-time home buyers, who often have lower incomes and are more susceptible to changes in economic fortunes than the rich.

“I do think there’s significant risk ahead, particularly impacting those buyers in the lower tiers of the housing market, but probably more notably, renters,” Redfin’s Marr said.

Mitchell said the buyers he’s been working with for the last few years have really been doing their homework.

“Buying a home is not something you do on a whim. You’ve got to plan and save for it… and it’s really something you need to think hard about. Get yourself some trusted advisors, whether it’s a realtor, a financial planner or mom and dad… go in with your eyes wide open,” he said. 

— The Associated Press contributed to this report