Housing Market December 2021 vs December 2020
Housing Market Predictions for the upcoming year are consistent across the board among economists and housing experts. Prices will continue to rise, but the rapidity of the rise will slow considerably. Over the past two years, housing prices have risen a whopping forty percent ($366,768 to $513,999) in Colorado Springs! The collective belief among experts is that those numbers will slow to a more normal appreciation of between five and eight percent in 2022.
Availability will continue to be an issue throughout the year, but there should be more of an inventory in the Colorado Springs housing market as summer nears. That is a positive for Buyers as Sellers will see more competition. It will continue to be a strong Sellers’ market, but with more inventory, houses will need to be in good condition to get the same kind of feeding frenzy we saw going into the fall of 2021.
Over the past two years, Colorado Springs homeowners have seen an average increase in their equity of about $147,231. According to Dr. Frank Nothaft, Chief Economist at CoreLogic, “Home price growth is the principal driver of home equity creation.” Lack of supply of homes for sale and continued demand from Buyers are giving homeowners a significant boost in their net wealth in the form of increased equity in their home.
Even if the market slows, there will not be the foreclosures we saw in 2008 because of the amount of equity many Sellers now have in their home.
Market Comparison November 2021 to December 2021
The weather played a role in November and December sales. Unseasonably high temperatures and lack of snow made homes more accessible as they came on the market.
The number of active listings decreased by twenty-eight percent, and the number of new listings decreased by over fifteen percent. There was a slight decrease in the average sales price in December, and a slight decrease in total sales (less than five percent). But the months of availability of inventory went down twenty-five percent.
Predictions Colorado Springs Housing Market 2022
How many times have you heard it said over the past few years that now is a good time to sell your home? The fact of the matter is, now is also a perfect time to BUY a home. There won’t be a typical winter slowdown in either prices or availability. All indications are that what we’ve seen at the end of 2021 will continue into 2022.
Experts agree on strong housing market predictions for 2022, but they also agree that interest rates will rise. Estimates are that interest rates will increase about one percent. Hovering around four percent is still amazingly low, but even that small increase will impact your buying power. The rate of home price appreciation will be unsustainable as it’s been the past two years. Home prices will continue to rise, but the rate of increase should slow sharply.
Although the past two years have seen Colorado Springs home prices increase an average of forty percent, over the past twenty-five years the average annual appreciation was four percent. This year prices will not decline, but they should decelerate to more normal increases in the range of five to eight percent.
What This Means for the Real Estate Market
While prices won’t increase as rapidly, there is nothing on any expert’s radar that would indicate depreciating values in the foreseeable future. Over the last ten years, prices have increased every single month. Taking an increase of even seven percent in home value over the next year, the $350,000 home you’re looking at in the beginning of the year would be $374,500 as we head into winter.
Add to that a one percent increase in interest rate and your monthly payment (on an FHA loan) becomes $2,353 instead of the $2,010 if you had purchased at the beginning of the year. That $343 difference per month adds up to an additional $4,116 per year, and $123,480 over the term of the loan.
More listings should be coming on the market, giving Buyers more availability of inventory and Sellers more competition. For the foreseeable future, however, there will still be an imbalance in the limited number of homes for sale and Buyers looking for a home.
Also, more and more people are able to work remotely, which will give a larger selection of cities from which to search. So don’t wait too long. What have you got to lose? As either a Buyer or Seller, the time is right if you’re ready to make a move. Contact Mimi Foster, a Realtor with decades of experience, and see how you can benefit financially in this hot real estate market.