Market Statistics March 2022 vs March 2021
Everything was UP in the Colorado Springs housing market in March of 2022 . . . average sales price, days on market, new listings, active listings . . . even interest rates!
Things changed a lot as we headed into the Spring real estate market in southern Colorado. Home prices were up over fifteen percent from the same period last year. Active listings were up fifty-four percent, but new listings still couldn’t keep pace.
The average days on market was under two weeks, and there was only one week of inventory available! What that means is, if no new houses came on the market, at the current sales pace all of the available houses would be sold within a week!
To put that in perspective, a “normal” market has about six months worth of inventory. At six months, there is moderate appreciation and it is a balanced housing market between Buyers and Sellers. As inventory gets lower (fewer houses available for sale), prices push higher. That goes a long way in explaining why home prices are rising as rapidly as they are. The housing market isn’t slowing down, but we can’t sell what’s not available, so bidding wars for the few houses that become available are still the norm.
These are also indicators that we are not at the top of the market. The average house price in Colorado Springs last month was an historic $541,663! It is expected there will be a modest improvement of inventory as we approach summer, but there’s still so much pent-up Buyer demand that it may slow down the frenzy but keep the housing market brisk.
In the early 2000s, we had overflowing inventory and a high demand for houses. The current price appreciation is a direct result of not enough houses for sale and stiff Buyer demand.
Market Changes February 2022 to March 2022
Between the months of February and March 2022, there was an increase in the average sales price by almost four percent. Again, that is a reflection of lack of inventory. Sales were up over thirty percent, but that is not unusual as we head into Spring.
New listings rose during that month by forty-seven percent, which gave us an increase from the previous month of sixty-four percent of active listings.
Some big national factors over the past month have been the rapid rise of interest rates, inflation, global instability with the war in the Ukraine, and swiftly rising energy prices.
Increasing interest rates do not have a direct impact on housing prices, but they do weaken a Buyer’s purchasing power. In the past thirty years, mortgage rates have jumped six times by at least one percent. Every time, the value of homes as increased.
Projections by housing market experts predicted a moderate rise in interest rates and a slowing of appreciation in home values for the year. Those predictions are being revised upwards. As we enter April of 2022, we have almost reached those estimates and are sure to surpass them by summer, indicating another year of robust price appreciation.
Buying a home is still the best long-term investment a person can make. For many decades, home price appreciation has continually outperformed inflation.
Market Predictions Remainder of 2022
Mortgage rates will continue to rise and will not go back down. This is a reality, not a forecast. That doesn’t mean ever, but we won’t see three percent again this year unless the economy falls apart completely, and that is not likely. It will be a win if we don’t hit six percent interest this year.
Colorado Springs housing market predictions are that inventory will improve modestly and prices will continue to rise. If you are thinking of waiting for the housing market to cool or prices to go down, it will cost you. You will be paying more for the exact same house later in the year.
Experts predict inflation will continue to rise rapidly this year. My family has been in real estate for over one-hundred-seventy years. I can tell you that historically, home ownership is a sound hedge against inflation.
There is a threat of a looming recession. Rental prices will to continue to rise. More houses will come on the market this year over last year. Buying a house is a solid investment.
Have you decided you want to purchase? Unlike most markets, I would consider an adjustable rate mortgage (ARM). We are not likely to see rates improve over the next few years. With rapidly rising interest rates, you may find a more attractive rate in a five or seven year ARM. That would give you breathing room to hopefully see the housing market settle down.
Another thing I would advise Buyers in these volatile housing times is to lock in a rate as soon as possible. You’re not going to wake up tomorrow with lower interest rates, but they may very well increase. And housing prices in Colorado Springs are not coming down this year, so don’t take the chance. Speak with a competent lender today to find out what your current buying power might be.
If you’re a Seller, you might think about putting your house on the market before the competition heats up over the summer.