Housing Market Predictions May 2022 Colorado Springs

Market Statistics April 2022 vs April 2021

As March folded into April, the housing market in Colorado Springs continued its climb to new heights. The average sales price of a home rose more than seventeen percent over its already-record-breaking highs of last year. Even though there was an increase by almost sixty percent of active listings, there still was nowhere near enough inventory to keep up with buyer demand. Homes sold, on average, for over a hundred and four percent of asking price. That’s the same as last year during the same period.

Interestingly enough, more people moved out of Colorado than moved here. During the past year, fifteen percent more people moved out of our fair state than in. Denver came in fifth in the country for most unaffordable cities in which to live, the effects of which naturally spill over to neighboring Colorado Springs.

Throughout the Spring and Summer of 2021, interest rates hovered around three percent. Sometimes slightly higher, sometimes a little lower. But in the Spring of 2022, interest rates have risen a massive two-and-a-half percent to an average of five-and-a-half percent in April. Jason Twitchell of Draper and Kramer Mortgage said, “Let’s put ‘massive’ in context. It’s not an overstatement considering this is the biggest, fastest jump in mortgage rates since at least 1994.”

Here’s a brief overview of the changes in the housing market in Colorado Springs over the past year:

Housing market statistics between May 2022 and May 2021

The luxury housing market doesn’t seem to be impacted by rising interest rates. They are still selling for hundreds of thousands over asking price. But the suburban neighborhoods, the mid-range priced homes, are seeing not only a noticeable decrease in showings but an increase in Open Houses.

Housing Market Changes March to April 2022

Between March and April 2022, the average price of a home rose four percent. Earlier predictions had been prices would slow down in the Colorado Springs housing market and would only rise between four and eight percent total this year. We are on pace to have another year nearing twenty percent price appreciation.

How interest rates affect your payment

That’s good for sellers as they have increased equity each month when average home prices rise. Wise buyers are purchasing quicker with rising interest rates. If they want to buy, they’re not giving up, knowing prices are not coming down any time soon. Neither are interest rates.

From last month to this, new listings in El Paso County were up twenty percent. That’s not unusual between March and April as we begin a seasonal real estate listing period. The number of active listings over the month rose thirty-two percent. Days on market stayed pretty much the same at ten days.

But the accompanying chart shows what a difference two percent makes in purchasing power. Last December at the going rate, the “average” buyer could afford a house worth $555,154.

In April 2022, the same “average” buyer would only be able to afford a home purchase of $463,492 with the change in interest rates. One obvious problem with this scenario is there are fewer homes available at $450,000 or below and the competition is fierce when one comes on the market.

With the increased interest rates, what I’m seeing in the past month in the local market is there have been fewer showings on listings. Rather than twenty showings in the first few days of a listing, there may be five. But those are serious buyers. Out of those five, there are still three or four offers. The market continues to be robust, just different.

The jump in mortgage rates influenced the housing market in April

Housing Market Predictions 2022

There’s no economic forecast I’ve found anywhere that indicates the housing market will crash in the next few years. Our market is different than it was as we approached 2008.

In reaction to that housing market crash, lenders reacted by tightening up lending rules. These stricter guidelines help prevent defaults by no longer providing risky subprime loans.

There are still a proportionately large number of people looking to buy and a frightful lack of homes to purchase. The supply will not likely catch up with the demand for several more years, so there’s little to no danger of home prices plummeting in the foreseeable future.

People say to me all the time, “I’m going to wait for the prices to come down.” It grieves me to hear that because prices are not only not going to come down anytime soon (especially not in 2022 or 2023). And interest rates will continue to rise. So if you’re ready to buy a house, now is a great time to do it. Do not let what’s happening in the real estate market influence your decision. What’s important is your season in life and your ability to purchase.

If the number of houses available for sale suddenly rose and the number of buyers looking for homes nose-dived, we would be talking about a housing market crash. Prices would plummet. But there’s no indication that homes will meet the demands of buyers in the foreseeable future. Therefore the market should remain vigorous.

Experts think the rapid increase in home prices will slow down this year, but there’s no sign of that yet. What we know is interest rates will continue to rise throughout the year. If your season of life to buy is now, it’s a great time.

Are We In a Bubble?

Are we in a housing bubble?

“A housing bubble can generally be defined as an unsustainable period of house price growth generated by artificial demand such as loose underwriting or speculative buying.” Odeta Kushi, Deputy Chief Economist at First American Financial Corporation.

While most economists are predicting a recession, unlike 2008 the red-hot housing market will keep the recessession moderate. Even Fannie Mae concedes that, “because of the housing market, a ‘modest recession’ will likely be on the cards for the latter half of 2023.”

I would generally agree house price appreciation does need to slow down, as the double-digit pace we’ve been experiencing is clearly not sustainable in the long run. But the high price appreciation today is not the same as saying a bubble. 

Mark Fleming, Chief Economist from First American Financial Corporation

Home prices continue to surge at almost twenty percent year over year. While there are already indications home prices may be cooling, there will certainly not be a depreciation of prices in 2022 or 2023. So don’t wait to purchase thinking prices will come down.

It may be daunting for prospective home buyers who are facing rising interest rates and stiff competition, but that is not slowing the serious buyers down. That is excellent news as the strong housing market is likely what will pull us out of sinking into a drastic recession.

If you’re looking for a Realtor with decades of experience to help you navigate these challenging times for both Seller and Buyers, be sure to call or text me. I’d be glad to talk with you about your particular situation.

By Mimi Foster

About the Author

Mimi has received the honor of being voted one of Colorado Springs' Best Realtors five years in a row. With over two decades of experience, she is committed to making the home buying/selling process as easy and enjoyable as possible. Read Full Bio…

Helping buy and sell homes throughout Colorado Springs,
Old Colorado City, Manitou Springs, and surrounding areas




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