The Sky is NOT FALLING
Has the housing market in Colorado Springs slowed? Yes. Are we in a real estate market crisis? Absolutely not! Let’s take a look at the facts of what happened in the Colorado Springs real estate market between August 2021 and August 2022.
There is no doubt the market is changing. For the first time in years, there are now more Active listings than Pending and Under Contract. When on any given day last year we’d find only two hundred homes available for sale, in the summer of 2022 we’re seeing two thousand homes for sale in El Paso County. We are seeing VA liquidation appraisals, which haven’t been a thing in the past few years. But these numbers are approaching a more “normal” market than we’ve seen since the pandemic started.
We are not in a housing crisis, we are in an information crisis. Real estate is always local, and there is a wealth of misinformation out there. The media is crying “Chicken Little.” It is no surprise the consumer is confused.
Colorado Springs Housing Market August 2021 to August 2022
The average sales price of a home rose almost nine percent over the past year (now $542,500 in El Paso County for existing single family homes). The number of new listings was down over nine percent, but that’s common in any year in the month of August.
Homes have been selling, on average, for over one hundred percent of asking price. This was the first month since February 2020 (the start of the pandemic) that the average sales price was less than one hundred percent of the asking price. And while there’s been an increase of 112% for the number of days on market, we’re still averaging just over two weeks before a home goes under contract.
There is no doubt 2021 was an abnormality for not only the local but also the national housing market. The market is not crashing, it’s just not rising at the rate that was normal in the second half of 2020 and in 2021.
From the same period last year, between rising interest rates and rising home prices, the average payment for prospective buyers is almost forty percent higher. That disqualifies many home buyers who were planning to move in the near future. If interest rates continue to rise, the housing market will suffer.
If you are thinking of moving but are waiting for home prices to fall, there is no indication that will happen in the foreseeable future in the housing market in Colorado Springs. Nationwide, experts predict home prices will appreciate ten percent in 2022. I encourage you to purchase before home prices go up. If interest rates come down, you can refinance.
A big change for the year was the average months supply. Last year there was a two-week supply. This year it’s almost two months. Still a Seller’s Market.
Impact of Rising Interest Rates
Home prices appreciated quickly last year because record-low interest rates motivated buyers to enter the market. There were more buyers looking to purchase than there were homes for sale. That led to to bidding wars which led to driving prices higher.
Keeping Current Matters provided the below graph to show how much of a difference just a few points in interest rates makes:
There is an increase in the number of people putting their home on the market. There are fewer Buyers because of rising interest rates and rising home prices. This has caused a slowdown in the market, but in no way indicates a crash. Home prices have risen for one-hundred-twenty-five consecutive months.
What it does indicate is an opportunity for people to wade into the market while others wait for the sky to fall. There is plenty of inventory to choose from, prices are expected to decelerate but not depreciate in the foreseeable future, and there is less competition when making offers on properties. That means your purchase should still increase in value, just not as rapidly as it did last year. A wise Buyer will not wait for prices to fall. There are no economic forecasters predicting that scenario.
Housing Market Shifts July to August 2022
The biggest change in the housing market in Colorado Springs between July and August of this year was the number of listings. New listings fell almost thirteen percent, but this is typical of an August market.
Housing prices fell a little over three percent during the month, but was still up nine percent from last year. Sales were down for the month about three percent. Again, typical of a late summer market.
There were almost three hundred houses that came back on the market after going Under Contract in El Paso County last month. Eight hundred sixty six homes were Pending. Forty seven homes had a listing expire before it sold, and almost one hundred homes were withdrawn from the market.
The average price of a new listing in the Colorado Springs housing market was $552,891.
Housing Market Predictions Autumn 2022
Colorado Springs was ranked the second best place to live by the US World and News Report magazine. With the addition of hundreds of new jobs on the horizon in the coming year, and being among the top five states for highest labor force participation, we are expected to continue in a stable housing market.
According to the National Association of Realtors, the party is still in swing. Housing prices are up forty-five percent since the beginning of the pandemic in March 2020.
How much longer will the party last? Unfortunately, consumers seem to believe the negative press. According to Google Trends, more people are searching “housing crash” than at any time since 2007. Although Fitch Ratings indicated some regional price corrections in overheated markets, they (like most other national forecasters) consider widespread price drops “highly unlikely.”
There is never a wrong time to buy a house. As I’ve said many times over the years, the best time to buy or sell a home is when the time is right for you. If interest rates go down, you can refinance. But while Sellers are being a little more negotiable on prices, there is not a large decrease in home prices currently, nor is there expected to be a major price shift in the foreseeable future.