2018 End of the Year Report
COLORADO SPRINGS, Colo. – Most Experts agree that the Colorado Springs market is beginning to cool off and that this trend will continue. Though still considered one of the country’s hottest real estate markets, a shift is coming, and it’s coming to Colorado Springs. What will this mean for you? There are different things to consider if you are a buyer vs a seller. Below we’ve laid out what’s trending.
While there have been slight fluctuations, since April 2011 median home sales have steadily increased. In the first quarter of 2014, the average home was selling for roughly $205,000. In the past few months, the median sale price for homes in Colorado Springs has risen to over $300,000. The same is true for the number of sales, although not as significantly. In October 2013, during the high season for sales, roughly 2,900 homes were sold. During low season the following year, April 2014, only about 1,600 homes sold. In the low season in April 2018, about 2,500 homes sold. In the high season this year, it was around 3500.
In short, Colorado Springs properties have been quickly climbing in desirability. In the past five years, all homes have seen 11.8% year over year growth in the sale price. Of these homes, though interestingly enough, one to two bedroom houses have seen the most significant bump, at a 24.6% year over year increase. And beyond just the selling price increase, there has also been an increase in how much houses are sold for versus how much they are listed for. In 2017, houses sold for 100.3% of their listing price. In 2018, there was a 0.2% bump, with the average home being sold for 100.5% of its listing price—an exciting prospect for many homeowners.
But this increased interest in Colorado Springs homes does not stop at just the selling price and how many homes are selling each month. It also extends to how long it takes to sell a home in the area. In 2017, houses were on the market for an average of 26 days (Keep in mind this is just the average. Many sold much faster), which is an ideal situation for any seller. In the first half of 2018, houses closed even faster, at an average of 21 days—a 19% increase in the speed of sale. But all this changed suddenly in the fall to where we are currently at over 45 days on market on average.
These statistics have peaked the interest of various data firms and experts in the real estate industry. They want to know how Colorado Springs home values compare to the rest of the country, as well as why the area’s real estate market is doing so well. In the past year, several firms have completed studies and found results that make Colorado Springs stand out.
ATTOM Data Solutions, a real estate data firm out of California created a pre-mover housing index—the first of its kind. They looked at 120 markets across the country and found that Colorado Springs ranked first.
The data that ATTOM used was from the first quarter of 2017. They created an index that calculated how likely a home would be sold in a community within 30 days. The calculation was based on the supply of homes in every community and every market’s homebuyer loan applications. In order to be considered, the market needed to be a metro area, have enough loan application data and have a minimum of 100,000 single-family condominiums and houses.
Based on the index’s rankings, ATTOM found two important correlations. The first was that markets that ranked highest, or the ones that homebuyers were more likely to move to or within, were the ones that had relatively affordable housing when compared to the nation’s average—which is one reason that cities like San Francisco and Boston were ranked low on the list. The second correlation was that markets at the top of the index provided easier access to jobs. This easy access can be seen by the 2.5% unemployment rate in Colorado Springs, the plethora of new commercial projects that have been announced in the city, and the thousands of individuals moving to Colorado every month due to the entire state’s booming economy.
A Possible Shift
While the Colorado Springs real estate market has been becoming more and more robust over the last few years, the level of homes on the market is not growing as fast. And even though thousands of homes are currently being built in the city by various development firms, the market will still have a limited supply when compared to the demand.
This tighter market and lack of overbuilding is likely a good situation for Colorado Springs. The reason is that economists are predicting a market correction nationally at some point in 2019. The number of individuals and families looking for houses will drop slightly because of buyer fatigue and rising interest rates—the type of growth that has been recorded over the past few years is simply not sustainable. The reason this situation is beneficial for this city is that when the market does correct, there will not be an overabundance of houses sitting on the market–they will continue to sell at the same rate and prices will not plummet, but rather drop slightly or plateau.
This drop is already being seen. In July, average home prices started to dip more dramatically than they have in two years—especially in single-family homes. In recent months, more than 20% of homes on the market have had to drop their price in order to sell–and average days on the market statistic is starting to go back up. These changes are giving some much-needed relief to buyers. And this shift, in the end, will be good for the market. Homes will continue to appreciate, they will continue to sell quickly, and more homes will be bought—especially as many buyers rush to get a mortgage before the interest rates increase any further.
But this potential shift also has implications for sellers. Sellers must be cognizant of the fact that they will not be able to sell their home as quickly or perhaps even for the same price that they would have in early 2018. They must also realize that they will have more competition as more houses are added to the market. Therefore, they need to make changes and renovations that will raise their home’s value. It is more important now than at any time in the last 6-7 years to do all the right things if you want top dollar when you sell. Buyers are becoming pickier because they’re not sure what the market is going to do. Many buyers that were polled stated that they were ok waiting and would only move forward if the perfect house came up. That means as a homeowner you need to make your home perfect and market it properly to cater to the hesitant buyer.
There is disagreement among experts as to exactly what this shift will mean. Home values may drop drastically, slightly, or just flatline for a period of time. But there is no disagreement in that the market has started to shift quickly–something is happening. In the last year we’ve already seen almost 1000 Realtors drop out of the profession.
When it comes to homeowners in Colorado Springs, the key is to not be caught unaware. In a shifting market, ignorance is rarely bliss. The Johnson Team can help you make the right real estate choices. In 2017, they helped more people close on their home than any other real estate team. To get more information about homes in Colorado Springs, as well as other area information, please continue reading our articles. And to get even more hyper-local information about your home, please reach out to our team.