The cost of living in Colorado Springs in 2022 is at 104.5%. Compare that to Denver, at 128.7%, Pueblo, at 85.2%, and Los Angeles at 173.3%. While Colorado Springs is expensive to live in, it's still relatively inexpensive when compared to larger or more developed cities.
Property showings have continued to be incredibly slow (about 1.5 per listing per week)! Buyer interest has dropped, at least here in Colorado Springs. The market has definitely leveled off.
The Home Purchase Sentiment Index® (HPSI) stated that 80 percent of consumers believe that now is not a good time to buy a house. According to the survey that is the highest percentage ever of lack of faith in the housing market.
The average sale price in Colorado Springs has started to go down since April. Interestingly, it has bumped up again for July. However, if you look at the "Close Price to Original Price Ratio," you'll notice that on average, homes have not been selling for more than asking recently. This is one metric we can use to look at the market as a whole.
Back in March, Colorado Springs made it onto the top 10 least affordable metro areas in the United States (we placed 10th).
Then, at the end of April, when mortgage rates went up, buyers pulled out of the Colorado Springs market, sharply.
Home builders, after having ignored real estate agents for three years because of the sheer buyer demand, are now soliciting agents again to find buyers for their new construction homes.
6/2022 Interest Rate: 6.1%
12/2021 Interest Rate: 3.1%
Average Days on Market is 13 for Colorado Springs
The Feds are raising the interest rates another 0.75% this week. I expect mortgage interest rates to increase in response, long-term anyway.
Inflation is up 9.1% as of end of June. Anecdotally, I have heard that people's grocery bills/living expenses went up about 20% over the last year. Your cost increases may be similar.
Is any of this sustainable?
This market has slowed down A LOT. But we were going Fast and Furious for a couple years here. Now, it's more normal. However, what that looks like in reality is that showings are much fewer for properties.
There are 1,663 listings in Colorado Springs (2,163 in El Paso County in total). That's only a little bit more than the number of listings we had in July 2019. Remember how low that inventory was?
June 2019 TOTAL Listings: 1,366 in Colorado Springs, 1,680 in total in all El Paso County. Inventory has not changed much since then.
We would need to have about 5,000 listings in Colorado Springs in order to see a truly balanced market between buyers and sellers.
What we are seeing right now is a temporary pullback from buyers, due to shock from:
However, could this pullback turn into a long term thing? Is a recession still possible? I don't see the cost of living decreasing, however...
No one wants to buy right now.
If you as a buyer plan to purchase a property to live in yourself, and you plan to keep it long term, then that's the most important thing for you. If you're going to be paying rent anyway, then I consider it a win to lock in a mortgage payment that won't rise like your rent will.
Only you know where you need to live and what that looks like. Just do what's best for you!
If we do hit some kind of recession, home prices may continue falling in Colorado Springs a bit.
Moody's Analytics estimates that Colorado Springs home values are 41% overvalued. That means that a $500,000 home in Colorado Springs might drop in value down to $295,000. Yeah, I think not.
CoreLogic, which runs the majority of the Multiple Listing Service companies for real estate agents throughout the country, thinks there is a low (10-20% chance) of Colorado Springs home prices falling in the next 12 months. That statistic seems more reasonable, but only time will tell!
If you are considering selling property, be aware that it will take longer to sell, and you are not going to get the multiple offers or extra incentives from buyers anymore. In fact, you will likely be giving seller concessions toward the buyer's loan closing costs. That's something that hasn't really been happening since 2017.
Houses, townhomes, condos, all of those need to be in great shape, with great first impressions, in order to sell. That is what a normal market looks like. Unfortunately, this market is still not normal.
I don't know if home values will suddenly plummet in the next 6 months. Nobody knows. I do know that most buyers are uncertain if they should buy right now. If you want to sell in this market now, be prepared for that. Buyer incentives are making a difference again, because most buyers are hesitant.
In the end, none of this really matters. Investor buyers will buy based on the numbers. People who buy to live in it buy because of a change in their lives. There will always be change.