The cost of living for housing in Colorado Springs in 2023 is at 140.9% of the national cost of living.
Compare that to Denver's cost of living for housing, at 183.1%, Pueblo, at 85.6%, and Los Angeles at 302.8%. While Colorado Springs is expensive to live in, it's still relatively inexpensive when compared to other cities.
As of January 2023, the average sale price of a home in Colorado Springs is $455,338. The median sales price is $420,000.
The median rent in Colorado Springs is $1,552 a month. The average rent for a 4 bedroom home in Colorado Springs is $2,081 a month.
For sale property showings are slow right now, at about 1.4 showings per week on average per listing.
In the summer of 2022, Fannie Mae recorded in their Home Purchase Sentiment Index® (HPSI) stated that 80% 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.
In 2023, 76% of consumers say that it's a bad time to buy a house. So the buyer sentiment has not improved much. The cost of living in Colorado Springs is still too high for many.
Days on Market for Colorado Springs is 50 days!
Quite a change from last year, properties are sitting on the market for about 50 days before accepting an offer and going under contract. Last year properties were on market for about 4 days before going under contract.
You can also see the trend downward in both average and median sale prices in Colorado Springs:
We had a high point in home sale prices in April 2022, with a downward trend in prices since then. In January 2023 we are at a low point from April. However, home prices in Colorado Springs are still up by a total of 24% since March 2020.
There are 1,224 properties for sale right now in Colorado Springs. For several months, Colorado Springs held at about 1,700-1,800 properties active at any given time. Now, during the winter, there is less activity.
There are 687 properties under contract. There have been 95 sales in January citywide. 594 sold for December. The median sales price is currently at $420,000.
So right now there are not many buyers, and not many sales.
As you can see from the chart above, home sales have been slowing down for the last half of 2022, and continuing into 2023. In past January’s we have sold ~700 homes. This month we’re nearing 100, a third of the way into January.
The housing market continues to be a slow time. Demand has not decreased, let’s be clear on that. Gen X and Millennials are in their prime buying life stage.
Take just Millennials. There are 97,900 people between 30-40 years old living in Colorado Springs. It’s the largest homebuying demographic of people, and they all need housing!
The cost for housing has shot up though, which only allows for those with enough money to purchase. As long as the income to housing cost gap remains high, buying a home will continue to be out of reach for many people.
Affordable Housing Options
Since his 2018 State of the City address, Mayor Suthers pledged to create 1,000 affordable housing units in Colorado Springs per year. For 2022 there were 1,057 units built. You can read more about what the city is working on with affordable housing here.
I think that this is a great pledge from the city. I also think that it's still not enough to house everyone who lives here. There needs to be a massive wave of building and incentivizing to build.
Right now we view housing as a commodity, a privilege instead of a right.
How Are Rentals?
Rental demand is still strong. Short-term rentals are still strong also, though they are seeing fewer bookings than normal. Short-term rentals are strong in Colorado Springs in the summer, weaker in the winter. Right now short-term rentals are seeing a 70% occupancy rate in Colorado Springs. I expect the percentage of short-term rental bookings to increase this summer.
Long-term rents in Colorado Springs decreased 1.5% month-over-month in December, compared to a 0.8% decrease nationally. Month-over-month growth in Colorado Springs ranks as the #20 sharpest decline among the nation's 100 largest cities.
Year-over-year rent growth in Colorado Springs currently stands at 4.6%, compared to -1.3% at this time last year. Rents in Colorado Springs are up by 25.5% since the start of the pandemic in March 2020.
Median rent in Colorado Springs is $1,205 for a 1 bedroom apartment and $1,509 for a 2 bedroom.
Median rent for all rental types is $1,552.
Are We In A Recession?
Mortgage interest rates dropped a bit recently. The 30 year fixed conventional loan is at 6.14% (was 6.54%), VA at 5.85% (was 6.20%), and FHA at 5.82% (was 6.15%) (MortgageNewsDaily.com).
I’m seeing people throw the word “slowflation” around, which means the economy is slowly growing, and you have inflation.
Several months ago people were using the word “stagflation,” which means the same things as “slowflation,” but with high unemployment also.
I expect the Fed to continue applying point increases, whether it actually works or not. I expect that will continue having a negative effect on our economy. Not sure about our inflation problem.
Since our economy is still technically growing, I don’t think we can say we’re in a recession. We sure are close to one though. But haven’t we been “close to a recession” for a while now?
People can’t seem to agree on whether the interest rates will jump up to 8 or 9% or higher, or if we’ll see rates drop into the 4’s and 5’s. There are always too many factors.
People can’t seem to agree whether our country is in a recession right now or not. That seems to indicate that we are on the brink of one. We might get there, we might not. It’s so weird, isn’t it?
Also, my fellow real estate agents can’t seem to agree on whether we are still in a seller’s market or not. The real estate market is normally slow in winter, but it has been extra slow since Fall 2022. Buyer demand has slowed, no question!
It is far too expensive for many people to buy right now. We are seeing that now in our headlines:
More Affordable Housing!
Various smaller affordable housing developments pop up in Colorado Springs, like this one. Our city is definitely conscious of the need for more housing here.
But here is the thing to consider: Gen X and Millennials are the largest homebuyer and renter demographic right now. There is a natural next generation of people who need housing, and there are simply more of them than the Boomers.
This means that there is a natural bigger demand for housing than there ever was! This is quickly becoming a huge problem that needs to be solved. As a nation, we are not building homes fast enough. This means that the existing homes go up in value/price because more people want them.
If developers build too many homes at once, then the price will go down, and so will their profit. But are developers limiting how much they build at one time? And if they are, what can be done about it?
Should we subsidize the housing market further? Should we use funding to incentivize new construction builders to build more smaller/starter homes? Or would multi-family developments be a better choice? Should we prioritize funding the housing market with our tax dollars?
Should taxes increase because of that? If not, what would we have to cut back on government spending in order to fund our housing market?
Also, do we have enough water to sustain more people? Is there a point where we should say, “No more people can live here?” If we continue to grow, how would we access more water resources?
These questions are a bit beyond what I can answer. I’m seeking out these answers though!
Should I buy right now?
Right now there are few buyers looking to purchase property right now. Competition from other buyers is low. Sellers are more likely to be open to dropping their price, or giving concessions toward buyer closing costs/loan buydown costs.
Prices could come down further though. If that happens, will you be upset that you bought now when you could have waited and bought lower later?
Or prices could actually increase this year, and some people think it will. If that happens, what if now was the best time to buy?
You’re going to hear all sorts of people telling you if now is a good time to buy or sell in this market. None of them know though.
I recommend you do what I do, and listen to a lot of people’s opinions on the housing market and the economy, and then make up your own mind about it.
For most of us, we don’t buy or sell a house because the market is timed just right. We sell because we inherited property and can’t use it. Maybe we sell because the property wasn’t performing how we wanted it to. Or we sell because we got a job transfer somewhere else.
We buy because the family is growing and we need more space. We buy because we took that job. We buy because we’ve been saving for so long and we can finally afford not to rent anymore.
No matter what happens to home prices and interest rates, people always need a place to live.