Still A Seller's Market, But It's Easier
Properties in Colorado Springs are getting between 2-3 showings a week on average now, and are going under contract in 16 days, on average. We had a full 2 months of housing inventory for July. 4-6 months is considered a healthy balanced market.
Are prices going to drop? Are we actually starting to head toward a balanced housing market? Or is this just seasonal? Summertime is when the most listings hit the market! On the other hand, the last time we had at least two months worth of housing inventory was back in January 2019. So that hasn't happened in a few years.
There are currently 1,885 properties for sale in Colorado Springs. Out of those, 1,198 (63.5%) have had price drops. Some properties are still selling above asking price though.
553 properties have sold so far in August. 1,084 properties sold in July in Colorado Springs. Compare that with 1,487 properties that sold in July 2021.
The current economic climate has made many buyers question purchasing right now, which has taken the urgency out of buying a home. We're seeing a closer to normal timeframe for days on market for properties.
Colorado Springs Average Sale Prices
You can see that even with the home values seemingly dropping a bit, they are still much higher than they were this time last year!
Also, for land, there are 130 land properties for sale in Colorado Springs right now. 56 of those have taken a price drop, almost half.
8 have sold so far for August. 12 sold in July, out of 151 for sale. 11 sold in June, out of 140 for sale. Land has not been moving as quickly here! If people are unsure of buying a home, they're even less sure of buying land to build a home.
I bring up land because of my luxury vacant lot listing in Kissing Camels, in Colorado Springs. It's ready to build on, and preliminary plans have already been approved. Here's a link if you'd like to get more info on that lot.
The National Housing Info
The NAR (National Association of Realtors) recently released their predictions for the housing market, in their August US Economic Forecast Data. This information something you can look at, interpret, and make some conclusions about what the NAR's economic forecast looks like, and how trustworthy it may be.
Remember, these are national numbers. Your local market will be different. Your city will have unique draws and drawbacks to it. In this case, I live in Colorado Springs, so I will be looking at this data and overlaying what I know about Colorado Springs, as well as what the dats says about Colorado Springs specifically.
Read NAR's August US Economic Forecast Data report here, so you can compare with what I'm saying, or come back to the report later so you can fully digest the numbers in there:
So it looks like the prediction is that we'll continue to see a drop in home values into the end of the year, and starting 2023 the values will start to rise again. New home prices will have very minor drops in value, not enough to really make a noticeable difference.
Home prices for new and existing homes are 14.2% higher than they were last year. Let that sink in. Even with the price drops we've been seeing on homes, the values are still 14.2% higher than last year's prices.
If we do see a 4.2% and then another 21.3% drop in home values, that's a lot! Let's do some quick math. If you have a house that's worth $500,000 now, and you get a 4.2% drop in value, and then another 21.3% drop in value, your home would be worth 479000 after the 4.2% drop, and $381,763 after the 21.3% drop.
Is that a realistic expectation though?
Applying These Numbers to Colorado Springs
Let's take my house, which had at it's highest point (before April 2022) had a Zestimate of 490,000. It's now at $460,000. If I had my home listed for $490,000, would a 30k price drop make sense to sell it in this market?
My $490,000 house would be worth $469,420 after the 4.2% price drop, and $374,127.74 after the 21.3% price drop.
So at a total predicted future value of about $375,000, my house would still be worth ~ $75,000 more than what I bought it for in 2018. Does that sound like a more reasonable appreciation for Colorado Springs, where I live?
Now keep in mind, this is Colorado Springs, it's a generally more in demand city to live in, and these numbers we're talking about are national numbers. Things will be different for each city, and I think Colorado Springs is going to be on the higher end of the scale in terms of property values, generally.
Still, NAR gives some predictions that give some numbers we can play with. At the end of the day, it's still just people's best guesses, and economists, much like the weather people, are often wrong. It's very hard to make predictions, especially when you can't possible know everything.
Additional Thoughts on if Home Prices Will Drop
Other things to keep in mind: millennials are the largest base of buyers right now. We have more people needing homes to live in than any previous generation.
The unaffordability rate of homes is at its largest! If we take the median sale price of a house in Colorado Springs, at $460,000, and we divide that by the median income in Colorado Springs (as of 2016-2020) at $67,719, the price of a home in Colorado Springs is 6.79 times more expensive than a person's yearly income.
In the historical past, the average house cost 5 times the yearly household income. At the height of the 2006 housing boom, that number was at 7 times the yearly household income. We are almost to that same ratio in Colorado Springs. It really does feel like we're all still on a precipice with the economy and the housing market. Still sitting on the fence. Everyone is still waiting. Waiting to see what happens!
The high cost of homes right now definitely makes it difficult to purchase.
The Homes Owned By A Corporation
If you've wondered about the corporations buying up homes in Colorado Springs, I have a name for you: SFR JAVELIN BORROWER LP.
I came across this corporate owner when I was calling people in my neighborhood and found the name registered as the property owner for more than a few properties.
They own 176 homes in El Paso County. SFR JAVELIN BORROWER LP is also known as Invitation Homes, based out of Dallas, Texas. They own and lease 80,000 homes across the country. Invitation Homes is owned by Blackstone Inc.
So if you need to rent a house or know someone who does, Invitation Homes definitely has options right now for people relocating to Colorado Springs.
What are your thoughts? Do you think prices are going to drop for the rest of the year in Colorado Springs? Do you think it will be a good time to buy this year or in 2023 if that happens? Let me know in the comments below!