The Colorado Springs real estate market is ever changing, which is why we do monthly updates! We firmly believe we are no longer in a seller’s market, but also not quite in a buyer’s market. Let’s go over some statistics for October 2022 and see why.
Single Family Homes
Single family home sales in the Pikes Peak MLS went down 11% from September to October of 2022. In September, 1294 homes were sold in comparison to 1100 sales in October. That drop in sales has continued to increase over the last few months, but isn’t a major concern since our real estate market is finally balancing out. However, when comparing home sales to last year, we are selling significantly less homes.
In October of 2021, 1641 single family homes were sold in the Pikes Peak region. Year over year, that marks a 33% decrease in sales. Does that mean we’re in a buyer’s market? Not necessarily. The housing market was volatile for a couple of years post-pandemic and the market is teetering, trying to find a happy medium.
We keep hearing that we’re no longer in a seller’s market. Numbers indicate that the Colorado Springs real estate market remains strong for sellers. The average sales price of single family homes went up from $523,117 in September to $532,488 in October. If you’ve been looking to buy and waiting for prices to plummet, this may be your sign that we aren’t entering a market crash, as some projected.
Compared to the average sales price of October 2021, home values have increased 4.4% year over year. Sitting between a 6%-10% rise in home value is what we call the “sweet spot” for sustaining a reasonable market. Although we’ve seen the year over year appreciation decrease slightly over the last few months, it’s important to remember we’re still counteracting the 20% increase we saw in recent years.
Although we saw a minor month over month decrease in active homes, 2690 to 2645, we’re thrilled to see inventory growing year over year. The Pikes Peak MLS saw a 152.4% increase in inventory from 2021, when there were just over one thousand homes for sale. A larger growth in margin month over month would be ideal in order to sustain a 6 month inventory, but here’s what the market tells us. We aren’t quite in a seller’s or buyer’s market.
Sellers aren’t as eager to go on the market and buyers aren’t as willing to push their luck. We’re caught in the middle and the market could swing either direction.
The current average amount of days a home sits on the market is 31 days. Since August of 2022, we’ve seen this number increase by about one week each month. Just a year ago, homes were selling in less than two weeks. Which explains why buyers were forced to offer over asking price and drop contingencies.
We’re reaching a much more comfortable space with homes now sitting on the market for a full month. First, it’s imperative for sellers to understand this statistic in order to set realistic expectations and plan accordingly. Second, this affords breathing room for buyers. Having time on their side, they’re able to view multiple homes, consider their options, and make a well thought out decision.
We’ve added a new statistic for single family homes. In October of 2022, there were only 1239 new listings, which is way down from September when it was 1498. Month over month, we’ve seen a steady decrease in new listings, to the tune of 17.3%. Year over year, we’re looking at a 22.4% decrease. What this drop tells us, is that even sellers are becoming very timid in this market.
Even though there is still a lot of interest and demand from buyers, the slowdown has caused caution in sellers. With changing average sales prices and more days on market, it’s understandable. However, the low inventory still puts the ball in the seller’s court. The homes that still sell quickly and gain the most traction are: well maintained, in desirable neighborhoods, and appropriately priced. Homes with that trifecta are still receiving multiple offers.
Townhomes and Condos
Townhomes and condo sales in Colorado Springs followed the same trend as single family homes. Sales went down from 248 in September, to 150 in October. Just last month, townhomes and condos were selling in the same quantity as the year prior. This time last year, there were 250 sales in the Pikes Peak region, marking a 40% decrease across the board.
The decrease in sales has a direct tie to interest rates. When interest rates were record low, it opened the market to more potential buyers. Therefore, individuals that couldn’t have otherwise owned, now had the opportunity to purchase. Being that they were right on the cusp meant they purchased at entry level, which is typically condos and townhomes, due to their lower price.
Much like what we saw with single family homes, the average sales price of townhomes and condos went up. From September to October of 2022, average sales price went from $363,000 to $367,500. Overall, not a major increase, approximately 1%. However, we’re still seeing a strong increase of value year over year. A 12.5% increase for your home’s value is a great return on investment and is good news for buyers and sellers alike.
So, the question is, why are the values of condos and townhomes increasing more rapidly than single family homes? We believe that due to higher interest rates, it’s forcing buyers to look at purchasing at a lower price point. Many people can no longer afford single family homes at 7% interest. But, they still want to own. So instead of waiting for mortgage rates to come back down and miss out on a great investment, they’re starting with a condo or townhome to build equity.
The number of active homes has also seen a steady increase year over year. In October of 2021, there were only 129 active townhomes and condos in Colorado Springs and surrounding areas. October of 2022 had 264 active homes. Month over month, we may not be looking at anything major.
Looking at the big picture, we’re thrilled to see that number has increased a whopping 104.7% year over year. Inventory hasn’t been building as quickly as we need it to, but that jump in active homes is exactly what we’d like to continue seeing.
New homes listed in October dropped down to 165 from 205 in September. From this time last year, new homes are down almost 34%, from 248. Again, sellers are timid. People thought the 2020-2021 real estate market was the new normal. What we need to understand is that the market during that time was artificially created.
Mortgage rates were ridiculously low so everybody could afford to buy. More importantly, homes were selling for over asking and then appraising for that. Those homes became the comps for new listings, which ultimately inflated the entire market at an unprecedented rate. Overall, we’re glad to see home values continuing to rise year over year, at a much more sustainable rate.
Colorado Springs Market Update
To give more context on where these numbers come from, we use the entirety of the Pikes Peaks region. A six month inventory is considered normal in the real estate market. This means if we continue to sell homes at our current pace, without adding inventory, we’d last six months. With our current inventory in Colorado Springs, we are nowhere near that.
With recent spikes in interest, we understand buyers are hesitant to purchase. But, keep in mind the year over year home value increases. Inventory is also steadily increasing year over year, allowing buyers to take their time, thoroughly research homes, and curate thoughtful offers. Sellers have grown weary due to lack of bidding wars and homes taking longer to sell. However, it’s perfectly normal for homes to sit for a month or so on average. Our perspectives became altered by the post-pandemic housing market. The last couple of years did not provide a stable benchmark of what we should expect.
If you ask us, interest rates were held too low, for too long. We should have been steadily increasing the rates since mid 2021. Then, in efforts to curb inflation, they took the band-aid approach and increased all at once, thus creating the market we’re currently in.
About The Author
The team at My Front Range Living are a group of full time real estate experts serving Colorado Springs, El Paso County and the surrounding areas. Their knowledge of the local community and experience in the industry provide you incomparable value when buying or selling a home. With several years of experience in helping out of state buyers and sellers, they are the go-to team when it comes to relocating and helping Colorado feel like home.
Even if you’re looking for an agent in another city or state, the My Front Range Living team has a network of experts that can connect you with the right professional.
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