Mortgage rates are continuing to rise, which means the Colorado Springs real estate market is definitely starting to balance out. Higher rates will cause prices to adjust, which is a good thing! The craziness of the housing market was simply not sustainable. Are we in a buyer’s market? Statistically, no. Even though the average sales price is declining, our inventory says it’s still a seller’s market. Buyers are enjoying being able to breathe a little when making a decision on a home, but it still is not technically a buyer’s market. Yet.
Single Family Homes
Single family home sales in the Pikes Peak MLS went down 5.3% from August to September of 2022. In August, 1366 homes were sold in comparison to 1294 sales in September. That drop in sales has increased 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 September of 2021, 1758 single family homes were sold in the Pikes Peak region. Year over year, that marks a 26.4% 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 things are starting to become sustainable.
We keep hearing that we’re no longer in a seller’s market. Although we may not have fully transitioned into a buyer’s market, numbers indicate that we’ve made a shift. The average sales price of single family homes went from $530,500 in August to $523,100 in September. Only a 1.9% decrease from the month prior. Considering there was a 4.8% decrease from July to August, it seems the slow down may have leveled off.
In contrast, home values have continued to increase by 5% 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 may have dipped just below that, we aren’t far off! The sky isn’t falling as many people might suggest.
After a nationwide shortage of available homes over the last couple years, we’re thrilled to see inventory growing. For instance, available single family homes on the market increased from 2639 in August to 2690 in September of 2022. Moreover, we saw a 127.2% increase in inventory from 2021, when there were just over eleven hundred homes for sale. We would love to see a larger margin month over month in order to sustain a 6 month inventory, but slow and steady wins the race. In addition, it provides some relief from aggressive bidding wars and rushed decisions.
The average amount of days a home sits on the market also indicates buyers’ relief. In September of last year, homes were selling in less than two weeks. Which explains why buyers were forced to offer over asking price and drop contingencies. Many buyers were purchasing homes sight unseen. We’re reaching a much more comfortable space with homes now sitting on the market for 25 days. 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 this month for single family homes. In September of 2022, there were only 1498, which is way down from August when it was 1801. What that 16.8% 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 lower 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 did not follow the same trend as single family homes. Sales actually went up from 215 in August, to 248 in September. On the other hand, townhome and condo sales still had a significant drop year over year. This time last year, there were 302 sales in the Pikes Peak region, making it a 17.9% decrease. Why? Because the market in 2021 was much more aggressive with an influx to Colorado.
Additionally, when interest rates were record low, it opened up the pool to more potential buyers. Therefore, individuals that couldn’t have otherwise owned, now had the opportunity to purchase at entry level, which is typically condos and townhomes, due to their lower price.
Unlike what we saw with single family homes, the average sales price of townhomes and condos went up. From August to September of 2022, average sales price went from $361,300 to $363,200. Overall, not a major increase, but definitely intriguing. Similar to single family homes, we’re still seeing a strong increase of value year over year. A 8.1% increase is a great return on investment and is good news for buyers and sellers alike.
So, the question is, why are the sales and value of condos and townhomes going up? 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 September of 2021, there were only 142 active townhomes and condos in Colorado Springs and surrounding areas. September of 2022 had 235 active homes. Month over month, we’re looking at a 2.6% increase. In the grand scheme of things, we’re thrilled to see that number has increased 65.5% year over year, but inventory isn’t building as quickly as we need it to.
New homes listed in September dropped down to 105 from 253 in August. A 19% decrease month over month is pretty drastic. From this time last year, new homes are down almost 29%, from 288. Again, sellers are timid. People thought the 2020-2021 real estate market was the new normal. Firstly, thank God it wasn’t. Secondly, nothing about that market was 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. What’s more, is that 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 realistic 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 and the rate at which we’re selling, we don’t even have half of 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 steadily increasing, 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. Relative to the history of the market, this is normal! It’s normal for homes to sit for weeks at a time. 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. Moreover, our current real estate market has 1/10 the amount of foreclosures that existed in 2010. We’re in good standing to move forward with our current market and it remains true that it is a good time to buy.
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.
Colorado Springs Relocation Guide
🏡 Moving to Colorado Springs? Download our FREE Colorado Springs Relocation Guide!