I am absolutely astonished that the Colorado Springs real estate market has held steady (and even strong by most measures) in these unprecedented and uncertain times. There so many factors that made everyone think this was going to be a really bad situation, but it has not been reflected in our local market thus far.
Take April’s statistics with a grain of salt
Real estate is usually slower to react to major changes. Our industry’s average 4-week contract time means that it can take longer to see any changes that are manifesting. The closing numbers you see today are from homes that went under contract in March during the beginning of the shutdown. May’s numbers will be even more interesting because they will reflect the strict Stay at Home orders that were in effect through April 27.
What factors of the shutdown could have negatively impacted our market?
Let’s consider some factors that could have caused a rapid downward spiral in the Colorado Springs real estate market:
- Many potential home buyers lost their income or had it drastically reduced and could no longer qualify for a mortgage.
- Although interest rates were very low (for the most part), there was a lot of volatility in the financial markets. This caused lenders to change lending requirements, affected their ability to lend on jumbo loans, and made funding loans more difficult.
- Real estate agents and buyers were only permitted to enter homes with a fully executed contract to buy. Appraisers were not allowed to enter homes and had to shift to desk or drive by appraisals.
- Sellers were not allowed to have open houses.
- Sellers pulled their homes off the market until we entered the Safer at Home phase here in Colorado on April 27. This phase allows more marketing and showing options.
- The military stopped all orders for permanent changes of station for non-essential personnel until June 30. This means the annual military moving season is delayed until military personnel can get orders. Colorado Springs is home to 5 military installations so this has a huge impact on our market.
All of these factors could have thrown a weak market into a real estate crisis. But Colorado Springs had the strongest first quarter since 2008. We had increases in average sales price of $10,000+ between January and March. This strong start made April’s $5,000 increase look relatively slow, but the bottom line is that prices still increased despite multiple negative factors at play.
What actually happened during the shutdown?
We have been tracking daily real estate data since mid-March in order to pay close attention to what is unfolding. Here’s what happened in the Colorado Springs real estate market:
- Houses Kept Selling:The graph below is encouraging: there was definitely a lower number of daily new listings during the strict Stay at Home orders, but the under contract and pending listings kept an even pace with the number of new listings. At some points they even outpaced the new listings. There was a strong increase in activity for selling and buying real estate as soon as the less strict Safer At Home measures were put into place.
- Number of Listings Increased (phew!)Colorado Springs was experiencing historically low home inventory at the beginning of the shutdown. It was hard to believe that our inventory numbers were even lower than the same time last year. As you can see in the graph below, Colorado Springs saw a steady increase in the number of single family home listings over the last several weeks. This is certainly a welcome change with 400 new listings, but we have not yet caught up with last year’s inventory numbers (and last year’s inventory was low as well). It seems that the COVID shut down has not really affected El Paso County real estate. We were helped by a very strong first quarter and we are heading toward our annual moving season when we can expect an increase in listings.
- Closings and the Average Days on Market Remained SteadyThe chart below shows the graph of weekly closings. This number dips at the end of April which is unusual, but we expect this to increase next week. Overall, the number of closing and days on market have remained fairly steady.
Factors to Watch:
It would be impossible for anyone to predict exactly how this will play out in the real estate market. But here are several factors we are considering as we monitor this evolving situation:
Bad news first…
- It will have a strong impact on our economy if businesses cannot safely and effectively re-open their stores completely by early fall. This will ripple into real estate and the lending industry.
- Inflation could be a factor with all the money being spent to hold up our economy at the same time this economy is contracting.
- Homeowners who have chosen forbearance could be in financial distress which will then have an impact on foreclosures and short sales.
The good news…
- The number of listings in Colorado Springs is still way below a balanced sellers’ market. The average days on the market in Colorado Springs is 20 days. 6 months on the market is considered a balanced market. This is an important factor to pay attention to.
- Spring is historically the start of the busy season for the Colorado Springs market. We anticipate pent up buying and selling activity from the pandemic to cause a rebound effect as things start opening back up. What does that mean? Our busy season might shift toward summer and early fall when the dust (hopefully) settles and people can move forward with their plans. Or we might see people hold off until next year and trigger an exceptionally active 2021.
- Military moves are suspended through June 30 and they have a significant influence on our local market. If the military stop movement order expires, we could see a very busy, compacted selling season over the summer.
- So far it seems that the changing lender qualifications have not drastically affected buyers’ ability to qualify.
If you’re planning to buy in the near future, we have a few tips to put yourself in the best possible position:
- Our Steps to Buy a Home page is a great place to educate yourself on the details of every part of buying a home.
- If you haven’t already decided exactly where you’d like to live, research neighborhoods, schools, crime rates, and commute times.
- Talk to a lender to learn details about how much you qualify for. Take a look at your budget and decide how much you want to spend. The lender can also give you detailed information about how much you’ll need to have for a down payment. This time is also an opportunity to improve credit scores if at all possible. Get pre-approved for a mortgage before you start seriously looking at houses.
- Sign up for listing alerts so we can let you know as soon as a home you might like comes on the market. This is an especially important step with inventory so low.
- You can also click here to schedule a free buyer consultation.
The bulk of the seller’s work happens before the house is for sale. It’s more important than ever to make sure your home looks fantastic in online pictures and marketing. Prepare your house thoroughly so that you can sell it for the most amount of money in the shortest amount of time (and ideally with fewer people coming into your home):
- Check out our brand new Steps to Sell a Home page for detailed information about every part of the home selling process.
- Prepare your house. De-clutter as much as possible. Make a list of all repairs that need to be done and check off anything you can complete yourself. Deep clean and stage your home.
- Make a list of any items you’d like to purchase before listing (new welcome mat, new bathmats and towels, etc.)
- You can click here to schedule a free listing consultation.
The bottom line: we are here for you. We will navigate these uncharted waters together. Contact us at 719-321-0800 or email firstname.lastname@example.org.
*SFH only, All of El Paso County
©2020 Pikes Peak REALTOR® Services Corp. All rights reserved. Information herein deemed reliable but not guaranteed. Based on information from the Pikes Peak REALTOR® Services Corp. (“RSC”), for the period March 1st,2020 through May 31st ,2020. RSC does not guarantee or is in any way responsible for its accuracy. Data maintained by RSC may not reflect all real estate activity in the market.