The new year brought surprises in Colorado Springs real estate. The biggest headline is that interest rates dipped slightly and enabled buyers to re-enter the market to snap up some great deals. Let’s take a look at what has been happening in the Colorado Springs real estate market so far in 2023.
Decreased Home Listings
The inventory in Colorado Springs soared year over year. But it’s a mistake to simply compare this month’s number of active listings to last year’s historically low figures. Why? Last January we had 544 active listings and that is just ridiculously low for a market our size. Anyone trying to buy a home in January 2022 can tell you how painful that low inventory was. Even though we had three times as many listings in January 2023 (1,639), it’s still not enough to comfortably serve the demand in the Colorado Springs market.
You’ll get a more accurate picture by following the listing activity from July 2022 to now. After the initial rise in listings last summer, we leveled off at around 2500 active listings. Then in December we started dipping below 2000. The decrease in interest rates and renewed buyer activity in January meant we only had 1639 active listings.
Another factor is that many sellers want to sell like it’s 2021 during the height of the real estate frenzy. They are throwing their homes on the market at high prices without much preparation. So, Colorado Springs technically has more inventory than this time last year, but the pickins’ are slim for homes that buyers are excited about. Plus, those desirable homes tend to generate multiple offers and competition. This is something we are paying close attention to as we move into the busy moving season this spring.
Related Reading: Tips for Sellers Navigating the Market Shift
Decreased New Construction
New construction permits in Colorado Springs dropped to a low of 424 in December 2022. For reference, 1597 new construction permits were issued in January 2022, which was the highest since 1988. Similarly, the number of issued certificates of occupancy in January 2023 was at 70 compared with January 2022 at 102. The key takeaway here is that Colorado Springs continues to struggle with sufficient inventory and new construction has dipped significantly from last year.
Related Reading: Where to Find New Construction in Colorado Springs
Where did the new buyer activity suddenly come from?
Mortgage applications saw an increase of 27.9% around mid January when interest rates touched below 6%. This reflects what we’ve been saying for several months. Buyers have not disappeared: they are just waiting on the sidelines and ready to jump in when the possibility of a home purchase becomes feasible again.
This sales activity applies to nearly all Colorado Springs zip codes where the market activity indexes show mainly strong gains. Check your market zip code stats here.
Related Reading: Tips for Choosing a Mortgage
Home Sales Prices in Colorado Springs
The higher average sales price for January ($525,254) displays strong activity in the higher end to luxury price level in Colorado Springs. The median sales price in January indicates that dynamics have remained stable in the middle of the market. Since most homes take about 4 weeks to close, the strong January sales numbers tell us that buyers are indeed shopping during the holiday season.
The solid start to the year will make it interesting to watch home prices as we enter the official moving season this spring. It’s a contrast to the doom and gloom predictions splashed across headlines. All the more reason to stay tuned into your local real estate market with an experienced real estate professional so you know exactly what’s going on.
Related Reading: 10 Ways to Lower Your Mortgage Payment
Housing is a hyperlocal industry but federal economics do have an impact. The interest rate hikes are finally influencing the monthly Consumer Price Index (CPI) with a small decrease to 6.5%. This is an improvement over the 9.1% CPI that we had a few months ago, but we are still not in a target range of 3%. There is still more to do, but the decrease in CPI was enough to cause the Federal Reserve to make a much smaller hike of 25 points. The markets expected this so there wasn’t really a reaction to the hike – interest rate offers actually decreased after the annoucement.
News of layoffs have created fears of foreclosures for some. Nevertheless, the unemployment rate is holding fairly steady at 3.4% in January. Remember, that the Feds would prefer for this number to be around 5%.
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Home seller tips for the current market
- Be ready to go: Talk to your real estate agent and lender as early as possible. These experts can help you come up with a personalized plan so you’re ready when market conditions allow or the home of your dreams comes on the market.
- Prep your home now so you can get your house listed with very little notice.
- Deep clean
- Ask your agent for a specific list of items to prep your home. They know what buyers are looking for.
- Prelisting inspection: Buyers are more selective about purchasing a home right now. Have your home inspected before listing. This will give you the opportunity to address any potential deal breakers without the stress of contract deadlines. While it still is a sellers market, there are many homes coming back on the market and you don’t want to have to start all over again.
- Price strategically: a well-priced home will attract qualified buyers who are ready to jump.
- Be particularly diligent about home preparation if you live in an area where there is still new construction activity or where there is a lot of competition from other similar listings. Stand out! Be special – in a good way.
- Give us a call to get started on your personalized plan: 719-219-9739.
Related Reading: Steps to Sell a House
Home buyer tips for the current market
- Have your finances in order and your paperwork ready to go. In fact, be proactive and move as far as possible in your pre approval process. This will enable you jump when a home comes up in your price range or the interest rates finally dip into range you need. Things can happen quickly so be ready!
- Be prepared for competition. We are looking at multiple offers again. This means you’ll have to look at options with your lender and how you can plan for that.
Related Reading: Steps to Buy a House
Selling and buying at the same time?
It’s always somewhat difficult to time this perfectly but it can be done. In the past 2-3 years, we have either been able to sell easily and have difficulty buying or vice versa. While still not perfect, this market has the most ideal dynamics for a simultaneous buy and sell that we have experienced in recent years.
Related Reading: Buying and Selling Simultaneously