U.S. Space Command Staying in Colorado Springs
Before we dive into the current Colorado Springs real estate market, let’s start with the biggest news for our city. The Biden administration announced at the end of July that U.S. Space Command will remain in Colorado Springs. After two years of review and much debate among legislators, this is a huge relief for many Coloradans. U.S. Space Command will provide many jobs and the headquarters will attract additional supporting companies to Colorado Springs. This is a big economic win for all of Colorado and the real estate industry here in town.
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Colorado Springs Real Estate Stats in July 2023
While many predicted an impending housing crash over the past 12 months, we simply aren’t experiencing that here in Colorado Springs. Our average home prices have stabilized in the mid $500s for the last few months after the unprecedented frenzy during the pandemic. Our market is continuing to get back it’s pre-pandemic conditions with listings sitting a little longer on the market and less overall competition. However, affordability continues to be a struggle with interest rates hovering around 6-7%. Some good news? Inflation has dropped to 3% from last year’s 10% Consumer Price Index (CPI).
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Owning a Home in Colorado Springs is More Expensive
It’s not just home prices in Colorado Springs that have increased significantly in the last several years. Many of the costs associated with owning a home have also surged.
- Property Taxes: Notices of property value were sent out in El Paso County at the beginning of May. There was a collective outcry from home buyers and homeowners when these notices arrived in mailboxes. Property values increased as much as 40% which means everyone’s property taxes are increasing quite a bit. The El Paso County assessor received 33,000 appeals, and about 30% of those appeals were accepted into the next round of hearings with the County Board of Equalization. Many homeowners who appealed their property value found themselves with little to no adjustment after the appeals process.
- Homeowners Insurance: Thankfully, insurance companies have not withdrawn from insuring Colorado Springs homeowners after several very severe hail storms. While homeowners still have insurance options (unlike Florida), they saw a big jump in insurance premiums.
- Homeowner Associations: Homeowners Associations across Colorado Springs have also increased their fees. A number of factors are at play here: regularly scheduled price increases, rising costs for services like trash and landscaping, increased insurance premiums, and depleted reserve funds due to repair costs for events like major hail storms.
With this news you’d think that real estate would come to a screeching halt. But real estate keeps moving and life goes on. People move out of Colorado and into Colorado. Homes are still being bought and sold, just at a much slower pace and different dynamics from the past few years.
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Buying a Home
First time homeowners accounted for 34% of all real estate purchases in 2021, but dropped to 26% in 2022. The average age of first time homebuyers also increased to 36 years old (an all time high). While the average age of a first time buyer is increasing and many potential home buyers can’t afford to buy a home, homeownership continues to be part of the American Dream. It’s still considered a vital component of building wealth for current and future generations.
Interest rates have hovered in the upper 6’s and low 7’s for the past 4-6 weeks and this has dropped sales activity to the lowest it has been in 9 years. July had just 959 sales which is a shockingly low amount of activity as we wrap up what is usually our busiest sales season of the year.
There is some good news for buyers who are still in the market. Colorado Springs has some great opportunities out there to negotiate price and contract terms. Buyers still can’t ask for the world, but they have a much greater chance of getting the conditions they want than they did in recent years. Headlines might paint a different story for other parts of the country, but pay attention to what’s happening here in Colorado Springs.
Keep in mind that there is also not as much buyer competition out there right now. Home buyers can take their time shopping, find what they like, and likely avoid a bidding war. Trends tell us that when interest rates dip even a little bit, buyer activity abruptly picks up and competition increases. As a buyer you have two options. Buy in the near future with a higher interest rate, steady prices, and less competition. Or wait until interest rates drop, but competition is high and prices increase quickly.
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Selling a House
We’ve seen a flurry of listing activity over the past few weeks but Colorado Springs still doesn’t have enough inventory up for sale. It’s unusual for us to see a bump in inventory as we approach fall, but this could be an indication that homeowners have accepted the higher interest rates, shrugged off their “Golden Handcuffs”, and decided to list their homes to move on with their next chapter. This could be a sign that our market could start shifting away from what felt like a gridlock where people wanted to move but didn’t want to give up their sub 3% interest rates.
When we speak to home sellers right now, we to have address several key aspects based on the fact that we are in the second half of the year with the busy Colorado Springs real estate season winding down.
- Seasonal Slow Down: Buyer demand is slowing down. Homebuyers want to be settled when school starts and then focus on the back to school activities. Colorado Springs historically sees a real estate slow down until March with some years’ moving seasons starting earlier than others.
- Lower Prices & Longer Time on Market: Decreased buyer activity means lower prices and increased days on market.
- Prepare, Prepare, Prepare: We’ve mentioned this before, but the days of throwing a home on the market with little preparation are over. Homes need to be diligently prepared and strategically priced to get buyer attention. In short, make the home buyer feel that your home is absolutely worth the 7% interest rate.
- Consider a Pre-Listing Inspection: On average, Colorado Springs is seeing 25% of contracts terminated and come back on the market. Yikes. Sellers can try to avoid this by getting an inspection and addressing any potential deal breakers before listing.
- Hire the Right Real Estate Agent: Absolutely look for someone with experience and good reviews that you trust to sell your home. But your agent should also be communicative and collaborative. You’ll feel taken care of as the seller, but these skills are especially important once you’re under contract with the buyer. If you have an agent without these skills, you’ll risk losing your buyer during the contract period when further negotiations come up. At this time of year in real estate, sellers really should avoid going back on the market as things slow down.
- How long does it take to sell right now? According to ShowingTime data from July 31, each listing has an average of 1.93 showings per week. It takes an average of 11.7 showings to get a contract. This tells us that sellers can expect to be on the market for about 6 weeks before getting a contract.
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We are dedicated to helping you receive the maximum value for your money when purchasing or selling your home. Give us a call (719-219-9739) or email us (susanna@co-regroup.com) if we can help you navigate your real estate journey. We look forward to hearing from you.
