What is a whiplash market?
You may have heard people refer to the current real estate market as a whiplash market. This is a market where price predictions and expectations are virtually impossible because key dynamics are shifting frequently.
The interest rates have bounced up and down through the first quarter making it difficult for buyers and sellers to plan for a home sale or purchase. One week a home buyer might have a $450,000 budget, but a week later that amount can shrink to $425,000 after an interest rate jump. Home sellers face a similar challenge as buyer demand (and home values) whip back and forth in reaction to what the interest rates are doing.
How is the Colorado Springs real estate market?
5 big takeaways:
- Interest rates down in the 5% range
- 4.4% average home price increase from February to March
- Buyer demand picking up
- Multiple offers still in play
- Pricing and presentation still vitally important for sellers
With all that in mind, we are seeing the spring real estate market in Colorado Springs heat up. Our busy military moving season has kicked off, and mortgage interest rates have decreased for 4 consecutive weeks. Interest rates are finally in the 5% range and this has caused buyer demand to surge. Colorado Springs still doesn’t have enough homes for sale. This means prices continue to climb and our real estate market has sped up with houses going under contract faster. A deep cut in home values similar to San Francisco and Austin is not in our future.
With all of that in mind, it’s not surprising to see multiple offers on homes again. We are back in a seller’s market, though things are not nearly as extreme as last spring. Home buyers in 2023 tend to be more selective because they are contending with higher interest rates than buyers were last year. Expect homes that are priced too high or not prepped diligently to sit a bit longer and probably succumb to price reductions.
Our average home price had a 4.4% increase from February to March landing at $523,972. At this point, the price declines compared to last year’s exceptionally strong seller’s market hover around 3%. This is much better than what most experts predicted for this year.
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Cautiously Optimistic Economy
Recent US economic developments are encouraging. The March Consumer Price Index (CPI) decreased to 5%. Mortgage rates have been mostly stable over the past 4 weeks and buyer demand has increased. This is all good news, and hopefully we are starting to climb out of our economic dilemma. The next Federal Reserve Board meeting is at the beginning of May. Many experts believe they will increase rates just 25 points or not at all.
Related Reading: Tips for Choosing a Mortgage
New Construction Homes in Colorado Springs
- Certificates of Occupancy: 388 Certificates of Occupancy were issued in March 2023 in El Paso County. These certificates are issued when a new construction home is complete and ready for the home buyer to move in. The number of Certificates of Occupancy went down about 16% from March 2022. Most builders in Colorado Springs have an average 6-9 month build time which means most homes receiving these certificates last month broke ground around September. Builders last September were experiencing a significant dip in demand so just a 16% year over year decrease is actually not bad considering.
- New Permits: Current new construction activity can be evaluated by looking at the number of new permits pulled by home builders. This number shows us how many new homes are being started. According to El Paso County’s Regional Building Department, March 2022 had 536 permits pulled, while March 2023 had just 238 permits—a 56% drop. This indicates that builders still have a lot of sitting inventory. A surplus of inventory for builders can mean great opportunities for home buyers. One of our recent buyers received a $30,000 incentive for a rate buy down.
Future Colorado Springs Market Impacts
There are several bill proposals currently running through Colorado legislature that could influence the Colorado real estate market.
- Bill SB23-213 (Change of Land Use) would increase the residential density in areas previously designated for single family homes.
- Bill SB23-1190 : could bring huge changes in the home sales process. If passed, it would demand “a first right of refusal of a local government to match an acceptable offer for the sale of a residential or mixed-use multifamily property”. This law has passed the house and is now going through the senate.
Tips for Home Buyers in Colorado Springs
- Consider looking at new construction to take advantage of surplus builder inventory and incentives.
- Look at homes that have been sitting on the market for more than 15-20 days to try to avoid multiple offer situations.
- If you have a flexible timeline, look into homes with assumable VA loans. You don’t need to be a veteran to assume a VA loan when purchasing a home, but you could snag a low interest rate. Read more here: How Does a VA Loan Assumption Work?
- Talk to a lender to start the preapproval process before you start looking. Then you’ll be ready to quickly make a strong offer when you find a home you love.
- Download the Home Buying Guide
- Schedule an intro meeting with us so we can start planning your home purchase together.
Tips for Home Sellers in Colorado Springs
- Get your home on the market as soon as possible. The busy moving season and buyer demand will slow down by mid-July because relocating buyers want to be in their homes before school starts.
- Diligently prepare your home.
- Price strategically to avoid sitting on the market. Click here to request a personalized home valuation.
- Get a prelisting home inspection so you can address any major repairs before putting your house on the market. This will help you avoid any deal breakers and possibly save you money because you won’t be up against contract deadlines for repairs.
- Download the Home Selling Guide
- Schedule a prelisting consult with us so we can provide you with a home valuation, preparation checklist, and come up with next steps for listing your home.