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Colorado Springs Real Estate Market Update November 2023

Posted by Sarah Steen on December 7, 2023
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October was tough with interest rates topping out above 8.03% (October 19 average 30-year fixed rate), but recent weeks have brought some relief with interest rates coming down to 7.08% on December 5.  It’s hard to believe that everyone is getting excited about 7% mortgage interest rates. But it’s all relative: in November 2022, the real estate industry was in shock with when the interest rates jumped into the 7’s.

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Colorado Springs Real Estate Numbers

infographic with Colorado Springs Real Estate numbers for November 2023 including average sales price, days on market, and number of sales

Home prices are up 5.5% from November 2022 despite many predictions last fall that prices would drop this year. The average sales price dropped a tiny 0.4% from last month, but that is normal in our market for this slower time of year in real estate.

Our days on market has stretched to 40 days as a result of a number of factors:

  • Homeowners feel locked into their ultralow interest rates and are hesitant to move.
  • We are in the middle of our slow real estate season in Colorado Springs. Things will start picking up again in late January/early February.
  • Many home sellers are initially pricing their home too high which decreases buyer interest and causes the house to sit on the market longer.

Related Reading: Steps to Buy a House

Tips for Home Buyers in Colorado Springs

We mentioned some great opportunities for home buyers in our October market update and those opportunities have stuck around. Take a look at the latest market dynamics and get an overview of the trends to pay attention to.

  • Interest rates are fluctuating. This can be an opportunity for home buyers, especially if they float their rate (wait to lock it for certain amount of time). The interest rate fluctuation also creates a sense of FOMO (fear of missing out) for buyers where they hesitate to lock their interest rate because there’s a chance that rates could go down after locking. The risk here is waiting to lock could also give interest rates a chance to go UP. This is a personal decision based on your risk tolerance as a buyer. Work with a great lender who can guide you.
  • Winning combination. You can snag a great deal if you catch an interest rate decrease and a seller offering attractive incentives. Seller incentives could help you get your rate below 6.5% (check with your lender).
  • New construction. We mentioned last month that there are some great deals in Colorado Springs new construction. Home builders are offering buyer incentives for up to $40,000-$50,000. Keep in mind that builders are advertising the sales price with the incentive already applied. So if the builder advertises a house for $400,000/40K incentive, the original purchase price was $440,000 and the incentive has already been applied.
    Tips to get the most out of your builder incentive:

    • It’s up to the buyer to decide how they’d like to use the incentive. Work with your lender to figure out what works best for your goals.
    • Some lenders are very expensive and builders’ lenders can be especially pricey.  We always recommend shopping for a lender. Consider consulting an outside lender to get a loan offer and present it to the builder’s lender to match it. You’d be surprised how many times we’ve seen a builder’s lender match a competing offer. This could save $1000s.
    • Check your settlement to ensure that ALL of your incentives are applied. If they aren’t, demand that they are applied to something. Especially with a VA loan, you can pay down other types of debt and explore options for utilizing 100% of your incentive.
    • Make sure you tell the sales office that you are working with a real estate agent during your first visit. Remember, the price of a real estate agent is already built into the home price, so you’ll pay for one regardless of whether or not you have a real estate agent on your team representing your best interests.
  • If you are using a 3/2/1 or 2/1 buy down, you interest rate increases by 1% each year until it reaches the final interest rate. It is important to get qualified with the final interest rate. This will help you avoid eventually having a mortgage payment that you might not be able to pay.
  • Ask your lender if a 2/1 or 3/2/1 buy down is indeed the best scenario for your personal situation. These loan options will temporarily decrease your monthly mortgage payment, but consider using (if permitted by the lender) some of the seller concessions to pay off a credit card. This will permanently save you money, and your credit card interest rate is probably much higher than your mortgage interest rate.
  • Buy for the long term. Plan on being in your home for a minimum of 4-7 years.
  • Steps to Buy a House

Related Reading: Where to Find New Construction in Colorado Springs

Tips for Home Sellers in Colorado Springs

  • If you are selling right now, most likely it is because life events have pushed you to sell. Thankfully, you  probably have a ton of equity in the home and can maybe offer a loan with a low interest rate to a buyer. Related Reading: How does a VA loan assumption work?
  • Nothing has changed for sellers over the last year. If you want your house to sell, you need to diligently prepare and repair the home and price competitively.  Homes that aren’t move in ready and/or priced too high will sit on the market with very little buyer interest.
  • Patience is key here. It takes an average of 10-15 showings to generate an offer on a house and we are in our slowest part of the year for real estate.
  • Steps to Sell a House

Related Reading: Tips for Sellers in a Shifting Market

2024 Dynamics

Interest Rates:

Many sources are predicting that the Federal Reserve Board will cut interest rates in 2024. There are varying opinions on the timing and frequency of rate cuts.

Business Insider projected multiple interest rate cuts starting in early 2024, while more conservative predictions are saying fewer cuts beginning July 2024. It’s promising that mortgage interest rates will likely come down at some point in 2024, but keep in mind that the days of 2-3% rates are over.

If we see interest rate drops, we will have 3+ years of stifled buyer energy jump back into the market. Many potential home buyers struggled to compete in the multiple offer conditions during the pandemic, and then hit affordability challenges as interest rates increased.

A significant increase in buyer activity with our tight inventory could cause our market to shift back to multiple offers and fast sales.

Related Reading: Tips for Choosing a Mortgage

Home Prices:

As you can see in the chart below, home prices are expected to rise over the next few years. This is a result of  homeowners not wanting to sell their homes combined with the sustained significant buyer demand. A gentle home value increase coupled with a few interest rate cuts could mean home buyers could see a small break in home affordability for 2024.

Bar graph of estimated home price performance through 2027

Source: Keeping Current Matters

Related Reading: How Much is My Home Worth?

Election:

Generally, an election year has little impact on the real estate market, but potential changes in the political landscape in 2024 could shift that.

 

Remember, we’re here for every step of your real estate journey. Whether you’re buying, selling or simply need a recommendation for a repair, we’ve got you covered. Email susanna@co-regroup.com or call 719-219-9739.

Click here to download your free home buyer guide