The December real estate numbers for the Pikes Peak region are out and our home prices continue to subtly yo-yo. We have a full report on the most recent numbers, plus real estate and economic dynamics to watch in 2024.
December Real Estate Numbers in Colorado Springs
The Pikes Peak region had just 777 home sales in December. We had very little 4th quarter sales activity in the Colorado Springs market and that is reflected by the November and December numbers provided by the local Multiple Listing Service (MLS).
The Pikes Peak region numbers include surrounding counties, so if we look at just El Paso County (Colorado Springs’ county) there were only 579 single family home sales in December. Just 492 of those sales were existing homes! If your home is currently for sale, it will take longer than expected to go under contract since we are still in the slow real estate season for our area.
It’s important to keep in mind that monthly real estate statistics lag behind the current market conditions by about 4 weeks. It usually takes about 30 days for a standard real estate transaction to close, so the December numbers mostly reflect the homes that went under contract in November. Historically, December sales are even slower than November, so we should expect one more month of low sales activity when January numbers are released next month.
Housing Inventory in Colorado Springs
Low inventory continues to be a challenge for home buyers with just 1891 homes for sale in the Colorado Springs area. December had 21% fewer homes for sale than November. We expect a strong increase in housing inventory over the next few months as we move into our busy moving season and folks start taking advantage of the anticipated interest rate dips. Our brokerage has already had multiple clients reach out this month with plans to sell in the spring.
Colorado Springs Home Prices
The average home price for December came in at $519,961 which is a nearly 6% increase year over year. This was much higher than originally predicted for 2023. But our average and median sales prices don’t reflect a common dynamic that was occurring throughout the year.
Many sellers were providing concessions to buyers to help them with closing costs and rate buydowns. Home builders were offering unprecedented concessions to the tune of $50K+, and it was common for existing home sellers to provide $25K+ in concessions. This is not reflected in the real estate statistics and would reduce our year over year home price increase by at least half.
2024 Housing Forecast for Colorado Springs
Overall, the housing market in 2024 is evolving into a transformative year characterized by a move towards more buyer-friendly conditions, a rise in listings and sales, and a re-defined approach to renting.
Increased Buyer Competition when Interest Rates Drop
Expect a sharp increase in home buyer competition when interest rates drop, especially because this will likely happen close to our busy real estate season in Colorado Springs. We have a few years of pent up buyer demand waiting on the sidelines for a break in interest rates. This includes:
- People who weren’t able to buy a home during the peak of the pandemic housing frenzy with bidding wars, appraisal gaps, etc.
- Folks who haven’t been able to afford a purchase with interest rates in the high 7’s.
- Homeowners who have been waiting to trade up or downsize but are reluctant to give up their pandemic era interest rates to jump into the high 7’s.
Colorado Springs Economy
Real estate is a hyperlocal industry and home value fluctuations will vary by each location’s economic strengths and weaknesses. The Colorado Springs market is poised well. The military provides a strong real estate sales foundation with a steady stream of personnel moving into and out of the area each year. Additionally, several companies have announced plans to headquarter or expand their existing workforces in Colorado Springs.
Our economy is strong which means we have a greater chance of a modest home value increase compared to predicted national averages. Tatiana Bailey, executive director of Data-Driven Economic Strategies in Colorado Springs, states that she expects a slowdown in the local economy as businesses struggle with the labor shortage. Businesses will face challenges in hiring, leading to a decline in job opportunities and income growth, ultimately impacting the overall economic growth.
A break in the inventory struggle?
Home sellers in Colorado Springs are finally acclimatizing to the higher interest rates and realizing they won’t dip back down to the 2’s and 3’s we saw during the pandemic. We expect that homeowners who have been waiting to sell because they are hanging onto low interest rate mortgages will start listing their homes this year as interest rates dip into the 6’s. This should bring a welcome increase in inventory and movement in the market. Keep in mind that if we have an abrupt increase in sales activity our struggles with low inventory will likely continue.
Rumor has it that some corporate real estate investors will start selling off homes. This will contribute to increasing housing inventory and the number of sales.
What are experts saying about the national real estate market for 2024?
Will interest rates dip in 2024?
As we mentioned above, interest rates are predicted to go down if the economic indicators that the Federal Reserve Board analyzes keep moving in the same direction.
- Industry experts think mortgage rates will hover around 7% in the first quarter before they gradually decrease to 6.5% by the end of 2024.
- Logan Mohtashami from HousingWire suggests that mortgage rates might fluctuate between 7.25% and 5.75%.
This potential decline in rates would alleviate the pressure on home buyers who are racing against rising borrowing costs. Expect a sharp increase in buyer demand and competition when rates drop.
What will national home values do in 2024?
Most experts are forecasting a very muted national home value increase of about 1% in 2024 . Redfin has a more pessimistic outlook with a home value DECREASE of 1% for 2024. Keep in mind these are national predictions.
Pro Tips for the Colorado Springs Real Estate Market
Tips for Home Buyers in Colorado Springs
- Now is the time to shop lenders. It’s ideal to partner with a lender who will work with you to develop the best financial strategy for the coming years.
- Consider buying now. You’ll have less competition and sellers will be more likely to offer substantial concessions.
- Homes will probably start going under contract more quickly, especially as we approach the summer months. Stay informed and ready for market changes.
- Consider a HELOC (Home Equity Loan of Credit) if you are planning to sell and buy at the same time. This will help you leverage your current home’s equity as a downpayment for your new home.
- Download the Home Buyer Guide
Tips for Home Sellers in Colorado Springs
- As always, it’s important to make your home attractive to buyers. Prepare your home diligently and price strategically. Work with an experienced real estate agent who can advise you through this process.
- It’s still a soft sellers market even with more inventory, but expect to sit on the market for awhile if you’re selling before March.
- Keep an open mind to alternative financing options that can attract a great buyer. These can include:
- Offering sellers concessions
- Allowing a loan assumption if it is available
- Offering seller financing for a part of the sales price
- Download the Home Selling Guide