It’s October and there are 79 days until the end of 2020 (but who’s counting?). 2020 has been a year of challenges that have created personal, economic and political insecurities. This month’s Colorado Springs real estate update will take a close look at the influences affecting our market and what they mean for current and future homeowners and sellers.
September 2020 Colorado Springs Real Estate
- Inventory in the Colorado Springs real estate market continues to be a pain point for buyers as they search for a home. The number of homes listed for sale has decreased even further while sales have continued to climb.
- As is typical for this time of year, days on market have trended up from 19 days to 21 days. This could mean that a home might only get 5 offers instead of 15 like we were seeing over the summer.
- We also usually see a reduction in average home sales price during the fall season and this year is holding that trend with a small dip from $432,922 in August to $431,293 in September. It is also standard for real estate sales to slow down and prices to dip a bit in October and November of presidential election years as everyone waits for the dust to settle. This could have an affect on buyers and sellers:
- Buyers: October is the time to buy to catch the forecasted lower prices. Or start looking for homes in early November in order avoid heavy competition when you offer on a home. Read through our Steps to Buy a Home so you can be ready when you find a house you love.
- Sellers: we recommend you have flexibility for your list date. Consider waiting until at least November and closely follow the sales, price and COVID numbers. Read through our Steps to Sell a home so you can be ready when the timing is right to list your home.
- Keep in mind that all of the 2020 factors mean that the market is still unpredictable and more volatile.
Will Colorado Springs have a housing crash?
Honestly, we have no idea. We truly wish we had a crystal ball to be able to give you a firm answer. However, every month we post our musings about trends to give you more background and tools to decide for yourself.
When we start researching the potential of a housing crash it becomes very clear that opinions vary from one extreme to the other. One side insists it will not happen any time soon while the other side is convinced that we are on the brink of a housing Armageddon.
Key factors to consider:
- A shutdown could be in the cards with the COVID infection numbers steadily increasing again, but it would be detrimental to our economy.
- A tenant eviction moratorium is in place until 12/31/2020. Experts believe that without specific programs for renters this moratorium could lead to:
- A homelessness crisis when the moratorium is lifted and renters are evicted without a place to go.
- A bankruptcy wave when landlords default on their mortgages because they don’t have rental income to pay mortgages.
- This could increase distressed property sales or at least increase the amount of homes fo
r sale. More inventory results in home price deflation.
- It’s important to note that, according to the National Multifamily Housing Council, unpaid rents in 2020 have not significantly changed from 2019.
- The Mortgage Banker Association reported that the percentage of mortgage delinquencies in Quarter 2 was at 4.4%. Compare that to a mortgage delinquency rate of 4.58% in Q4 in 2008 and it can seem unnerving. But dig a little deeper and you’ll see this rate includes all loans in forbearance for 90+ days. Remember, forbearance is when a mortgage company permits a homeowner to temporarily pay a lower mortgage payment or pause payments. The forbearance rate in September 2020 was 6.6%. A rise in reported delinquencies is expected when the forbearance rate is included in that statistic. It is important to keep in mind that these delinquencies might not indicate an impending foreclosure.
- Closed businesses could be affecting home buyers and their ability to apply and pay for a mortgage. This could result in a reduced amount of home buyers combined with distressed homeowners needing to sell their houses. Decreased buyer demand + increased inventory = decreased home prices.
- The bottom line is the numbers are skewed on the surface level. Research is more vital than ever.
TIP 1: It is crucial to pay attention to the micro market wherever you are. General information is great, but you need specific information about where you live for a full picture.
Important stats about our Colorado Springs market:
- Colorado Springs has a low unemployment rates (6.3% compared to national average of 8.4% in August).
- We are on the receiving end of the migration pattern which supplies a steady stream of home buyers.
- Colorado Springs is home to multiple military installations and a strong health services industry. This influence will continue to help keep our unemployment rate down.
- Colorado Springs is expanding which contradicts national trends.
- These influences don’t make us immune (excuse the pun) but certainly much more resilient in a potential economic downturn.
TIP 2: Refinance your mortgage to reduce your monthly payment, but do not cash out refinance unless there is no other way to ease your financial burden. Tapping into your home’s equity has significant impacts on your financial well-being down the road.