You’ve probably heard that there has been a dramatic shift in our Colorado Springs real estate market since the beginning of the summer. In just a few weeks, we went from sellers receiving multiple offers and getting a contract for well over list price in just a couple of days…to homes for sale sitting on the market for weeks and lots of price reductions.
The major marker of this shift has been the rapid increase in inventory. The growing inventory combined with the rising interest rates mean we are seeing less buyer competition and a shift back to pre-pandemic market dynamics. But how do sellers deal with all of these changes? We have some tips below to help sellers in Colorado Springs navigate this shift.
First: what’s happening for sellers in Colorado Springs?
Two weeks ago, our area had 1875 homes for sale and this week there are nearly 2200 single family homes for sale in El Paso County. To put that in perspective, there were less than 500 available properties in March. This is a significant increase in a very short amount of time. Keep in mind that our Colorado Springs market has been struggling to have enough inventory for 2+ years.
Price corrections have become commonplace as sellers navigate this market shift in real time. The Colorado Springs area had 518 new price corrections last week. These price reductions represent one in four homes for sale. Only about 10% of last week’s reductions resulted in a quick contract. But what does that mean? The initial sales prices were way too high.
Buyers Want to Feel Safe
Sellers might feel frustrated as the market goes through the mechanics of normalization. Buyers want stability as they commit to this huge investment. Ultimately, it’s difficult for buyers to feel safe buying with so many unstable factors in the economy:
- 30-year interest rates
- Active inventory levels
- The stock market
But this market shift is starting to feel safe to the buyer, especially since the home buying process has been so frantic for the last couple of years. That stabilization is on its way with home prices not shooting to the moon anymore.
Tips to successfully sell during this market shift
Keep it in Perspective:
It’s true: if you’re selling right now, you’re probably going to get a contract price that will be less than what it could have been if you sold earlier this year. That’s understandably difficult for sellers to stomach. But it’s important to keep things in perspective.
If you purchased your home in Colorado Springs in the last 12-24 months (or earlier), you have seen tremendous gains in home value. Those gains are still higher than any other investment could have yielded, even with the real estate market softening. If you had invested your down payment in the stock market instead of your current home, your funds would have dwindled significantly. Plus, you had the advantage of having a stable housing situation and you’ll probably still make money if you sell now. More than likely the amount of money you’ll walk away with is equal to many people’s yearly income.
If you’re planning to buy another home after you sell, you’ll reap the benefits of the shifting market. You’ll have more options, much more time to find the right home, and seller contributions have even come back to the negotiating table.
Pricing is Vital:
Initial pricing is very important in your home selling strategy.
- A big mistake we see sellers making during this shift is using comparable home sales from 2+ months ago to decide on a list price. Home sales that old don’t reflect what’s currently happening in the market. If you find yourself focusing on how much you could have made earlier in the year, you’ll lose perspective and undermine your efforts to successfully sell your home. You’ll be much less stressed if you focus on the reality of what’s happening now.
- If you are on a timeline for selling your house and need to be closed by Labor Day or earlier, your home needs to generate 8-12 showings as quickly as possible. Why? It takes an average of 10+ showings to generate an offer. This requires an initial listing price that “raises the paddles” as they say at auction houses. Unless a property is under $4000,000, sellers can expect an average of 1-2 showings each week. That means sellers should realistically plan to be on the market for 4-6 weeks before getting an offer. If you need to sell quickly, a competitive price will help generate more showings in a shorter amount of time.
- Consider a price reduction if you’re only getting 1-2 showings/week and you need to sell quickly. It will need to be a significant price reduction to activate a different pool of buyers. The average price reduction last week was $36,000. The median time on market for homes with a price correction was 25 days.
The days of throwing a house on the market and selling it within a week regardless of presentation and condition are gone. Set yourself up for success by allowing time to get your home in tiptop shape before going to market. Even if you’re just thinking about selling in the near future, reach out to your real estate agent as soon as possible so they can strategize with you, work with you on a plan and a timeline, and start prepping promotion. This will also give your real estate team time to schedule stagers, professional photography, etc. to help your home look it’s very best.
Questions? Give us a call (719-219-9739) or email firstname.lastname@example.org. We’re happy to discuss different options and help you come up with a plan that works for your situation.
Source: Showing Time, Benjamin Day, Liv Sotheby’s