It’s hard to believe that it’s already July. This year is one for the books in so many ways. Everyone is busy and adjusting to the fluctuating situation of COVID infection rates, rules and guidelines, and trying to plan for the future.
Many expected to see Colorado real estate prices declining and inventory increasing during these times. But the opposite has happened. June was the first full month after the strict shutdown ended. June’s real estate statistics were eagerly anticipated because they reflect closings from contracts that were initiated after Colorado reopened.
Low Interest Rates
Who knew interest rates this low were even possible? For the last decade we have had year after year of record-breaking low interest rates. June is no exception: one of our VA buyers is currently under contract with an interest rate below 2.5%.
What this means for the Colorado Springs real estate market: When interest rates go down, home buyers are able to spend more money on their home. This allows them to offer and close at a higher price. Low interest rates coupled with a competitive market for buyers can drive average home prices up.
Related Reading: Steps to Buy a House
Average Home Price
In the first quarter of 2020, average home prices in Colorado Springs increased by almost $10,000 per month. The pandemic shutdown slowed this trend of huge price leaps and May had an average sales price of $393,000. Many homes that closed in May went under contract in April when we had very tight restrictions on the real estate industry. It took this additional month for the reopening to effect housing statistics: home sales in June 2020 bounced past 2019’s highest month of sales to 1684 closings and the average sales price increased to $401,980 (a record high, by the way).
Most likely this is not the end of the price increases. Our clients who are trying to buy homes under $400,000 are experiencing fierce competition and we anticipate a continued increase of average home prices in July. The available homes for sale have also decreased by 43.6% from June 2019 which will further drive a jump in average price.
What this means for the Colorado Springs real estate market: it could be a good time to sell if the timing is right for you. Buyer demand is high, inventory is low, and the market is fast. Hoping to buy? Expect a very competitive market if your budget is under $400,000.
Related Reading: Steps to Sell a House
Is this a COVID rebound?
It might be.
There is nothing surprising when you compare the pre-COVID market to the statistics we are seeing now. The real estate market hasn’t skipped a beat between March and June 2020. Activity has increased due to a combination of:
- Even lower interest rates.
- Suppressed buyer demand that could not be satisfied in March and April due to the shutdown.
- The release of military relocation (PCS) orders. This actually has a huge influence on our summer real estate market because we are home to five major military installations.
The average days on market is 18 days which is also a new low down from May’s 21 days. Keep in mind that a balanced real estate market has properties with an average of 6 months on the market. This means that pretty much every property is snapped up the moment it comes on the market – most likely with multiple offers.
Is unemployment disrupting the real estate market?
The total unemployment rate was listed at 11.1% on July 2. These rates are staggering even though they seem to be slowing down.
Colorado Springs has solid military and health care industries which were not strongly influenced by unemployment (if at all). This would explain why we still see many home buyers shopping for a new home and moving into the state.
An estimated 8.8% of all mortgages in the United States are in forbearance (this means that the mortgagees have paused their mortgage payments for up to 12 months). We probably won’t know exactly how this will shake out for another 6 months or so.
If the homeowners in forbearance continue to have financial hardship after their forbearance period expires, the home starts to go through the short sale or foreclosure process. There is a good chance that many homes in this situation will probably avoid foreclosure thanks to the huge amount of equity available in homes. Inventory could increase depending on how many homeowners decide to sell their home.
Here is a perspective: at the bottom of the Great Recession in 2010/11, there were anywhere between 5000-7000 homes for sale in Colorado Springs with 300,000 residents. In June 2020, we had 1478 homes on the market but now there are approximately 500,000 Colorado Springs residents!
If you are in forbearance and considering selling your home, please speak with us to see what your options are.
As previously mentioned, most home owners have a tremendous amount of equity in their homes because of our increasing sales prices. Fewer people have tapped into that equity than when the Great Recession hit. For folks that have chosen to use this equity, they were still able to stay below an 80% loan to value leverage of their homes value. This will bolster resiliency in home ownership and help the real estate market endure an economic downturn.
Look into our crystal ball
Just kidding–we can’t predict the future. There are so many unknown economic factors now that will start to have an effect on the economy.
But current numbers in our market are strong. We’ve included tips below for buyers and sellers to navigate this market.
If you’re planning to buy in the near future, we have a few tips to put yourself in the best possible position:
- Our Steps to Buy a Home page is a great place to educate yourself on the details of every part of buying a home.
- If you haven’t already decided exactly where you’d like to live, research neighborhoods, schools, crime rates, and commute times.
- Talk to a lender to learn details about how much you qualify for. Take a look at your budget and decide how much you want to spend. The lender can also give you detailed information about how much you’ll need to have for a down payment. Get pre-approved for a mortgage before you start seriously looking at houses. The market is fast and a pre-approval is an absolute necessity.
- Sign up for listing alerts so we can let you know as soon as a home you might like comes on the market. This is an especially important step with inventory so low.
- You can also click here to schedule a free buyer consultation.
The bulk of the seller’s work happens before the house is for sale. It’s more important than ever to make sure your home looks fantastic in online pictures and marketing. Prepare your house thoroughly so that you can sell it for the most amount of money in the shortest amount of time (and, ideally, with fewer people coming into your home):
- Check out our brand new Steps to Sell a Home page for detailed information about every part of the home selling process.
- Prepare your house. De-clutter as much as possible. Make a list of all repairs that need to be done and check off anything you can complete yourself. Deep clean and stage your home.
- Make a list of any items you’d like to purchase before listing (new welcome mat, new bathmats and towels, etc.)
- You can click here to schedule a free listing consultation.
If you’re thinking about buying or selling, give us a call 719-219-9739 or email email@example.com. We’re always here to help and answer questions.