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How is the Colorado Springs Real Estate Market?

Posted by Sarah Steen on November 11, 2022
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graphic of Colorado Springs real estate statistics for October 2022

What happened in Colorado Springs real estate in October 2022

2022 is racing toward the finish line and many experts say we might be heading for a recession. The Federal Reserve Board recently increased their rates by another 75 points which pushed the mortgage interest rates over the 7% interest threshold.

But what does that mean for the Colorado Springs real estate market? The number of home sales has steadily declined over the past few months. This is consistent with what is historically a quieter time of year in our real estate cycle. The Colorado Springs housing market typically slows down once school starts and picks back up again in late winter/early spring.

The home inventory in Colorado Springs has also leveled off and settled between 2600-2700 homes for sale since August. There are two factors causing the number of homes for sale to plateau. Homeowners are choosing to stay put unless they absolutely have to move because they likely have a mortgage rate under 5%. Additionally, many home builders are finishing off their current builds and not pulling more new construction permits.

Many sellers consider this flat inventory rate a positive sign because a lack of inventory could potentially stop the home value decrease. It might. While the number of homes for sale increased in Colorado Springs 150% year over year, this number is still not enough to satisfy the pent-up demand of potential buyers.

Click here to download the Home Buying Guide

What will happen with interest rates for the rest of 2022?

The Federal Reserve decisions to increase rates hinge on the Consumer Price Index (CPI) that is released every month. The CPI or inflation rate shows how prices for goods and services have changed over the previous month. A more interesting number to look for is the Core CPI which reflects the CPI without the volatile food and energy prices.

Good news: the CPI for October was published yesterday and the number finally dropped to 7.7% after months of increasing. This was much lower than expected with energy prices still high. The Core CPI didn’t budge quite as much, but still went down from 6.6% year over year to 6.3%. Used car buyers are starting to see relief as used car prices went down for the 4th month in a row. All of this news sent the stock market soaring yesterday. We are still far away from a 3% inflation rate goal, but it’s a start and the hope is that the interest rate hikes will slow down in 2023.

Related Reading: Steps to Buy a Home

Will the real estate market crash?

Most experts consider a housing market crash to be a home value decrease of 20-30% from peak home prices. In El Paso County, that would mean our home prices would drop to between $392,700-$448,000. This is unlikely to happen in Colorado Springs. We would essentially need a home sell off with inventory swamping the market to have home prices drop that drastically. 

As we mentioned above, home inventory is leveling off due to the slower season in our real estate cycle and because most homeowners are choosing to stay put in their low interest rate mortgages. Supply and demand still regulate the real estate industry. Housing supply is climbing at a slower pace and priced reductions have also decreased.

The number of homeowners in the United States that owe more on their mortgage than their current home value has doubled to just under 500,000 in the past four months. This statistic sounds worrisome, but that is less than 1% of the 53 million mortgage holders. Most of the mortgages currently underwater closed in 2021 and 2022 when buyer competition was very high. To put that in perspective, 29% of homeowners in the United States were underwater at the height of the housing crash that started in 2008.

Related Reading: How much is my home worth?

Colorado Springs Real Estate Market Predictions for 2023

Interest rates are the most significant factor for the real estate market in early 2023. We are unlikely to see interest rate relief through the end of 2022.  Buyers and sellers will need to get creative to make sales happen with the high interest rates.

Interest rates are expected to soften sometime in the late first quarter or second quarter of 2023. Experts predict the Federal Reserve Committee will have slowed down the economy so much that they will have to reduce the rates again to keep the economy from stalling. Expect buyers to jump into the market and start snapping up homes as soon as there is a drop in interest rates (even a small one).

Freddie Mac expects a home value growth for next year of 6.4% and overall a price drop is NOT expected for 2023. That said I will expect negative numbers in certain months of the sales numbers year over year. April average sales figures will most likely be less year over year compared to 2022.  Fingers crossed all goes well, stay tuned for the next market updates, to see if expert opinions change.

Related Reading: 10 Ways to Lower Your Mortgage Payment

Homes for Rent in Colorado Springs

After a rally this year, rents are expected to soften. This is great news for many renters, and investors will need to be satisfied with a more moderate yearly average rent increase of roughly 3%.  More investors are turning to the real estate market for their investments as stock markets become more volatile and real estate prices are declining. Real estate remains a great investment to consider for expanding your portfolio.

Related Reading: Tips for Finding a Rental in Colorado Springs

What does all of this mean for home buyers and sellers in Colorado Springs?

The chart below shows very clearly that some Colorado Springs neighborhoods have significantly more active listings than others. While inventory is still fairly low for our market, we are 150% above last year’s inventory. The chart indicates that many homes are sitting on the market depending on the neighborhood.

It will be vital for sellers to pay attention to what’s currently happening in their specific neighborhood. Sellers in neighborhoods with very high inventory will need to diligently prepare and strategically price their homes to stand out among the competition.

graph of active, under contract, and sold listings by zip code in Colorado Springs Colorado

Credit: Grok the Market


Tips for Home Buyers in Colorado Springs

  • The increasing interest rates over the last several months have caused buyers to look to their real estate agents and mortgage lenders to lay out options for a successful purchase strategy.
  • While competition has decreased significantly, we are occasionally seeing multiple offers on homes at certain price points that have a wow factor.
  • Currently, Buyers have more time to shop and make an offer than they did at the height of the buying frenzy earlier this year.
  • If you’re interested in new construction, we are starting to see builders have more inventory sit and offer at times even huge buyer incentives. This is in stark contrast from last year when some builders were holding lotteries when lots became available.
  • If you’re waiting out the high interest rates, we recommend putting yourself in the best possible position to capitalize on an interest rate dip. Improve you credit score, start a conversation with a lender about your options, continue saving more cash for a down payment, and reach out to us to create a personalized strategy. When the interest rates do start dipping, you’ll be prepared to jump into the home search and snag a nice deal at a lower price. Be ready – keep in touch with your real estate team to make this happen (719-219-9739 or contact us).

Tips for Home Sellers in Colorado Springs

  • With the current market conditions, you should really only enter the market if you are willing to do everything it takes to get your home sold. The days of simply throwing a home on the market without prep are gone. Do the work, prep, and strategic pricing based on the current market conditions.
  • Remember that scene in Indiana Jones where he’s trying to outrun a giant boulder? Home sellers need to imagine themselves as Indiana Jones and the real estate market as the boulder. It’s vital to stay out in front of the real estate boulder as it continues rolling downhill for the rest of 2022. If you keep looking back to early 2022, you could get crushed by sitting on the market, price reductions, and more.
  • Pricing a home inaccurately results in a double whammy. You miss the market as that real estate boulder rolls further down the hill and your property becomes stigmatized. The longer your home sits, the more likely it is that buyers will think that there is something wrong with it. Meanwhile, that real estate boulder keeps rolling without you and you have to lower the price to catch up.  Look at the statistics below where more than 50% of all listings in El Paso County between 300K and 500K are being reduced 2.5-3%.

chart of active and sold listings comparison in El Paso County Colorado

  • As previously mentioned, buyers want the most perfect house possible. If they find it somewhere else while they are under contract with you, they have no qualms backing out of your contract. Losing 5k in earnest money if they find a home they love for 15K less than yours right before your closing is not going to be a big deal. We see this happen. Stay on top of what your buyers want and be accommodating all the way to closing.
  • Sales in the past month are listings that initially went on the market 30-90 days ago. That’s a lifetime in the shifting market and not representative of the current sales climate. Sellers need to base their strategy on today’s active listings in their specific market.
  • When mortgage applications increase, it means that buyers are starting to come back out to shop. Pay attention to this metric as it might indicate a more advantageous time to list. Currently, mortgage lending activity is down 32% year over year.

Related Reading:
Tips for Sellers to Navigate the Shifting Market
Steps to Sell a House

Current Colorado Springs Market Snapshots by Zip Code

Please click the headline to go to the detailed Home Report for your Zip Code. Don’t see your zip code? Comment on this blogpost or contact us and we’ll get it to you. A zip code is considered a Buyers Market if the Market Action Index is below 30.

Real Estate Market Snapshot for Monument Zip Code 80132

Out of the 10 zip codes included in this article, 80132 has the lowest Market Action Index number and may be the first to venture into an official buyers market. Interestingly, when looking at the median price for new listings, it does not seem to deter sellers from listing much higher than sellers did in August.

real estate snapshot for Monument, Colorado zip code 80132

Real Estate Market Snapshot for Colorado Springs Zip Code 80903

80903 seemed to experience somewhat of a rally in October in terms of list prices, though Days on Market and overall Market Action Index point to a downward trend.

real estate analysis for Colorado Springs, Colorado zip code 80903

Real Estate Market Snapshot for Colorado Springs Zip Code 80905

Just like 80903, List Prices increased dramatically in a direct contradiction to the average days on market which nearly doubled. Inventory has increased and the Market Action Index took a nosedive, but it is still the strongest zip code on this list. Investors rejoice as the median rent indicates a strong upward trend – for now.

real estate analysis for Colorado Springs, Colorado zip code 80905

Real Estate Snapshot for Colorado Springs Zip Code 80906

Half of this zip code is located in School District 12 and the other half in School District 2. Opposite neighborhoods are adjacent to each other and therefore skewing this 80906 chart. Overall, there has been less movement in this market than any other zipcode.

real estate analysis for Colorado Springs zip code 80906

Real Estate Market Snapshot Colorado Springs Zip Code 80911

80911 is strongly influenced by the military as it is adjacent to Fort Carson and easily accessible for Peterson Space Force Base. This this market a mixed bag. Median List Price and Days on Market are up while Market Activity Index is down. It could easily be a strong market in the next 6-12 months due to its large military presence or it could take one of the biggest hits in town. Stay tuned and follow along.

real estate analysis for Colorado Springs zip code 80911


Real Estate Market Snapshot Colorado Springs Zip Code 80916

This is still one of the strongest zip codes in our list of 10. It has has the most affordable housing in the city and remains also one of the strongest markets.

real estate analysis for Colorado Springs zip code 80916

Real Estate Market Snapshot Colorado Springs Zip Code 80917

This zip code has taken a hit in almost all categories of this snapshot and pushes it further down the towards a buyers market

real estate snapshot of Colorado Springs, Colorado zip code 80917

Real Estate Market Snapshot Colorado Springs Zip Code 80920

List prices have taken a hit in this area and all other categories have not changed much since August. This is not surprising since this zip code includes most of Briargate, which is a proven steady favorite among buyers for years.

real estate snapshot of Colorado Springs, Colorado zip code 80920

Real Estate Market Snapshot Colorado Springs Zip Code 80922

Change in increased new list prices could be from the new construction activity in this area since builders are finishing off their homes. While trending slightly down, this area is fairly stable.

real estate snapshot for Colorado Springs, Colorado zip code 80922

Real Estate Market Snapshot Colorado Springs Zip Code 80923

This zip code showed up already fairly weak in August and the downward trend continued here as well. Though inventory decreased, Median Days on Market nearly doubled.

real estate snapshot for Colorado Springs, Colorado zip code 80923

As always, our team is here to help any answer questions. Call us at 719-219-9739 or email susanna@co-regroup.com. We can help you create a strategy for buying, selling, or simply help you understand your home’s current value in today’s dynamic market.

Click here to download your free home buyer guide


Homes for Sale in Colorado Springs

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