It felt nearly impossible to get a buyer into a Colorado Springs house in March (notice we said nearly impossible–our team is working hard every day to continue to get our clients under contract and into new homes). The biggest factor in this competitive real estate market continues to be the extremely low inventory. This issue was exacerbated in March by a couple of influences:
- We were just coming out of the winter months and many home sellers were not yet ready to list their homes.
- More buyers were pushing into the market because the official real estate season kicked off.
- The anticipation of rising interest rates gave home buyers an increased sense of urgency to get a home under contract and lock an interest rate before they were completely priced out of buying.
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Here is a snapshot of how March was in Colorado Springs real estate:
The Colorado Springs region closed 1361 home sales in March. For reference, that was about 300 more closings than in February 2022 which feels like a big jump. But we only had 1.4% more sales over March 2021. This tells us that 2022 is looking very similar to 2021’s market conditions.
Average Home Price
Colorado Springs had a $20,000 increase in average home price from January to February of this year. This statistic had home sellers, home buyers and real estate professionals all trying to catch their breath since the winter months are not traditionally a hot real estate time period in the Springs. Even more surprising: our average home price increased an additional $25,000 from February 2022 into March 2022. Colorado Springs had a similar price jump pattern from January to March 2021, so this could be an indication that we are in for another wild real estate season this spring and summer.
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Homes for Sale
We mentioned in last month’s market update that the number of homes for sale should be taken with a grain of salt since it is simply a snapshot of a single day. Sellers and their agents prefer to list over the weekend, and Thursday is the most popular day for new homes to come on the market. The number of homes for sale is calculated on the last day of the month. March 31, 2022 fell on a Thursday when many homes enter the market. With that in mind, it’s not surprising that the graphic indicates more than a 50% jump in listings compared to March 2021 (March 31, 2021 was a Wednesday).
Related Reading: Steps to Sell a Home
What does it all mean?
There are many signs indicating that the 2022 real estate season in Colorado Springs is shaping up to look very similar to 2021.
- There are a few economic influences that will differentiate 2022 from 2021, but keep in mind that real estate usually reacts very slowly to outside economic factors. Real estate statistics historically take at least 4-8 weeks to reflect major economic events.
- Inventory is still low and will continue to be a struggle. Sellers are hesitant to list their home because it is so difficult to find a replacement home.
- The limited number of homes for sale pressures buyers into offering more, and this has contributed to Colorado Springs landing in the top ten least affordable housing markets in the nation.
- The interest rate increase will push some buyers into the rental marketplace which is just as competitive and expensive. Remember, the general rule of thumb is that a 1% interest rate increase translates into a 10% decrease in buying power. The Federal Reserve plans on raising interest rates another 5 to 6 times this year to curb the inflation and keep money out of the economy.
- New inflation figures will be released on April 10. Many experts predict the number will be close to a shocking 10% since the full effects of the high energy prices have had a chance to take hold. Appreciation in house value is considered a positive aspect, but the effect it has on the overall health of the economy is significant. Home affordability is reduced, infrastructure workers such a police, teachers, and nurses are struggling to buy homes, and this appreciation is one of the biggest drivers of inflation.
- New construction will continue to be more expensive and plagued by delays. The good news: El Paso County had a 42% increase for new construction permit requests in March 2022. More new homes means there might (eventually) be some relief for our inventory woes.
Related Reading: Steps to Buy a Home
What should home sellers do?
It’s tempting in a strong sellers market to simply throw a home up for sale thinking you don’t need to do much to sell. But it still greatly benefits sellers to diligently prepare the home for market. This will attract more buyers, increase offers, and could result in a higher sales price AND better contract conditions for sellers. This is why we continue to offer professional staging and photography for every listing we represent. Click here to schedule a listing consultation with us. We can help you strategize the best ways to prep your home for this market.
There is a chance that some buyers will drop out later this year with the higher interest rates and even higher prices. If that’s the case, sellers can expect multiple offers but it will most likely be 2-5 offers instead of 10-15 or more.
Click here to download the Home Selling Guide
What should home buyers do?
It might feel as though the window for buyers is closing as the market heats up in our busy selling season. But you might be surprised that we are seeing small, random lulls during certain time periods. Real estate agents in local industry Facebook groups are talking about how even just a sunny weekend can temporarily reduce the number of showings, offers and competition. This could be a golden opportunity for the determined buyer to compete with fewer offers and snag a contract. Related reading: 10 Things You Might Not Know About Home Buying
- Keep in mind that rental rates will continue to increase alongside home prices.
- There will not be a crash in the Colorado Springs market. A significant slowdown will take at least another 18-24 months. Even when the market does eventually slow down, home prices will not drop 20-30%.
- Increase your credit score and reduce your debt to income ratio to increase your buying power.
- Patience and persistence are key.
- Connect with an excellent real estate agent who will be just as patient and persistent as you.
Click here to download the Home Buying Guide