Housing prices are indeed surging to new records and are rising at a faster rate than during the 2005-2007 housing bubble. The median price of existing homes in Colorado Springs now stands at $440,000, which is 93.83% more than the peak of the last bubble in late 2006!
Factors such as low interest rates, investors’ belief in the housing market’s resilience, and low inventory of homes are contributing to these high prices .
The demand for housing in Colorado Springs has been driven not only by low-interest rates and limited inventory but also by other factors contributing to the region’s appeal. The city’s proximity to outdoor recreational opportunities, such as hiking trails and skiing destinations, has attracted many people seeking an active lifestyle amidst natural beauty. Additionally, Colorado Springs has experienced steady job growth, particularly in industries such as aerospace, defense, and technology. The presence of major employers like the U.S. Air Force Academy and several tech companies has stimulated economic activity and boosted the demand for housing in the area.
Furthermore, the migration patterns have seen an influx of residents from more expensive housing markets, such as California and Colorado’s Front Range cities like Denver, seeking more affordable options. Colorado Springs, with its relatively lower cost of living compared to those areas, has emerged as an attractive alternative for homebuyers looking for a balance between affordability and quality of life.
Despite these high prices, many economists do not believe that the current run-up in housing prices constitutes a bubble that’s about to burst. Instead, they predict that even if interest rates rise slightly, which is expected, home prices might only slide between 5% and 8% but not crash as they did in 2007. Stronger underwriting standards on home loans today, as well as the lack of an excess inventory of housing and low vacancy rates, are some reasons cited for this belief.
Some experts, however, are cautious about the market’s trajectory. Ivy Zelman, CEO of Zelman Associates, suggests that the so-called housing shortage may be an illusion, citing broader trends like slowing population growth and low rates of new households being formed. She is concerned that there might soon be a glut of homes on the market due to the current pace of building and the entry of outside investors into the market. Still, she doesn’t predict a collapse in housing prices like in 2007.
Builders are doing well: Homebuilders are feeling good because their confidence has been increasing for five months in a row. Although there are some problems with getting supplies, there aren’t many existing homes for sale, so builders are optimistic. In May, 54% of builders offered special deals to buyers, and 27% lowered their prices by an average of 6%. In April, the number of new homes being built went up by 2.2%.
Colorado Springs’ new construction market is booming too, with several new developments underway to meet the growing demand. However, builders are facing challenges due to rising material costs and labor shortages, slowing down the pace of new supply.
Regarding new construction homes, there have only been 734 certificates of occupancy issued for Colorado Springs for 2023 so far. Compare that to last year’s 2,314.
Investment properties are also seeing a surge in interest, thanks to Colorado Springs’ strong rental market. The city’s growing population, thriving job market, and lifestyle amenities make it an attractive option for investors.
The housing market is not doing great: Over the past ten years, the housing market has been getting worse because there aren’t enough houses available. Recently, the market has been getting worse because people who have low-interest mortgages are not selling their homes. This means that there aren’t many buyers or sellers in the market because they’re waiting for better mortgage rates.
The debt ceiling is causing problems: A recent report says that if the debt ceiling is breached (which means the government can’t borrow any more money), a lot of jobs will be lost. In just one week, 1.5 million jobs would be cut, and the unemployment rate would go up to 5%. If the debt ceiling is breached for two months, almost 8 million jobs would be lost, the stock markets would be chaotic, and interest rates would go up. The people who would be most affected by job cuts are men, young people, and Hispanic and Black workers.
Rent prices in Colorado Springs stayed the same in April, while they increased by 0.5% across the whole country. Compared to last year, rent prices in Colorado Springs have grown by only 0.4%, which is much less than the 11.8% increase from a year ago. Since the COVID-19 pandemic started in March 2020, the cost of rent in the city has gone up by a total of 23.5%.
Right now, the average rent for a one-bedroom apartment in Colorado Springs is $1,186, and for a two-bedroom apartment, it’s $1,486. Also, the percentage of empty apartments in the city is 8.2%, which is 2.6 percentage points higher than last year at this time.
The average rent in Colorado Springs is 12.7% higher than the national average. It’s around the same as the prices you would see in Denver, Colorado, which is $1,581, and Atlanta, Georgia, which is $1,536.
There are 1,076 properties for sale in Colorado Springs. That includes single family homes, condos, and townhomes. We have had 757 property sales for May so far.
Inventory sits at just under 2 months. We need 4 – 6 months of home inventory in order to have a balance to market between buyers and sellers.
Colorado Springs has always been a desirable place to live, thanks to its breathtaking natural beauty, thriving economy, and an abundance of outdoor activities. Over the past year, we’ve witnessed a significant surge in interest and demand for real estate in our region, and the momentum continues to build.
Home prices in Colorado Springs have experienced steady growth since the beginning of the year, reflecting the strong demand and limited inventory. This trend has made this seller’s market even harder for home buyers. The limited housing inventory has resulted in increased competition and bidding wars again.
Meanwhile, homeowners can maximize their investment and achieve great returns. If you’re considering selling your home, now might be the perfect time to take advantage of the favorable conditions.
The average sales price in Colorado Springs is $504,659, median at $445,000. The average days on market has lowered to 30 days, with the median days on market being even lower at 7 days.
The influx of new residents and businesses has spurred remarkable development and revitalization projects throughout the city. Neighborhoods are blossoming with new shops, restaurants, and amenities, enhancing the overall quality of life for our residents. As our city continues to grow and thrive, so does the value of our properties.
Moreover, Colorado Springs is a hub of innovation and opportunity. With the presence of several leading technology companies, defense contractors, and a burgeoning entrepreneurial ecosystem, our city offers an excellent environment for career growth and advancement. The influx of highly skilled professionals has contributed to the strong demand for housing, making it an opportune time to consider real estate investments in our region.
Because interest rates are lower, prices are not going up as fast, and builders are offering deals, more people think they can afford to buy a home. In the beginning of 2023, 73% of buyers couldn’t afford half of the homes for sale, but that’s better than before when it was 87% in the last part of 2022. Now, 27% of people can afford most of the homes.
There’s this idea about homes being so unaffordable as to indicate that prices must naturally come down. But there is also the understanding that incomes have not increased with cost of living, which is a separate issue from housing altogether. The upcoming social change that will give power and wealth back to the people will be its own black swan event.
If such a social change were to occur, it could indeed have far-reaching impacts on various aspects of society, including housing and income inequality.
The other potential black swan event is the upcoming debt ceiling limit discussion, which could cut government spending on things like VA benefits, Medicaid, Medicare, Social Security, and more.
What do you think is the likelihood of either of these events happening?