Colorado Springs Housing Market Summary

Status: Decent Seller’s Market
Supply: 2049 Active Homes for Sale
(1200 is typically very low) (553 Sept 2021)
Demand: #1 Most Desirable Place to Live as of Dec 2021
Market Index: 72 (74 last month, >50 seller’s market) measures sales vs inventory

Colorado Springs Metrics

Median Home Price = $490,000
$485,000 median price last month
$450,000 median price last year
Average Home Price = $542,500
$562,693 average price last month
$499,278 average price last year
Avg. Days on Market = 17 days
Average 13 DOM last month
Average 9 DOM last year
Inventory (supply) = 55.0 days
50 days Inventory last month
15 days Inventory last year
Home Sales (demand) = 1116
7% decrease from last month
44% decrease from last year
Price Decreases on Actives = 59.74% ⇑
56.70% last month
Distressed Properties = 20 Sold Aug ⇑
Public Auction = 18 Sold in Aug
MLS Listings = 2 Sold in Aug
Total Sold in July = 16

Today’s Interest Rate Trend

Conv Interest Rates = 5.66%
VA Interest Rates = 5.375%
FHA Interest Rates = 5.30%

Although the Federal Funds rate only went up .75% end of July, the Mortgage Interest rates did not go up that much. However, rates are starting to climb in anticipation of further Federal Fund rate increases.

Current Avg. Rates as of Today

Most Desirable Places to Live

As of July 21, 2022

by US News & World Report
  1. Colorado Springs
  2. Honolulu
  3. Los Angeles
  4. Myrtle Beach, South Carolina
  5. San Francisco
  6. Naples, Florida
  7. Portland, OR
  8. San Diego
  9. Nashville, Tennessee
  10. Sarasota, Florida
  11. Daytona Beach, Florida
  12. Boston
  13. Jacksonville, Florida
  14. Austin, Texas
  15. Boulder, Colorado
  16. Orlando, Florida
  17. Houston, Texas
  18. Charleston, South Carolina
  19. Seattle
  20. Charlotte, North Carolina
  21. New York City
  22. Tampa, Florida
  23. Eugene, Oregon
  24. Charlotte, North Carolina
  25. Pensacola, Florida

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Colorado Springs Housing Market Summary

The question I get asked the most is; How’s the market, do you think the market is going to crash? Let’s look at our headlines here and analyze what each of these mean and try to determine what the market is doing. My short answer is that I don’t think the market is going to crash any time soon, not this year anyway.

The market may have hit the top and has leveled out, but not likely to crash per se with still historically low inventory, although Demand is the key metric to monitor.

In March I predicted inventory would triple to 900 or more Active homes on the market, not quite right, inventory actually quadrupled. We are at 1175 Active homes on the market now.

1. Demand decreased 7% since last month, Supply increased to almost 2 months

The question sellers have is; why am I not getting that many showings? The market has softened significantly or sellers. There has been a huge change over the last two months in regard to inventory available. Days on Market is going up significantly because there are a lot more homes on the market than earlier in the year. Savvy buyers are looking for deals, they know there are a certain percentage of sellers that are motivated to sell that will drop the price 10s of thousands to just move on with their lives. So, prices will continue to come down and sellers need to get ahead of the downward curve if they want to compete and get their home under contract.

2. 60% of Homes on the Market have had a Price Reduction. 

What this means is that for Active homes on the market in August, 60% of the homes had a price decrease either before going under contract or they may still be Active. Typically, about a third or 33% of homes on the market have a price decrease at some point after listing. Because demand is not there, and supply has increased, prices are coming down.

3. Average home price dropped $20,000 since last month. 

Yes, we definitely hit the top of the market for Average home price at $563,000 in April and we hit the top for Median home price at $500,000 in June.

4. Less showings on listings, less multiple offer situations, more days on market for Sellers, more selection for Buyers. 

It’s all about Demand. Typically, in the spring and summer months, the days on market goes down, and in the fall and winter months it goes up, it is cyclical and predictable. However this year, I predict that we’ll have an anomaly and days on market will actually go up in the summer. The reason is that Demand for homes is not there despite still historically low inventory. 

If interest rates tick back down a little that will loosen up the market for buyers to make it more affordable. The word on the street is that the Fed will raise interest rates but that is the Federal Funds rate and it doesn’t always correlate directly with mortgage interest rates. There is another bigger reason mortgage interest rates have increased that I won’t get in to here. Every .25% in interest rate is another $100 or so in mortgage payment that hurts the affordability for buyers.

Not to get political, but because of current Democrat policies (and not Putin’s war on Ukraine) energy prices are so high that everything is costing more and further affecting supply chain issues. This is putting the squeeze on the average American and only exacerbates the problem with demand. This is not likely to change for the next 3 years.

5. Sellers don’t panic, and Buyers don’t get too excited yet, inventory is still lower than pre-pandemic levels. 

Inventory in terms of Active homes on the market is about 1175 which is still lower than pre-pandemic levels in June 2019 at 1360 Active home on the market. There has been a shock to the system so to speak with inventory increasing 92% from March to April and then another 73% from April to May. We are back to “normal” low inventory levels.

This may sound like OMG the sky is falling for Sellers, but we were in a housing inventory crisis earlier this year. In February inventory was at 311 homes, the lowest inventory levels recorded in the last 20 years or more likely.

So, although some sellers will panic and do massive price drops because they absolutely have to sell their home, this will offset higher initial listing prices and so the median home price likely won’t go up. 

Buyers may compete for homes with a severe price cut and bid them up a little, but those homes will still likely sell for less than their initial list price. Buyers have more of an opportunity now to get homes without offering over list price and so we will be in more of a normal buying environment.

Colorado Springs Ranks # 2 Best Place to Live and # 1 Most Desireable Place to Live.

As reported by US News & World Report Colorado Springs ranks as their #2 Best Place to Live. The Colorado Springs Housing Market has had inventory increase over the last few months which is not too unusual going into the Spring and Summer months. There typically has been a shortage of available homes for sale in Colorado Springs and the demand has been high here for several years. As a result of increased supply and the higher interest rates and relatively high home prices, there are less multiple offer situations on home here. The demand is high because Colorado Springs is ranked consistently as one of the best places to live and most desirable places to live according to U.S. News & World Report and other agencies each year. Low supply and High demand for the limited number of homes available has caused an increase in home prices not only last month but over the last several years. There are certainly many things that have contributed to inflating home prices, but we won’t discuss that here.

Absorption Rate, Inventory Expressed in terms of Days or Months

By using what is called an Absorption Rate calculation we can best determine whether we are in a Buyer’s or Seller’s market. Absorption Rate is a measurement of the rate at which a group of homes in a particular area get processed through the system.  So, Absorption Rate does not measure inventory as to number of homes actively on the market, but it measures inventory as to the number of days left of available homes. The current Housing Absorption Rate of 55 days means that if no more homes were listed on the market as of today, it would take just 55 days (30 days per month x 1.8360 absorption rate) for all the homes currently listed to be sold. We use our Absorption Rate calculation in our Market Index formula to determine a score that expresses the type of market that we are in.

Determining a Buyers or Sellers Market

So if the Absorption Rate is slow (higher number), that means there will be an increase in supply of homes which leads to a buyer’s market.  If Absorption Rate is fast (lower number), that means there will be a decrease in supply of homes which leads to a seller’s market. It is really a function of supply and demand where supply is the current inventory of homes and demand is what has been sold in a given time frame.

Absorption Rate is the best metric to determine if we are in a buyer’s or seller’s market. However, knowing average days on market, the percentage of recent price decreases, home price trends, and home sales trends are obviously good metrics to determine market conditions as well.

Updated by the 7th day of every month. Metrics for Single Family Homes in the Colorado Springs region of El Paso County. Data provided by Pikes Peak Realtor® Services Corp., Absorption Rate calculations provided by Wish Property Group, Inc.®