Colorado Springs Housing Market Summary

Status: Slow Seller’s Market
Supply: 2.0 months of Inventory
1410 Active Homes for Sale
Demand: Down 11% from last month
Market Index: 70 (66 last month, >50 seller’s market) measures sales vs inventory

Colorado Springs Metrics

Median Home Price = $445,000
$455,000 median price last month
$450,000 median price last year
Average Home Price = $498,626
$525,000 average price last month
$506,000 average price last year
Avg. Days on Market = 41 days
Average 34 DOM last month
Average 16 DOM last year
Inventory (supply) = 60 days
70 days Inventory last month
14 days Inventory last year
Home Sales (demand) = 704
11% decrease from last month
17% decrease from last year
Price Decreases on Actives = 35%
52% last month
Distressed Properties = 11 Sold Dec
Public Auction = 9 Sold in Dec
MLS Listings = 2 Sold in Dec
Total Sold in Nov = 16

Today’s Interest Rate Trend

Conv Interest Rates = 6.20%
VA Interest Rates = 6.05%
FHA Interest Rates = 6.00%

Although the Federal Funds rate went up by .5% on Dec 4th making it the 7th rate hike of the year. It is anticipated that there might be more .25% rate hikes in 2023.

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. In March my short answer was that I don’t think the market is going to crash any time soon, not this year anyway. Now here in December we can see the market is declining for sellers certainly and it is harder to sell a home, but the housing market certainly is not crashing, you could say it is correcting.

I do think it is quite possible that housing market prices will correct downward significantly in 2023 and bottom out then stabilize in to 2024. A housing crash is when home prices decline suddenly by a significant amount in a short period of time. A housing crash isn’t clearly defined but you know when it happens. In general, I would say a sudden decline or crash in prices by 20% over a span of 3 months would be a good guideline to say crash. I think prices will come down 20% in 2023 but it will be over the entire year, so I would say price correction. So a $500,000 home coming down to $400,000 is quite possible.

The average home price in June 2022 was $557,000, so if the average home price in June 2023 is $445,000 then I’d say we had a housing correction. Currently as of January 2023 the average home price is $498,000. It’s a relative measure and everyone’s definition of a crash or correction is different. This would be a good thing for affordability of homes perhaps in the long run if interest rates eventually come down and buyers can refinance.

1. 11% Decrease in Demand since last month, Supply decreased to 60 days of inventory

Demand is decreasing faster than the decreasing supply of homes coming on the market. This month there are 175 fewer Active homes on the market, but because there is a higher percentage decrease in home sales, this has caused the days on hand of inventory to rise. Last month the December home sales dropped 42% from the previous year. So a 11% decrease may not sound like a lot this month, but when that is paired with the last two months it is a huge number. The Absorption rate or Home Inventory has increased significantly because of lower demand, so this supply and demand curve will continue to push home prices lower. We’ll look at supply and demand causes more in the paragraphs to come.

Days on Market is going up steadily 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.

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 60 days means that if no more homes were listed on the market as of today, it would take just 60 days (30 days per month x 2.25 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.

2. 35% of Homes on the Market have had a Price Reduction. 

What this means is that for Active homes on the market in December, 35% of the homes had a price decrease either before going under contract or they may still be Active. Typically in a normal market, about 33% of homes on the market have a price decrease at some point after listing. Because demand is not there, and supply has increased since last year, prices are steadily coming down.

3. $27,000 Decrease in Average home price since last month. 

Last month the average home price went up $7,000 and I said it was likely an anomaly because there are more higher end homes selling and that has skewed the numbers up a bit, in fact that was the case. Overall we are down $5,000 in Average home price since September, so not a big jump over a 2 month span. The Median home price is down $10,000 over a 2 month span since September. We 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. What we can see overall is that the market is declining for sellers with 34 days on market and Absorption rate trending up each month.

4. Colorado Springs Ranks # 1 Most Desirable Place to Live, # 2 Best Place to Live!

As of July 2022, it has been reported by US News & World Report that Colorado Springs ranks as their #2 Best Place to Live. 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.

5. Economics affecting the Housing Market

I’m trying not to be political here, I just want to call balls and strikes and I believe most people can see what’s been going on with the economy. So if I offend anyone reading this, that is not my intention. Having said that, to be blunt, our Economy has been badly run for the last 2 years as could be expected with the Democrat Party in power. The Federal Reserve is reacting to this and effectively correcting or crashing asset prices to “bring down inflation”. Despite what the Fed is doing it doesn’t necessarily help bring down energy and food prices which primarily is hardest on people with low income.

You can see inflation’s impacts with credit card debt that is at an all time high as reported by the Federal Reserve Bank of New York. American’s credit card debt is now $925 Billion. This is a $121 Billion increase since the same time last year, which is a 15% increase. This correlates with what many call the real Inflation rate of likely around 15%, and not what the Government is reporting of 7.5%.

You could say that the Federal Reserve and the Government are cyclical and predictable . You may have heard the saying, Weak leaders bring hard times, Hard times bring strong leaders, Strong leaders bring good times, Good times bring weak leaders, and they cycle continues. I believe we are heading further in to hard times so buckle up everyone, it may be a rough ride for a lot of people in 2023.

6. Seller’s Market or Buyer’s Market?…is that the right question?

So is it a Seller’s market or a Buyer’s market? It really depends on your perspective right now. On paper it is a Seller’s market, although a Slow Seller’s market. Buyer’s are not having to submit offers in a multiple offer bidding war so in one regard it is a Buyer’s market in that there are many offers several thousand below list price and there are many prices decreases on Active homes. However prices are still higher than they’ve ever been and most Sellers don’t have to sell Short of what they owe on their homes so it is still a Seller’s market although they won’t get as much for it as they would 6 months ago.

So if the Absorption Rate (Inventory processing) 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.®