Here we go again.
The Colorado Springs-area housing market, which saw home sales roar to another record high last year and prices spike for the seventh straight year, will be red hot again in 2022 — albeit maybe just a few degrees cooler than in 2021.
Among predictions from local real estate industry members:
• Sellers will continue to get top dollar and multiple offers for their homes.
• Buyers should again expect fierce competition as they battle for a limited number of properties listed for sale.
• Construction will launch on upward of 4,000 new homes for the third straight year, even as builders again confront supply chain issues, a skilled labor shortage and a lack of buildable lots.
• Sales won’t break a record, yet the demand for housing will remain robust as the Pikes Peak region’s population swells.
• Prices will rise again by double digits, though not quite as high as last year.
“I’m 31 years in the business and I have never seen anything like this,” said Dean Weissman, a real estate agent and co-owner of The Platinum Group Realtors in Colorado Springs. “I mean, I am going, ‘This has got to slow down; the prices have got to level off.’ They’re not. And our buyers are saying, ‘We want the house. What’s it going to take to get it?’
“Comps (comparable sale prices) don’t necessarily matter,” he added. “People will try and get an idea of what do things sell for in this particular neighborhood. But at the end of the day, you can tell them, ‘You’re paying $75,000 over (list price).’ And they say, ‘Just get me the house.’ It’s crazy.”
But will 2022 be as crazy? Here is what some local real estate experts had to say:
Question: Home sales totaled 18,159 in 2021, a second straight annual record. Is a three-peat possible in 2022?
Answer: Sales will remain strong, though might not match last year’s record, in part, because they’re aren’t enough homes on the market available for purchase.
“I don’t know if we’ll necessarily quite get to 18,000 again, but I don’t think we’ll be far off,” said Eddie Hurt, a real estate with ERA Shields Real Estate in the Springs.
Whatever the tally, there will be plenty of demand.
More people continue to move to the Colorado Springs area and need a place to live. The city’s population grew by about 15% over the last decade while surrounding El Paso County grew by 17.4% over the same period to 730,000 residents to be the state’s largest county, U.S. Census Bureau data released last year show.
The economy has rebounded from the shock of the COVID-19 pandemic in early 2020. Colorado Springs’ unemployment rate was 4.7% in November and, as of October, the Springs area had recovered all the jobs it lost after the onset of the pandemic in March 2020.
What’s more, the Springs remains a desirable place to live because of its quality of life, weather and increasing number of amenities, including downtown venues. Among them: the Weidner Field multiuse stadium that’s home to the Colorado Springs Switchbacks; Colorado College’s Robson Arena; and the U.S. Olympic & Paralympic Museum.
“I feel like Colorado Springs has finally grown up,” Hurt said. “Now we have a lot of entertainment venues that a lot of people used to feel like they had to drive all the way to Denver for”
The pandemic, meanwhile, has allowed employees to work remotely and many have moved to Colorado and the Springs, Weissman said.
“Colorado has really been discovered and I think the quality of life, especially Colorado Springs being more of a small town, home-grown feel, I think the notoriety of that is really becoming popular,” he said.
Q. Will there be enough homes to satisfy demand?
A: Real estate agents are cautiously optimistic the area’s housing supply will increase in 2022, yet it seems unlikely it will return to historical norms. As a result, the inventory of homes for sale probably won’t quench the demand.
At the end of December, just 659 homes were listed for sale in El Paso County and a handful of Front Range counties, according to Pikes Peak Association of Realtors figures.
By comparison, there were 1,536 homes for sale five years earlier in December 2016, Realtors Association data show.
A decade ago, 3,285 homes were available during the same month, though that was in the post-Great Recession era when the market slowed. Twenty years ago in December 2001, there were 2,913 homes for sale, according to historical data compiled by The Gazette.
Hurt said he hopes a few hundred homes that have been owned by Zillow will come back on the market in the first and second quarters and help boost the area’s supply during the first half of the year.
The Seattle-based real estate company, which provides online housing data for buyers and sellers, announced last year it would end its homebuying program in markets such as Colorado Springs and sell off its inventories.
“I don’t think it will be enough to satisfy the demand,” Hurt concedes of Zillow’s inventory, “but I do think it will help alleviate it some.”
In Weissman’s view, the Springs doesn’t necessarily have a housing supply problem; it’s just that the homes that do come on the market sell blazingly fast.
“They just don’t last,” he said. “It is a misnomer that people think there’s no inventory. There is inventory. It just moves very, very quickly in and out of the market.”
Q. With the strong demand and tight supply, will Colorado Springs remain a seller’s market?
A. No doubt.
Sellers can continue to expect multiple offers, with bids that will top their asking prices by many thousands of dollars. Buyers, in turn, will find themselves thrust into bidding wars as they vie for limited numbers of properties.
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“Ten years ago, we were telling our sellers, ‘If you can’t bring money to the table, don’t sell,'” Weissman said of cash sometimes needed to help close a deal. “Now, we tell buyers, ‘If you can’t bring money to the table, don’t buy.'”
Joe Clement, broker-owner of Re/Max Properties in the Springs, said he expects bidding wars to continue amid the tight supply of homes for sale and furious demand.
“To get a nice house in a nice neighborhood,” Clement said, “people are willing to fight, people are willing to go higher than they probably should. But they want to live here. They want the schools. They want this, that or whatever it is. And usually it’s people with families that have kids and want the lifestyle that they’ve dreamed they would have at age 32 or 40 or whatever.”
The demand for housing also will continue across all price ranges, Clement said. But as housing costs increase, the supply of homes priced at $300,000 and under will continue to shrink, and more sales will take place in the mid to upper six-figure range.
In 2021, homes priced at $299,000 and under made up just 9.6% of the 18,159 sold in the Springs area, according to Realtors Association data. Five years ago in 2016, homes in the same price range accounted for more than two-thirds — 67.5% — of properties sold.
Even seven-figure properties are in demand, Clement said.
In 2021, 503 homes were sold that carried price tags of $1 million or more, a record high and nearly double the total in 2020, said Clement, quoting Realtors Association figures.
Q: So if demand remains strong and inventory doesn’t increase significantly, what will happen with prices?
A. They’re headed up, of course, just as they have each month and every year since December 2014. The only question is by how much.
At the end of 2021, the median price of homes sold in December rose to $450,000, an 18.4%, year-over-year jump.
Hurt said he expects prices to rise by closer to 10% in 2022.
Some buyers are getting priced out of the market and won’t pay such extreme, double-digit increases, which could lead to a slowdown in the rate of price gains, he said.
Weissman said he expects prices to rise possibly 10% to 14% in 2022.
Even in a hot real estate market, however, sellers need to be wary of overpricing their homes and must set a price that accurately reflects its condition and location, he said.
If buyers believe the asking price reflects a home’s true value, they’ll pay full price and above, Weissman said. But if buyers don’t see the value and suspect a home is overpriced, they’ll pass on it, he said.
Q: Will higher mortgage rates price some buyers out of the market, which could cause demand to slow and prices to stabilize?
A. In normal markets, yes. But it probably won’t happen in today’s market because of the strong demand and tight inventories, Clement said.
Last week, 30-year, fixed-rate mortgages rose to an average of 3.22% nationally, which was the highest since 3.24% in May 2020, according to mortgage buyer Freddie Mac.
In past years, when mortgage rates hovered around 5% or 6% for long-term, fixed-rate loans, monthly inventories totaled 3,500 homes, Clement said. So, as rates jumped, some buyers would shelve their purchases, homes would go unsold and sellers might have to lower prices.
“There were so many homes that didn’t get shown and didn’t get sold because there were a bunch of people that went to the sidelines,” Clement said.
Today, an increase in mortgage rates will cause some buyers to lower their sights on how much house they can afford or even cause them to hold off their purchases all together, Clement said.
But because there are so few…
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2022-01-17 03:45:00
