What does it mean when real estate sales start the year so strong? Are we in for a hot year?
The Colorado Springs real estate market was up 6.7% over last year in sales, but the average price was up 11.4%. That is a big jump. In fact, it’s the largest year-over-year increase since 2013. Will it continue? Here are a couple of things to keep in mind.
- The supply of homes for buyers to look at is almost at a 20-year low. The only way to increase the supply is to increase prices. At higher prices, more sellers will offer their homes for sale.
Look for the listings to increase as this mild winter gets closer to ending.
- Interest rates are so low, they’re making headlines. For the buyers that have good jobs and credit, it is a no-brainer to buy a house instead of rent one.
Demand may cool a little if rates go up quickly, but that is not anticipated at the moment.
- January is just one month; there is a lot of year left. However, the number of pending sales going into February would indicate that lots of sales are already on the books, and more are coming.
If the number of pending sales at the end of February is over 1700, I think we are in for a real hot year.
- The average price can be affected by a few high-end homes selling. After all, when the average sale price is around $250k and a home sells for $2.5 million, it can really affect the average. However, the median sales price also jumped by 10.9%, at $235,000. That means ½ of the homes sold were for more than that amount. That is the 2nd highest median price ever, trailing only the record of $237k set this past June. A higher median implies more sustainable price growth.
If the median continues to climb, we are in for a hot year.
So a strong January doesn’t mean it’s time to break out the champagne just yet, but to paraphrase an old saying, “well begun is half done,” and we are off to a great start!
Update: 2-12-15, Sierra Nevada Corporation just announced approximately 2,100 new jobs that will be based near the Colorado Springs Airport. The average wage is expected to be over $80,000. Buckle your seat belts, this could get fun!