Living Colorado Springs » Colorado Springs Real Estate Market Conditions

Colorado Springs Home Sales Drop For 2nd Month in a Row

Rick Van Wieren — Wed, 01 Sep 2010 15:01:37 +0000

The feared ‘double dip’ housing recession may have arrived. August 2010 single family home sales in Colorado Springs dropped for the 2nd month in a row compared to the prior year, by 22.8% at 688 homes. Year to date sales are now even with last year, but assuming the current trend of year to year declines persists through the slower fall and winter selling seasons, 2010 will likely go down as slower year than the anemic 2009.

It wasn’t all bad news. The average price was actually up 10.6%, at $246,072, reflecting some life at the higher end (although the sale of a $2.3 million dollar home may have pulled this up a little). The median (1/2 above, 1/2 below) also rose 4.8% from 2009, although it declined from the prior month. Distressed sales appear to be down. At 120 homes, this was only 17.4% of the market, the lowest in a year. The inventory of 5,835 unsold homes, while up 15.8% over 2009, was down from July’s peak.

Slower sales, while expected initially after the tax credit program expired, were not expected to continue for long, as interest rates at historic lows (locally 4.25% with no points or origination on my most recent quotes). Reasons for slower sales include a depleted buyer pool as a result of ‘borrowing’ purchases earlier in the year with tax credits, job scarcity and uncertainty, and tighter lending rules making even today’s low rates unreachable for some buyers.

For more details, please visit the Market Conditions section of this web site.

Late Summer Lull Sets In

Rick Van Wieren — Thu, 26 Aug 2010 14:05:07 +0000

There a seasonality to the Colorado Springs real estate market. Our Spring / Summer season tends to be when we see the most closings (in part because is Spring is when many of them go under contract and is the ‘relocation season’). Winter tends to be our slowest season.
There is a short period at the end of summer, generally between the back to school time and Labor Day, when things get kind of quiet. I’ve never completely figured it out, but it seems like this period comes every year, so I decided to give it a name – The Late Summer Lull. Maybe it is because people are distracted with back to school activities, or ‘last hurrah’ vacations before summer ends. Maybe it is because they are taking their college kids to school. But generally, after Labor Day, activity picks up for a bit.
This year of course, there may be some additional factors. With sales down almost 25% in July, we may still be experiencing a ‘hangover’ of sorts from the expiration of the tax credits. There also seems to be dwindled pool of qualified, motivated buyers. There are several reasons the buyer pools seems a little shrunken at the moment.

Credit damage. Some people have really been credit damaged as a result of losing jobs or health problems or whatever earlier on in the recession. They may now be working and making progress, but the credit building process takes time.
Liquidity. Some people have equity (or cash flow) tied up in other properties, and until those sell, are no going to be able to move.
Jobs. Unemployment in Colorado Springs stands at 8.9% at the moment, and nationally at 9.5%. It takes a job (or documentable income) to sustain a mortgage.

The ‘Late Summer Lull’ does not typically last very long. With interest rates at 4.25%, it’s a wonder it exists at all this year!

July Home Sales In Colorado Springs Live Down to Expectations

Rick Van Wieren — Mon, 02 Aug 2010 14:29:44 +0000

I am really not a fan of bad news, but sometimes it just has to be told. July 2010 home sales in Colorado Springs is one of those bad news stories. At only 713 sales, we were down 24.6% from last July, which was not a great month to begin with. This was something we expected however. With the tax credit expiring, there was some borrowing of sales in the spring from the summer months. It will take a few months for ‘normal’ demand levels to really be established. In the mean time, the inventory of unsold homes jumped 16.9%, an 8.4 month supply of homes at the July selling pace.

There is a silver lining. Prices actually improved again, with the average up 2.4% at $237,029, and the median up 5.1% at $209,800. Interest rates are still incredible at 4 3/8% . The ratio of selling price to list price went back up to 97.6%, a more normal figure. And the 90th percentile (indicating where the top 10% of activity is) jumped again, to $415,000, the 1st time we’ve seen that level in a while, and a sign of continued strength in more expensive homes.

What will it take for us to get to a more sustainable level of home sales? Jobs. The quality of life in Colorado Springs is famous. What we still need are more jobs, and preferably of the higher paying variety.

For more details about home sales, see the Market Conditions section of this web site.

Home Sales in Colorado Springs up 4.7% in June

Rick Van Wieren — Thu, 01 Jul 2010 15:54:51 +0000

June Colorado Springs home sales were up 4.7%, compared with June of 2009. This was undoubtedly affected by deadline of the Home Buyers Tax Credit, with June 30 being the last day to close to still be eligible (before the last minute extension of the closing deadline passed by both the house and the senate). The average price was up 7.5% at $242,315, and median was up 5.3% at $205,000.

Less positive was the increase in homes for sale. The inventory of homes for sale in Colorado Springs rose 14.5%, to the highest level since October 2008. Also, the Selling Price to List Price ratio dropped to 96.7%, which is low by local standards.

With interest rates in the 4’s, the remaining summer months should be moderately healthy, and more ‘normal’, with tax credits and other government stimulus actions less of a factor. The things that will turn our market around more quickly than anything will be more jobs in Colorado Springs, and the return of the thousands of troops who are currently deployed to the Middle East, to Ft Carson.

For more details on current housing market conditions, please visit the Market Conditions section of www.LivingColoradoSprings.com

Low Interest Generating Low Interest?

Rick Van Wieren — Fri, 11 Jun 2010 15:48:09 +0000

Mortgage interest rates came close to hitting a record low last week. All the junk going on in Europe with Greece and Hungary’s financial situations has made US mortgage backed securities more attractive apparently, and the result is some incredibly low mortgage interest rates.
But not as many buyers are taking advantage of them. There are a couple of factors.

The tax credit programs that expired at the end of April ‘borrowed’ some buyers from the summer market, as people made decisions based on the deadline. They aren’t in as much of a hurry now, although this should be a temporary factor, being less of an issue as the mid summer months arrive. Most people do not move based on tax credit type incentives, and that is especially true in relocation, where a lot of my work is.
The pool of eligible buyers has shrunk because of the soft job market. People are more income constrained, and cautious, when unemployment is high. Here in Colorado Springs unemployment is 8.2%, not horrible, but not great.
The pool of eligible buyers has shrunk because of tightening lending rules. Interest rates can be 2%, but if the rules preclude someone from getting a mortgage, what can they do? Example: John and Mary Smith want to move up to a bigger house, but they currently own a home. In past years, they could rent the existing home and still make the move (if they have enough for the down payment), with the lender counting 75% of the rental income as an offset against the current house payment. The new rules require the existing home to have at least a 1 year rental history in order to count the rental income at all, eliminating the ability to move without selling for many homeowners (who are often underwater on the mortgage). This is just one example, there are LOTS of rules that have tightened, thereby shrinking the buyer pool.
Home ownership and the prospect of appreciation has lost some of its shine. Buyers are no longer as confident in the house going up in value as they have for the last 60 years. There are MANY reasons to own your home besides appreciation, but appreciation has certainly become less of an automatic. Of course when the stock market recently dropped 1,000 points in 1/2 hour, it does raise the question, what IS automatic?
At least in Colorado Springs, the supply of homes for sale is increasing very rapidly. We are up to 5,700 unsold homes from 4700 in March, giving buyers the perception that there is no hurry, there will be more for sale tomorrow, and they might even like them better.
There is a little bit of ‘chicken and egg’ going on, in that lower demand for mortgages actually brings rates down. Fewer borrowers will have at least some impact on rates, pressuring them downward further.

Conventional wisdom had interest rates heading up by this time. But life happens, and it will be interesting to see how the whole picture unfolds!

How Much Was That $8,000 Tax Credit Really Worth?

Rick Van Wieren — Mon, 24 May 2010 14:57:26 +0000

The most frequently asked question I hear these days is, ‘How’s the market now the tax credit program is over?’ This is a really good question. While I’ve been very busy, the fact is, showing traffic is down, and I’ve had fewer calls from first time home buyers. This will be a busy closing week, as many of the first time home buyers are going to be closing on the homes they contracted for in April. May will likely be one of the best closing months of the year.
Having said all that, lets look at what the long term benefits of the tax credit really add up to, compared to other factors at work in the market. The $8,000 credit, when used in conjunction with other programs, freed up cash for buyers who did not have adequate down payment resources otherwise. This of course adds buyers to the market. But it really only helped buyers in the lower portion of our market, since the credit only covered the down payment of an FHA loan on a $228,000 house.
Since most buyers, even 2nd and 3rd time buyers pay for most of their home with a loan, the bigger issue is payment size. $8,000 spread over 30 years at 5% interest is a payment of $42.95. To put that in perspective, interest rates have fluctuated in the 3 weeks since the tax credit ended from around 5.25%, to 4.75% (I actually received quotes of 4.5% on certain loans this weekend). On that $228,000 house, that is a swing in house payments of $69.66 per month. So how much was the tax credit really worth? If you didn’t have the cash, quite a bit. But for those with even $8,000 in cash of their own, they will save substantially more from lower interest rates than the credit was ever worth. How long will these nice rates last? Unlike tax credits, they don’t announce these in advance, so you just have to take advantage of them when they are there!

Colorado Springs Home Sales Up 11.9% in April

Rick Van Wieren — Sat, 01 May 2010 17:04:05 +0000

April was a good month in the real estate business in Colorado Springs. Homes sales were up 11.9% over last year, and prices were up 4.7%, a very respectable amount. While the tax credit expiration of April 30 undoubtedly pulled some activity into the month, most of the impact of that will likely be felt in May and June closings (there were 1,866 homes in some level of ‘pending sale’ status), as the closing deadline under the program is June 30. Even distressed property sales indicated an improvement, with only 1 in 5 homes sold being shown as ‘distressed’ in some way, down from almost 1 in 3 as recently as January.
It isn’t ALL good news. The fact is, the inventory of unsold homes actually grew for the 1st time in 2 years (only up 2.6%). But considering it has been shrinking for 2 years straight, it had to increase sometime. Taken in context of the number of homes being sold, it put us at about a 6 1/2 month supply, very near what many economists think of as ‘balanced’ market.
For more details and a 5 year trend chart, visit the Market Conditions section of this web site.

Tax Credit Almost Done – Now What?

Rick Van Wieren — Wed, 28 Apr 2010 01:38:33 +0000

Many in the real estate industry are holding their collective breath to see what comes next after this Friday’s expiration of the First Time Home Buyers Tax Credit. While some thought it would be extended, the reality is that the Federal government has got to back off from its assumed role as rescuer of the housing market, and let people get back to business.
So does this mean that sales will dry up? Probably not. While we may have borrowed a few transactions from the summer months into the spring, the housing market does not really ebb and flow that much around special incentives, and is driven more by jobs, and the need for housing. Young people are still graduating from college, getting married, having kids and buying their first homes (not necessarily in that order!), with or without tax credit help. People are still transfering to accept new jobs, or retiring, or divorcing, or whatever other ‘change of life’ event that happens that changes housing needs.
Interest rates are trickling up a little, but are basically still at incredibly low levels. Colorado Springs homes are a great value, and there are lots of nice homes for sale right now. The economy is not great, but getting better by the month, if not the week. And Colorado Springs is still a GREAT place to live. Will sales slow? Maybe a little. But my own perspective is that there will continue to be many reasons for people to buy a house in Colorado Springs. And I’ll be here to help them!

Annual Colorado Springs Home Values Report Released

Rick Van Wieren — Sun, 18 Apr 2010 15:38:00 +0000

There are lots of ways that home values get reported in Colorado Springs. Many of us as agents track this tightly, the Pikes Peak Association of Realtors definitely makes a major effort, and the El Paso County Assessors office takes its own swing at the issue. But this is one area where I really have to tip my hat to our only daily Colorado Springs newspaper, The Gazette.

Today they released their annual Home Values section. I like this particular section, because it is probably the most in-depth look at housing values at a neighborhood level that we ever see without doing it ourselves. They include the assessors office data, and they identify foreclosure information, too often overlooked in other analysis. I don’t always agree with the way they break down the neighborhoods, there can be a huge swing in the number of homes they include in each, but none of this kind of work is perfect.

Their numbers correlate with, but don’t match, prior analysis released by PPAR. They show prices fell 8% during 2009 (compared to 6.2% reported by PPAR). The online version of the report is very interactive, enjoy playing with it! The Gazette’s Online Annual Home Values Report

Selection of Homes for Sale in Colorado Springs is Growing

Rick Van Wieren — Wed, 14 Apr 2010 13:43:00 +0000

As of this morning, April 14, there were 5,069 single family and patio homes for sale. That number has been climbing, and it looks like April will see the first year to year increase in the inventory if homes for sale in Colorado Springs since this recession began.
Part of the increase is because we have a little rush of sellers trying to take advantage of a demand spike related to the First Time Home Buyers Tax Credit, scheduled to expire on April 30. Part of the increase is the normal ’spring rush’ of signs we get when the grass starts to turn green. Homes show better in the spring, many job transfers occur in the spring, and people get a little spring fever to move as well. Locally we have some great deals on homes in the upper price ranges, and for the first time in a while, we are seeing more move up traffic. In Colorado Springs, military orders also play a role in our housing market, with many active duty personnel receiving their orders for their next assignment right about now.
In a way it is a sign of returning normalcy. With over 1700 homes pending sale, we need some to take their place. Thankfully, only 10.2% of the homes for sale appear to be bank owned or short sales, also indication of health.