However, in December the numbers were more dramatic, with sales up 28.4% over 2013 and the average sales price up 7.3%. In addition, the inventory of unsold homes was only 2,599 according to the official reports, indicating we are approaching a shortage of homes for sale, especially in the more affordable price ranges.
So what does that mean in 2015? Here are a few of my own predictions.
- Prices are going to rise a little faster. With a shortage of homes for sale at the current prices, the only way the inventory will increase is for prices to increase. Look for prices to rise in the 6-8% range.
- Sales continue to be brisk. With unemployment continuing to drop, more households are being created, which will result in more homes being sold. Look for an increase in the 5-7% range, with the only holdback being that 1st time home buyers are price sensitive. So if prices rise too much at the lower end of the inventory, it may keep some out of the market.
- New construction will try and fill the gap, likely rising 8-10% over this year. However, rising construction costs will make it even more difficult for builders to offer homes in the mid 200’s – the price ‘sweet spot’ in Colorado Springs.
- The higher-end homes will likely continue to move more slowly. There does not appear to be any major job announcements in the wings that will bring droves of buyers in for the more expensive homes. Even December’s active pace showed the 90th percentile of sales price to be only $389,000.
What could affect actual outcomes? A major employer could swing these numbers either way, but probably more positively than negatively. A rapid increase in interest rates could affect things, but the consensus seems to be that rates will like stay in the 4’s for most of the year (they are actually under that at the time of this writing). New discussions are suggesting that the underperformance in overseas markets may keep our rates fairly level, but others are forecasting 5% by year end.
I look forward to seeing how it all unfolds as the real estate market as a whole continues to improve.
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. This could get interesting!