November 7, 2022

 

HARRY’S BI-WEEKLY UPDATE

A Current Look at the Colorado Springs Residential real estate Market

As part of my “Special Brand of Customer Service”, it is my desire to share current Residential real estate issues that will help to make you a more successful and profitable Buyer and Seller.

 

 

NO MATTER THE CURRENT STATE OF THE MARKET, OVER TIME, HOME OWNERSHIP IS ONE OF THE MOST ESSENTIAL KEYS TO BUILDING PERSONAL WEALTH

Yes, you read that right!  A home is often the largest personal asset of many families.  

It is certainly up there as the most expensive purchase for most, and it allows the building of equity while providing tax deductible considerations and more.

In times like today when interest rates are at their highest level in more than 15 years and local home prices are still rising, albeit considerably slower than in the recent past, home ownership is still very desirable on so many levels.

Rental rates are higher than ever and climbing steadily.  In recent times the lack of available homes for sale created the need for rentals on a large scale and prices went up accordingly.  They do not appear to be going down and more investors seem to be looking to scoop up homes for investment purposes and/or companies are building new projects to accommodate those needing or choosing to rent.

I’ve talked to several young professionals who would love to buy a starter home because they are aware that the monthly cost of a home would likely be less than that of their current rental expense.  However, saving for a down payment can be tough when your current rental housing output keeps escalating.  

It’s most certainly a problem and one not likely solved in the near future.  

In Colorado Springs, we face the same higher interest rates and inflation as the rest of the country, but we are in a better position than many other cities in that people want to relocate here and have for some time now.

I just returned from a international relocation conference and had the opportunity to speak with folks like myself who help relocate employees and others to various cities for both employment and personal reasons.

What I learned is that those of us who live in “desirable” cities that provide a good “work/life balance” have a distinct advantage over crime-ridden, overpopulated cities.  People are willing to drive further to have their own home in a city where they can enjoy “living”.

Some of this is a result of the recent pandemic where working from home became popular, and some just makes sense, and most especially to those millennials who are looking to put down roots and start raising a family.

In any case, this is all good news for those of us who live in the Colorado Springs area.  

Yes, interest rates are high.  However, speaking as one who had an 8.5% mortgage on my first home here, I consider 7% “reasonable”.  Let’s face it, the very low interest rates of the last several years were not going to stay around forever, and the fast acceleration of home values were not sustainable either. 

It’s fair to say home values were needing to “normalize” and now they have.  Do I think the home appreciation in Colorado Springs will continue to slow down?  Possibly.  And I also believe that those values will not rise quick as fast as they did any time too soon.  And that’s a good thing.  Building home equity, steadily and over time, provides the stability most homeowners need and want.  Paying rent to someone else does not do anything but put extra income in the hands of the landlord.  

Waiting for interest rates to fall probably isn’t a great idea either.  There are several ways to work around the fixed rates of today, such as getting a 5 or 7 year Adjustable-Rate Mortgage (ARM) and refinancing when rates fall, and several other strategies.  The best advice for today’s market is to shop around.  You will find that rates vary from lender to lender, and I can help direct you to several that often have very competitive rates and terms.

There are two and a half times as many actively listed homes here at present than a year ago.  Some of those belong to folks who kept waiting for prices to go up even higher and some are simply those who find that now is the time they want to sell.  

That makes today’s market a good one for buyers.  There isn’t the frenzy we saw even six months ago where homes were selling “as is” in one day with multiple offers and bidding wars.  Buyers have time to make informed decisions, request contingencies and have home inspections.  When it comes to such a big financial investment, that is a very good thing as well.

In Residential real estate, there are always those who need to buy and those who need to sell.  The economic climate may enter into those decisions, but it is often not the primary reason.  

If you are wanting to find out how the present market is going to affect any buying or selling thoughts of yours, please give me a call at 719.593.1000 or email to Harry@HarrySalzman.com . 

I look forward to speaking with you soon.

 

And now for October statistics….

 

OCTOBER 2022

Statistics provided by the Pikes Peak REALTORS Service Corp., or it’s PPMLS

Here are some highlights from the October 2022 PPAR report.

 

In El Paso County, the average days on the market for single family/patio homes was 31.  For condo/townhomes it was 22.  

Also in El Paso County, the sales price/list price for single family/patio homes was 98.8% and for condo/townhomes it was 99.8%. 

In Teller County, the average days on the market for single family/patio homes was 42 and the sales/list price was 98.0%. 

 

Please click here to view the detailed 10-page report, including charts.  If you have any questions about the report or to find out how it relates to your individual situation, just give me a call.

 

In comparing October 2022 to October 2021 for All Homes in PPAR:

                        

                        Single Family/Patio Homes:

·       New Listings were 1,239, Down 22.4%

·       Number of Sales were 1,100, Down 33.0%

·       Average Sales Price was $532,488, Up 4.4%

·       Median Sales Price was $465,000, Up 4.3%

·       Total Active Listings are 2,645 Up 152.4%

·       Months Supply is 2.4, Down 4.6%

 

 

Condo/Townhomes:

·       New Listings were 165, Down 33.5% 

·       Number of Sales were 150, Down 40.0%

·       Average Sales Price was $367,514, Up 12.5%

·       Median Sales Price was $337,500, Up 3.4%

·       Total Active Listings are 264, Up 104.7%

·       Months Supply is 1.8, Down 2.6%

 

Now a look at more statistics…

 

OCTOBER 2022 MONTHLY INDICATORS AND LOCAL MARKET UPDATE ILLUSTRATE OUR LOCAL TRENDS IN DETAIL

Colorado Association of REALTORS® , Pikes Peak REALTORS Service Corp, or it’s PPMLS

Providing greater detail than the above report, this contains information on both El Paso and Teller counties for Residential real estate. 

The “Activity Snapshot” for all residential properties in El Paso and Teller counties shows the Year to Date one-year change:

 

  • Sold Listings for All Properties were Down 35.2%

 

  • Median Sales Price for All Properties was Up 5.8%

 

  • Active Listings on All Properties were Up 108.0%

 

You can click here to read the 16-page Monthly Indicators or click here to get specific information on the geographical are of your choice from the 18-page Local Market Update.  It’s a good idea to check out your own area or one that you might be considering to get a good idea of the local pulse.  As an example, here is a detailed report on the Colorado Springs area:

 

HOMEOWNERSHIP WINS OVER TIME…AN INFOGRAPHIC

Keeping Current Matters 11.4.22

Here’s a graphic representation of what I was talking about earlier.  A “key” to a family’s financial health is homeownership.

 

 

IF YOU BELIEVE HOMEOWNERSHIP IS OUT OF REACH…MAYBE YOU SHOULD THINK AGAIN

Keeping Current Matters, 11.3.22

A recent “2022 Consumer Insights Report” from Mynd indicates that there’s a portion of millennial and Gen Z buyers who are pursuing homeownership as a way to build their wealth, but it might not be exactly the way previous generations have done it.  The study explains how they are breaking into the market:

 

“…younger generations of Americans are not buying into that dream in the same way that older generations have.  A growing number of Americans are choosing to make their first real estate purchase as an investment property.” 

 

Instead of buying a home and moving in, some young buyers are purchasing a home so they can rent it out.  This tactic may be gaining popularity, at least in part, because of the affordability challenges brought about by today’s higher mortgage rates.  The report mentions how many people in this group are considering this approach.  It says:

 

“Almost half of Millennials and Gen Z (43%) are considering buying an investment property compared to only 9% of Baby Boomers and 27% of Gen X.”

 

This strategy allows buyers to continue living in their current location like a busy city apartment or a neighborhood they know and love, where they couldn’t afford to buy.  But instead of giving up on the idea of owning a home, they buy a home in a more affordable area with the intention of renting it out.

That way they’re getting the best of both worlds.  They live where they want, and they still own a home where they can afford it. 

Their goal is to generate passive income and diversify their assets.  It works like this:  in addition to having a rental stream of income, the equity they build in the home they own will also help grow their net worth over time.

If this is something that you or someone you know has considered, please give me a call.  I’ve had personal experience in this area and can certainly help provide answers that can help get the ball rolling.

 

HOME BUYERS ARE MOVING FARTHER AWAY THAN EVER BEFORE

The Wall Street Journal, 11.3.22

As I mentioned earlier, the rise of remote workers and the ballooning cost of housing in major metro areas are leading Americans to move much further away when buying a home.

According to a National Association of Realtors (NAR) survey, buyers who purchased homes in the year ending this past June moved a median of 50 miles from their previous residences.  That is the highest recorded distance on record, going back to 2005 and follows five straight years in which the median distance moved was constant at 15 miles.

Some of this is due to employers changing their in-office requirements which gave some remote workers the ability to move farther from their offices.  

Smaller communities were especially popular—48% of home purchase were in small towns and rural areas, a record in data going back to 2003 and up from 32% a year earlier, according to the survey.

Suburbs are traditionally the most popular destinations for home buyers, but the share of suburban home purchases dropped to 39% from 51% the prior year.  Only 10% of purchases were urban areas, down from 13% the year before.

NAR polled 4,850 people who bought primary homes during the 12-month period.  

This survey reflects a 12-month period in which the housing market was upended by the surge in interest rates.  The pandemic spurred the biggest housing boom in years as people took advantage of record-low mortgage rates and sought more space to work from home.  Home prices rose to record highs.  Now that mortgage rates have more than doubled, home purchases have dwindled, and buyers have focused more on affordability.

Colorado Springs, while not considered a “rural” area by any means, is still a great choice for those who do not want the higher prices and congestion of living in a city such as Denver.  Folks relocating to southern Colorado are choosing our city and immediate surrounding areas as a place to call home and are willing to commute to do so. 

Again…one more reason why I believe our housing market is very stable and should continue that way into the future.

 

ECONOMIC & WORKFORCE DEVELOPMENT REPORT

Data-Driven Economic Strategies, October 27,2022

As most of you know, Tatiana Bailey, our “local” economist and previous Director of the Southern Colorado Economic Forum at the UCCS College of Business, has started a new non-profit company called Data-Driven Economic Strategies (DDES), along with Rebecca Wilder who worked alongside her at UCCS. 

I know many of you enjoy seeing the “data” as it pertains to Colorado Springs in terms of economy, jobs and more.  I will continue to publish her reports when I receive them and you can click here to see the first one under the new banner. If you have any questions, please give me a call.

 

HARRY’S THOUGHT OF THE DAY:

 

 

If you haven’t done so already, please vote.  

It’s a right that many around the world don’t have and one I never take for granted. 

No matter who or what you personally support, if you don’t vote you are missing the opportunity to get your voice heard.