December 13, 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.

 

 

HOMEOWNERSHIP AS AN INVESTMENT IN YOUR FUTURE IS AS TRUE TODAY AS IT WAS LAST YEAR AND WILL CONTINUE TO BE IN YEARS TO COME

Some days when you read the paper or listen to the news, the mention of Residential real estate has to do with the fact that values are not appreciating as much as they had been in recent years and that would be true.

However, what you don’t hear is that while the appreciation is down from it’s crazy rise in recent years, homes are still appreciating.  As you will see below, our local average sales price appreciation year-over-year for single family/patio homes in November was 3.6%.  While it’s not the 15% of recent times and is a bit below our “normal” appreciation, there is some great news to be garnered there.

First let’s talk about the value of homeownership.  When you own a home, you are paying down a mortgage loan, which, over time is creating equity.  You are also seeing appreciation, whether it be 3.6% or 15%, that is also creating equity.  This home equity is creating wealth for you and that’s why homeownership is often the greatest financial asset for many families.

This is true whether you buy a home today, tomorrow or whether you bought it 15 years ago.  

And now let’s consider renting.  At present, rental prices are the highest they have ever been, and rental properties are difficult to find at times.  When you rent a home, you are creating additional wealth for your landlord by helping to pay down his or her home mortgage while getting no financial value for yourself.

First-time homebuyers are being hit hard because of the fast increase in mortgage loan rates and millennials, while having more dollars to spend are less “wealthy” without homeownership.  Their financial futures will often be hurt due to lack of owning a home.

Older folks (those 65 and older) who are renting rather than owning are also creating a substantial wealth “gap”.  This is illustrated in the graphic below:

 


So basically, no matter whether you are a first-time buyer or a senior who is considering renting rather than owning, it’s time to think again.

Yes, interest rates are higher than they were.  But what goes up will go down and when rates go down, it’s likely you can refinance at a lower rate.  5-1 ARMs (adjustable-rate mortgages which are usually 1% to 1 ½% less than 30-year fixed-rate loans) are again gaining popularity. In my opinion we will see interest rates drop within the next one to two years and when that happens, you will be able to refinance for a lower fixed-rate loan.

Now let’s talk about home appreciation.  While the fast appreciation of recent years did provide substantial equity for many folks, it also made homeownership unaffordable for others.  With home price appreciation slowing down, homes are a bit more affordable for some.  Also, higher interest rates on lower prices often don’t affect the monthly bottom line any more than lower interest rates on higher prices!  Something to think about for sure.

What’s the bottom line here?  When it comes to Residential real estate, there’s no right or wrong time to buy or sell.  The last several years have most definitely been a boon to sellers, but at the expense of buyers who had to “get in line” and into bidding wars to often make an offer on a home sight unseen just to be try and “win” it.  

Today’s market is becoming more normalized, and buyers are finding more choices and have time to consider their offer before jumping in just to try and get whatever home is available. This is a good thing.

Before you let negative news about the housing market get you down, don’t forget what I’ve said forever—at any time there is always someone looking to buy and someone looking to sell.  Their reasons vary, but the facts remain the same.

If you or a family member are even considering a move, or want to buy for the first time or for investment purposes, please give me a call at 719.593.1000 or email me at Harry@HarrySalzman.com and let’s put your wants, needs and budget requirements to work for you.  

I’ve been in the local Residential real estate arena for more then 50 years now and have seen just about every cycle imaginable.  If there’s a way to make it happen, I can find it, and I can help make your financial future a bit brighter with the addition of the home you desire.

 

And now for November statistics….

 

NOVEMBER 2022

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

Here are some highlights from the November 2022 PPAR report.

In El Paso County, the average days on the market for single family/patio homes was 33.  For condo/townhomes it was 29.  

Also in El Paso County, the sales price/list price for single family/patio homes was 98.6% and for condo/townhomes it was 99.1%. 

In Teller County, the average days on the market for single family/patio homes was 27 and the sales/list price was 98.2%. 

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 November 2022 to November 2021 for All Homes in PPAR:                       

                        Single Family/Patio Homes:

·       New Listings were 953, Down 20.6%

·       Number of Sales were 936, Down 36.2%

·       Average Sales Price was $525,923, Up 3.6%

·       Median Sales Price was $453,000, Up 0.7%

·       Total Active Listings are 2,430, Up 184.2%

·       Months Supply is 2.6, Down 5.1%

 

Condo/Townhomes:

·       New Listings were 143, Down 27.8% 

·       Number of Sales were 136, Down 40.6%

·       Average Sales Price was $368,724, Up 9.7%

·       Median Sales Price was $350,000, Up 7.7%

·       Total Active Listings are 262, Up 127.8%

·       Months Supply is 1.9, Down 3.1%

 

Now a look at more statistics…

 

NOVEMBER 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:

2023 housing market PREDICTIONS

The Residential Specialist Nov/Dec 2022

As I mentioned earlier, 2022 marked the beginning of the end of an unprecedented seller’s market.  Mortgage interest rates climbed from around 3% to above 6% and by June 2022 inflation had reached its highest annual rate since November 1981.

According to one Realtor, “We saw one of the craziest markets on record over the last couple of years, but it did a U-turn in the span of a quarter, and we went from record highs in appreciation to a 20-year low in mortgage demand”.

Although the market has cooled in many regions, most real estate agents and experts across the country don’t foresee a crash or drastic downturn in 2023 but, like I have been saying, a return to what was prior to 2020—a normal, healthy market.

Here are a few predictions that Certified Realtor Specialists (CRSs) have for the 2023 national housing market outlook:

 

2023 will see a return to a slower, but still healthy market.

Despite what you read or hear about how drastically different 2022 has been from last year, you should take it with a grain of salt.  That’s because the last two years were highly unusual and fueled by low interest rates that we will probably never see again.  

Don’t compare 2022 or 2023 to 2021 or 2020 because that’s unrealistic.  What to expect in 2023 is that things will slow down in terms of time.  It will take a bit longer to sell and pricing adjustments will be necessary, but home values will still rise at a normal rate of 3% to 7%. 

 

Seasonal fluctuations will return.

We will again see seasonal adjustments which we haven’t see in two years.  The spring buying season will return, and the end of the year sales will slow down.

2023 will be like years before 2020 in terms of seasonal cycles.

 

Above 5% interest rates will become the new (and old) norm.

Realtors like myself who have been in the business for a while can remember a time when 5% and 6% rates were normal.  Some of us even remember the high interest rates of the 1980’s.  In those days a VA loan of 13% was considered low and rates of 18% to 20% were not unusual.

Millennials, who continue to make up the largest share of homebuyers today, are used to seeing rates below 4% but once they realize that above 5% interest rates are the new normal, they will adjust.

 

Assumable loans might become a more popular offering due to higher interest rates

A loan assumption, where a seller who has a VA or FHA loan can have their loan assumed by a qualified buyer, are going to be a big trend for the next decade.  The process takes longer but can save the buyer a lot of money.

 

It will be a more balanced market.

Supply is still relatively low everywhere in the country, and especially here in Colorado Springs, but interest rates and inflation will put the ball back in the buyer’s court when it comes to closing cost help, inspection, and repair negotiations, and below initial asking price offers—things that were thrown out the window during 2020 and 2021.

As we move away from a seller’s market, we will have a more balanced market in 2023.

 

FYI…

For more information, please give me a call.

 

ECONOMIC & WORKFORCE DEVELOPMENT REPORT

Data-Driven Economic Strategies, November 2022

Here is the most recent Economic Progress Report from Tatiana Bailey.  Please click here to see all the charts for El Paso County.

 

UCCS ECONOMIC FORUM REPORT

UCCS, College of Business, 11.22.22

As always, I’m happy to share the most current report from the UCCS Economic Forum.  The first page is printed below, and you can click here to get the report in its entirety.  

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