The Colorado Springs real estate market has done expectedly well during 2020, regardless of the continuous challenges caused by the coronavirus pandemic.
So as we approach the final month of the year, we are noticing some favorable estimates for the Colorado Springs housing market into 2021. The same is true for other cities such as Fountain, Manitou Springs, and Monument, within El Paso County. Prices for homes are forecast to keep going higher through this year and into next, based on analyst studies.
When you take into account today’s supply-and-demand circumstance in the county it should not be that surprising. To put it briefly, the number of people wanting to buy a home is much more than the number of homes listed for sale. That along with low interest rates creates upward price pressure on homes.
The reality is a shortage of housing supply is perhaps the number one factor guiding current trends and projections for the Colorado Springs housing market. We’ll get to those predictions in a moment. But first, let’s take a quick look at current real estate trends in the area.
Colorado Springs Home Prices Climbing Steadily in 2020
In many ways, the housing market in Colorado Springs is a positive sign in the local economy. Even though the jobless rate continues to be high because of COVID-related limitations, real estate in Colorado Springs and throughout the area keeps moving well at a stable rate.
Actually, if you only viewed real estate trends, you would never have thought we were still in the Covid-19 health crisis. The housing market in Colorado Springs as well as Denver are a perfect example of this.
Home prices in CO Springs went up continuously through almost every month of 2020, regardless of the difficulties found in other parts of the economy. Sales of new construction and existing homes have gone up on a 12-month basis.
As of October 2020, the typical home in the Pike Peaks region was selling for around $435,000. According to the real estate data company Zillow, home values in the city have risen by around 10% over the past year or so.
On the existing homes segment of the market the average price of homes sold during June rose to an all-time high of $401,980, based on data from Pikes Peak Association of Realtors. The jump over $400,000 can be skewed by more luxury homes sales though because the median home price is still around $360,000.
Housing Market Forecast Moving into 2021
Real estate agent Rick Van Wieren of Re/Max Properties said buyers are still coming from the Denver area in search of less expensive housing. For the last few years, soaring prices in Denver have caused some of their residents to buy in northern Colorado Springs and northern El Paso County. The median price in Denver as of June was $480,000.
As of October 2020, Zillow forecasts that Colorado Springs home values will rise 7.8% in the next year.
It seems insane that home values would resume their ascent during a pandemic. However, each month since the summer the unemployment numbers have fallen and many people expect next year to be better.
There are a few reasons for the real estate market’s surprising strength:
• Mortgage rates are still incredibly low, which encourages buyers to own vs renting.
• The housing market was healthy and strong prior to the pandemic.
• The inventory of homes for sale remains to low to meet demand.
Mortgage rates have something to do with this.
On July 16, 30-year fixed-rate loans fell to an average of 2.98% across the country, and that was a 50-year low, based on Freddie Mac data. This may have been helped by the higher unemployment numbers due to the pandemic. During the same time five years ago, mortgage rates were at 4.04% which is a full percent higher.
In the first week of November, the average 30-year fixed mortgage rate fell to yet another record low last, dropping to an unbelievably low of 2.78%. That’s based on the weekly study conducted by Freddie Mac.
Tight Inventory Has Driven Bidding Wars
Strong home-buying demand and a reported shift from urban to suburban areas has resulted in more competition in areas such as Colorado Springs. When you combine that with limited supply of homes it makes it harder for buyers to locate the right home at the right price.
According to the Colorado Gazette reporter, the inventory of homes for sale decreased to a half a month supply in October of 2020. This is far, far away from being what is considered a balanced market.
The inventory of single-family homes listed for sale fell to only 881 in October. This represents an all-time low dating back to 1995, according to a Pikes Peak Association market trends report and Gazette historical data. In comparison, there were 1,940 homes for sale in October 2019 and 2,900 in October 2015.
This discrepancy is a big reason for the increased home-value forecast in Colorado Springs real estate. With demand far surpassing the supply of home, we will likely see continued price increases well into 2021.
Recommendations for Home Buyers in Colorado Springs
Are you thinking of buying a home in Colorado Springs sometime during 2021?
Below are some helpful tips to buy a home in the current market environment:
• Begin your search early to offset other competing buyers.
• Have your loan pre-approved before putting in an offer(or agents and sellers may quickly dismiss your offer).
• Make your offer strong as if there’s 10-20 other buyers bidding for the same house.
• Be willing to compromise with regards to square feet, features and location.
Keep in mind there’s always a chance that today’s record-low mortgage rates will move upward over the coming months. This can happen for a number of reasons such as national unemployment numbers moving lower, tax changes from the new administration, or more mortgage defaults.
Disclaimer: This article includes real estate market predictions for Colorado Springs, Colorado stretching into 2021. Those forecasts were issued by third parties not associated with our company.