The Data

When we look at data we use two main data sources, the Colorado Association of Realtors and the Pikes Peak Association of Realtors. These are followed by National data tracking services from sources such as Realtor.com or the infamous Zillow. Here are the nuts and bolts data pulled from CAR specifically looking at El Paso County for 2022:

Median Sales price up 16.8% to $480,000

Average Sales price up 16.0% to $546,047

New listings up 13.6%

Percent of sales price compared to list price 104.1% 

Average Days on Market (DOM) is 12

So, the market looks strong as hell right, for Sellers anyway. Then why are we writing this?     

Reality Check Time

The market has been trending upward for a few years now, increasing faster than most predicted. In fact most experts still expect a 10% appreciation for our local market. Yet, we're sat here in the trenches of selling homes and we're feeling a squeeze. You can ask any high producing Agent, in early March it was great, it was moving, we were expecting multiple offers on anything. Then mid March hit and all of a sudden homes sat over the weekend. MY Facebook feed started to buzz with Agents that are not accustomed to this freaking out. Not the best look, but it's the truth. Since then our discussions with Sellers has shifted, like the market, where we can't guarantee multiple offers or selling in 4 days. We can only hope and prepare the property to the best of our ability. We have Buyers getting Seller concessions! We have Buyers not competing against a ton of others. It's a breath of fresh air when we don't have to offer appraisal gaps or inspection clauses. I think it's finally here, the market shift. Or atleast a break from getting punished in a tough market.

Market Shift

I read about dangers to business that we're external all the time during my schooling days for my M.B.A. but I never really paid too much attention to external factors until I became a managing Broker. We've seen this coming for a long time, but didn't expect it to be so rapid. A shifting market happens for a multitude of reasons, but here are my thoughts on why we've hit it here.

1. Interest Rate Increase

We've discussed this before. Higher rates mean higher payments. A Buyer was just quoted a 6.125% loan, historically that's fine, but when we've been spoiled with 2% rates for a couple of years you can understand the trepidation. Also factor in the fact that homes were a fraction of the price when loans were 10-15%. When 80% (roughly) of your Buyer pool is financing through a loan it's quite obvious that people would double check their monthly payments. Sticker shock baby. For example, a client closing at $450,000 on a property with a low tax rate on a VA loan is paying $2800 a month. This time last year that payment would have been around $2300 on a bad day. 

2. Buyer speculation/Inflation

Less Buyers in the pool ultimately means less need to offer exuberant things. Like over ask offers, inspection clauses, appraisal gaps etc. If you're only up against one offer there is a lot more peace of mind than being up against ten. Also, we have Buyers hedging against the rates rising to higher numbers, and instead hoping Buyers fall out, resulting in more homes for sale. We're seeing it in the new build world all over the place. Buyers contracted last year expecting a 2-3% rate giving a budget they can afford, but now with home delivery in June-August they have been priced out. We're snatching up these left and right for our Buyers. 

3. Seller mindset

If the market is shifting why would I risk waiting on it!? Or that's the discussion we get. We're already seeing more inventory, more so than the usual Spring/Summer increase. More inventory means more options and less offers. 

What to expect next?

It's hard to say, but I'd call this a stagnation if anything. I don't believe in the doom and gloom of a market crash, there is far too much strength in the market for this. But, I would absolutely argue that we flatten. Perhaps 1-5% appreciation compared to what others may think. Couple inflation with lack of inventory we have to keep trending up, the only point is that the rate at which we increase will differ. Colorado Springs is always going to be a top destination in America, once again we were named top 5 places to live. We're propped up by implants and investors so heavily that I'm confident in my investments in Colorado Springs. If I weren't I'd be selling also. 

We need this slow down, it's good for a fair and balanced market. Competing in the housing market has been rough for a couple of years, I'm excited to see the shift and navigate through it. How about you? If you need help getting things done in a shifting market you'll need to have an experienced Agent. Check out this blog for help there:

Top Questions To Ask Your Realtor As A Buyer In Colorado Springs