Run! A recession is coming. A recession is coming. Wolf! Wolf! Wolf! How many times do you here something before you start ignoring some of the cries? Real estate is a cyclical business. It always has been. Yes, in the Colorado Springs area, the real estate market activity should start slowing down some. Prices can't keep going up at the rates they have been.
For the last couple of years, it seems like one of the media's favorite topic is about the next recession. For example, here in the Colorado Springs area, on September 23, KDRO, one of our local news stations had a report,"Economist Say Recession is Coming, Local Expert Says It is Likely."
As a former CPA, I enjoy studying the market reports where in the areas where I work. I am a real estate broker that lives and works in El Paso County, which is also known as the Colorado Springs area. I specialize rural residential properties. Any way, it seems like the media has been crying wolf for so long now that I don't spend much time worrying about the next recession.
I spend more time worrying about losing buyer prospects because of the limited number of affordable country homes under $300,000 in my area. Buyers are not desperate. They may want to live in they country but they don't want to live in a junky place that is falling apart. They want value.
How am I educating my clients and prospect?
I have my market reports posted on several dry erase boards. I can quickly pick the board up and talk about what the market is doing. What is selling. What is not and why. In the ucpoming months I will be sharing this information in blogs more.
The Great Recession of 2008:
I was working in Texas in 2007-2008 when the Great Recession hit. The real estate market was fun and crazy at that time. It is hard to believe that was almost 10 years ago. Sometimes it seems like "just the other day."
I was living in Texas. Homes were selling quickly - within a month or two. People were able to get financing with no problem. Most of my sellers had enough equity that they could move every 3 years or so. Moving up. Moving down. Moving just because they could. Now and then I came across a seller that was having difficulty paying their loan. Based on their income, they probably should not have gotten the loan in the first place.
Then the real estate market crashed. Even my exceptionally well qualified buyers could to get a loan. Banks were scared to lend.
According to Wikipedia:
Major causes of the initial subprime mortgage crisis and following recession include:
- International trade imbalances and lax lending standards contributing to high levels of developed country household debt and real-estate bubbles that have since burst;
- U.S. government housing policies;
- Limited regulation of non-depository financial institutions.
I have not seen or heard about these issues contributing to the Colorado Springs area's real estate market success.
2019 Colorado Springs Area Rural Real Estate Market
The Colorado Springs area and Colorado in general is a beautiful state with a nice climate and 4 seasons. There are many things to do. The job market has been good. Although not everyone likes the winter, cold weather; there seems to be plenty of people that do not mind it. Compared to other areas, 35-40 acres tracts of rural land is still very affordable.
Many of the buyer prospects that I have worked with this year have been cash buyers and people that have retired. Unfortunately, some people decided to move to this area up retirement a couple years ago. Then when they finally retired and started seriously shopping, the price of lower priced homes had increased enough in the last year or two that they could no longer afford to buy that retirement home that they were dreaming of here.
Similar to last year, the Colorado Springs area is popular BUT buyers have not been acting desperate. Properties in poor condition and/or require a cash buyer tend to linger on the market.
In the lower price ranges, this has contributed to the average days on market increasing. If investors purchase a home, they expect to be able to purchase it, make the repairs and updates plus make a decent profit that will compensate them for their time and financial risk.
Yet, well cared for homes and remodeled homes that are appropriately priced are still going under contract within two weeks or so. The closer they are to Colorado Spring the better. Those that are on privately maintained roads, which can be difficult, take longer. Quality.....
We are not in a position where homes that were purchased at market value a year ago are being flipped at a substantial profit.
I still caution sellers to make sure they know where they plan to move to before they sell their rural house or ranch. I remember talking to a sweet lady about a month ago. She has agreed to sell her house to one of those "we buy ugly house" types of investors. When she agreed to sell, she was thrilled because she was going to be making a lot of money on her ugly house due to the increase of home prices and land prices.
Then reality hit. She was not going to be able to find another livable house in her price range in this area that could accommodate her family and family and livestock. Fortunately, she was able to cancel her sales contract.
Do I Think the Colorado Springs Real Estate Market Will Slow Down Some?
I am not an economist, but I don't think that we are going to have a big recession like we had in 2008.
I do hope that the rate of appreciation slows down some for rural homes in El Paso County. Otherwise, more and more buyers will choose to purchase somewhere else, where home prices are more affordable.
They might also simply give up on their dreams of rural living.
Other buyer prospects will continue waiting.
For example, if I was a cash buyer with a $200,000 to spend, do I want a single wide manufactured home in Colorado Springs area or would I rather live in another state where I could have a decent brick home on similar sized acreage?
If I have $335,000 to spend, or less, do I want a somewhat dated fix it upper in a rural area 45 minutes from town or am I willing to sacrifice my dreams of a living on a farm so that I can live in a practically new home in town? This is when people start having to decide what is most important to them. Location? Acreage? Outbuildings for livestock and horses? Peace and quiet? Modern home in a nice subdivision in town?
Within the next few days, I will be updating my real estate market reports.
If you have any questions, please let me know.