Seasonal changes have historically characterized the housing market of Colorado Springs. However, the pattern has been significantly altered due to the COVID-19 pandemic and the shift to remote work, resulting in an unprecedented demand surge.
The appeal of Colorado Springs, with its excellent quality of life, unique four-season climate, and captivating landscape, has drawn a growing number of remote workers to relocate here. The escalating home prices in Denver partially propel this trend, positioning Colorado Springs as a more appealing and budget-friendly alternative for many homebuyers.
Despite this, the escalating demand for Colorado Springs homes has sharply increased home prices over the past decade. The median sales price has rocketed by an exceptional 129%, posing serious affordability issues for the city. However, this price surge hasn't deterred new residents from moving into the city.
These shifts have resulted in a dynamic and evolving Colorado Springs real estate market, influenced by broader societal and economic changes. Although it's an enticing destination for buyers looking for a blend of urban convenience and outdoor living, the sustained hike in housing prices indicates persistent affordability challenges that need to be addressed.
This real estate market report aims to provide a comprehensive, impartial analysis of the residential and rental sectors of the Colorado Springs real estate market for Q2 2023. It endeavors to shed light on crucial market trends, including home prices and sales data, which are pivotal to understanding the local real estate dynamics.
Our study isn't limited to Colorado Springs alone. We contextualize these local trends and interest rate shifts within the broader national economy. This approach provides a clearer comprehension of the relationship between local real estate trends and wider economic indicators.
The scope of this report includes a detailed analysis of the residential and rental market trends in Colorado Springs for Q2 2023. We'll compare these trends with national data and forecast potential market changes in the upcoming quarters.
We aspire to equip homeowners, renters, and real estate professionals with crucial data and insights. With its thorough comprehension of local market trends and potential impacts of macroeconomic variables like interest rates, this report serves as a solid basis for informed decision-making and strategic planning.
Median Sales Price
The median sales price is a critical indicator of the residential real estate market, offering a reliable snapshot of a market's overall status and trends. Unlike average prices, which extremely high or low values can influence, the median price gives a more balanced representation of typical home transactions. Tracking this metric can help investors, homeowners, and real estate professionals to gauge market conditions, estimate property values, and make informed decisions.
As of the end of Q2 2023, the median home sales price in Colorado Springs was $498,000, which denotes a significant milestone in the local real estate market's performance. Notably, this figure is 14% higher than the national median home sales price, currently at $436,800.
Based on information from the REALTOR® Services Corp ("RSC"), for the period Jan 1, 2023 through Jul 16, 2023. RSC does not guarantee or is in any way responsible for its accuracy. Data maintained by RSC may not reflect all real estate activity in the market.
This disparity between Colorado Springs and the national average suggests that the city's real estate market surpasses the national trend. Given Colorado Springs' desirable features, like its excellent quality of life and scenic landscape, it's understandable that the city's real estate market commands higher prices.
Certain areas in the market seem to be undergoing a correction due to a combination of increasing property prices and rising interest rates. This has decreased affordability, impacting popular neighborhoods like Mountain Shadows and Black Forest, which have seen significant price drops. This could allow potential buyers a better deal in these neighborhoods.
New constructions, however, reflect a different trend as their prices are usually set when contracts are signed, often months before they're ready for occupancy. This means their current prices may not necessarily reflect the immediate market conditions at the time of sale.
Number of Sales
We consider the number of sales as a crucial indicator of market health, demand and supply dynamics, and overall market activity. High sales volumes typically suggest strong demand, which could drive up property prices, while low sales may indicate an oversupply or declining demand, potentially leading to price drops.
June is usually a busy period for real estate activity in the Pikes Peak region, and this year is no exception. The number of sales has increased markedly since the start of the year, but it's still trailing behind June 2022 by 28.63%. According to the buyers we've spoken with, the principal factor behind this decline in sales is rising interest rates. Many potential buyers are priced out of the market and will likely remain so until property prices decrease.
Unfortunately, a decrease in median home prices doesn't appear imminent, primarily due to current market conditions. Many homeowners are reluctant to sell their homes, unwilling to exchange their low-interest rates of 2% and 3% for the higher rates of 6% and 7%.
Based on information from the REALTOR® Services Corp ("RSC"), for the period Jan 1, 2023 through Jul 16, 2023. RSC does not guarantee or is in any way responsible for its accuracy. Data maintained by RSC may not reflect all real estate activity in the market.
This hesitance is contributing to a shortage of housing inventory. The resulting lack of supply is helping to keep prices elevated. While we're observing some price softening in the higher-end market, this is not true for mid-range and lower-priced homes, where prices remain stubbornly high.
Days on Market
The 'Days on Market' (DOM) metric is valuable for assessing real estate market performance. The larger this number, the longer homes typically take to sell. While DOM provides a good overall snapshot of market health, it's particularly useful in evaluating the higher-end market.
Based on information from the REALTOR® Services Corp ("RSC"), for the period Jan 1, 2023 through Jul 16, 2023. RSC does not guarantee or is in any way responsible for its accuracy. Data maintained by RSC may not reflect all real estate activity in the market.
Our average 'Days on Market' (DOM) in Colorado Springs is currently 22 days. While this is typically considered excellent, it represents a slowdown compared to the past few years, which were not a regular market. A glance at the DOM data from the past three years reveals that this is the longest DOM since June 2020, signaling a deceleration in the market's pace.
Months of inventory
The 'Months of Inventory' metric is particularly insightful when assessing market conditions. Traditionally, it's used to distinguish between a buyer's and a seller's market. If inventory lasts under six months, it's a seller's market. If it's around six months, the market is balanced, and over six months indicates a buyer's market. For several years now, Colorado Springs has been a seller's market. The current situation is so pronounced that it raises whether the traditional inventory benchmarks still hold.
Based on information from the REALTOR® Services Corp ("RSC"), for the period Jan 1, 2023 through Jul 16, 2023. RSC does not guarantee or is in any way responsible for its accuracy. Data maintained by RSC may not reflect all real estate activity in the market.
In Conclusion
The Colorado Springs real estate market remains robust, although some may perceive it differently due to the exceptional strength of the market from 2020 through 2022. If we compare it to historical trends, the 2023 market resembles that of 2019, which was widely considered favorable. We'll continue to monitor the market and share updates. If you're interested in receiving our quarterly market updates directly, please subscribe to our newsletter by clicking here.
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