The Colorado Springs housing market for 2022 just got worse now that interest rates have gone up. Now that prices are overinflated, we're adding a few hundred dollars more per month on that monthly mortgage payment. The frenzy might be over.
Colorado Springs Foreclosure New Starts
The graph above goes over foreclosure new starts going back to the last five years, so back to 2017. And when you look at the stats in 2017, back when we had a little bit more of a healthier market. As far as being on the market, I remember when people were saying that we weren't able to ask for concessions back in 2017. I was floored, like, you know, I was offended by that. That was before appraisal gaps and before people offering tens of thousands over the list price to be competitive. I would say a most normal market was probably before 2016. But the graph above is from the El Paso County Assessor's-all public information, you can pull it up yourself.
The highest number in 2017 was108 for new starts. In April of this year we had 119; a considerable jump when comparing to last year. But, that was because we had the forbearance program, the government stepped in and helped out with those mortgages to help people from going into default. People had all this time shortly after the pandemic to kind of, buy time, take their payments and put them on hold or wrap them on the back end of the loan. With some banks, you didn't incur additional interest. It was a nice thing to take advantage of - the 18 months of no mortgage payments.
Will Housing Prices go Down in Colorado Springs?
Foreclosures could take up to about a year to come to fruition, this could be the start of something really bad, a lot of houses are going to come back on the market and that could reduce the prices, but then with the interest rates going up another 2% could cause a problem.
Is Housing Affordable in Colorado Springs?
What about your middle-class buyers, people that can no longer afford a house. And so that's kind of the new dilemma that has come into the picture. You know, with that middle-class situation, the monthly payments are going to be way too high, and the housing prices are already super inflated.
In this graph, you're going to see the average days on market. We've got pretty had ten days on the market on average back in May of 2021. We went all the way down to seven in July. Of course, it's a popular month to be selling your house. Lots of buyers come out after school is out. They want to move in the summertime before August when kids go back to school, and then we shoot up longer days on market over the months from there peaking at 14 in December.
That's why they say the best time to buy is over the holidays. You're going to get the best deal when you're buying a house during these months because most people don't want to move. First of all, it's wintertime. Second, no one wants to move over the holidays. I bought my house on Christmas one time and walked into 20k in equity by closing. As January hits, you get those days a little bit longer and then in May of this year 2022 we're at 11 days on market.
Overvalued Homes in Colorado.
I wanted to share this video of the day of reckoning coming.
This was an article written by the Denver Post, talking about the over inflation, specifically Denver home prices being way higher than they would be with the absence of the pandemic.
That has escalated the rising house prices, mass exoduses, leaving these major cities wanting to go somewhere that wasn't as strict as some of these larger cities such as California. Denver ranks 37 out of the 100 largest metros in April. Home values soaring just over 30.5% of what would have been expected based on long-term trends.
This would not have occurred, had the pandemic not hit creating this wave of the expected value for Denver based on trends and Zillow. Now, we know that Zillow went under with their i-buyer program because of their faulty algorithms. So, I take this with a grain of salt. But more importantly, is the Colorado Springs gap, which was reported at 45.9%, depending on which report you read. I go by the Pikes Peak Association of Realtors' data.
Nonetheless, that's a huge difference. That's almost double inflation. So what Denver Post is saying is home values tend to cycle between periods of over-inflation and undervaluation. So you can read this article in-depth, but just saying that we have a very high premium here in Colorado Springs.
I don't know how much it's going to change. I'm not an economist, I'm a real estate agent, and I use the data that I see, and share that with you. As I've said before, home buying has been tough. Now with interest rates, potential foreclosures coming on the market, it's making a lot of agents nervous with that higher monthly payment for buyers.
Colorado Springs Housing Market Summary
Here is the monthly summary report. This is where we get my average sales price. If you follow me on Instagram, I'm always posting the average home price, but let's look at the median home price.
If you're looking for a house, that's probably where you're going to land to get your average three-bedroom, two-bath home. That median price went up about half a percent. We're down on the average sales price, comparing May of 2022 to April of 2022. But still, year over year, we're looking at 13.2% increase.
So I will be staying on top of these numbers so we can see whether we're heading for a crash.
Homes For Sale from in Colorado Springs from May 2021 to May 2022
If you look back at the history, we didn't have a ton of homes available for sale in Colorado Springs last year in May. 1,184 was a good month for us. 1,360 in May and people are worried about that. Back in 2008, the new number of listings was 5,000 to 6,000, and even over 7,000 at one point. Even if we hit 2,000 new homes for sale on the market - to me, that is the market balancing. That's not a crash to me.
Have questions about the housing market? Feel free to reach out.
IRIS BURTON | REALTOR® | COLORADO SPRINGS
PROSPERITY GROUP BY EXP REALTY
3361 NORTH ACADEMY BLVD
COLORADO SPRINGS, CO 80917