The resale side of the Colorado Springs-area housing market has picked up in 2020 where it left off last year: record high prices and strong sales that are great for sellers, but a sharp drop in the supply of homes that continues to torment buyers.
The median price of single-family homes that sold in January soared to $336,795, an 11% year-over-year jump and surpassing the previous record high of $335,000 set in October, according to the latest Pikes Peak Association of Realtors report.
It was the first double-digit percentage gain in median prices since an 11.2% increase in September 2018.
The Realtors Association report also showed:
— January home sales totaled 916, a slight, 1.6% increase over the same month last year. Sales now have increased for seven straight months on a year-over-year basis.
— Homes continued to sell briskly, averaging just 30 days on the market before selling. In January 2019, homes averaged 46 days before being purchased.
— The inventory of homes for sale plunged to 1,190 in January, the lowest monthly total on record and down 26.4% from the same month last year. Year-over-year inventories have dropped for nine straight months.
— January's listings were equal to a 1.3-month supply, based on the number of homes for sale and the pace at which they've sold over the past few months.
While prices jumped again in January, low mortgage rates are making it possible for many buyers to afford a home, said Harry Salzman of Salzman Real Estate Services and ERA Shields Real Estate in Colorado Springs.
On Thursday, 30-year, fixed-rate mortgages averaged 3.45% nationwide, down from last week's 3.51% and the lowest rate in three years, according to mortgage buyer Freddie Mac.
"If you take a look at your monthly payment, even though prices have gone up ... factor in the monthly payment, and the monthly payment is absolutely down," Salzman said.
Buyers, however, first must find a home.
The demand for housing, fueled by low unemployment and a strong local economy, remains strong, but inventories have stayed tight as many homeowners don't want to sell for fear they won't find another house to buy, real estate agents have said.
That's left many buyers frustrated when they search for weeks and even months, but can't find a house. Or, when they do, they lose out to another buyer.
"We have the same demand, but we don't have the supply of resales," Salzman said.
The supply and demand imbalance — a nationwide problem, not just in Colorado Springs — has driven prices higher, agents have said. Not only do sellers reap top dollar, but they sometimes field multiple offers, especially if their home is in the hard-to-find $300,000 price range.
The tight supply of resales benefits builders, too, Salzman said. When buyers can't find an existing home, they often turn to new models. In January, single-family building permits totaled 329 in El Paso County, more than twice as many as the same month a year earlier, a Pikes Peak Regional Building Department report showed this week.
"We're definitely strong," Salzman said of the local housing market. "And we're strong because the market demand is absolutely there."
Salzman expects the housing market to remain strong in 2020; inventory traditionally increases between April and June, and a large percentage of annual sales takes place in that period, he said.
Until supplies pick up, however, Salzman suggested that some buyers shouldn't wait for the perfect home and instead should consider lowering their sights slightly. If a home has outdated kitchen cabinets or appliances, for example, maybe buy anyway and consider a remodeling project, Salzman said.
"People need to amend their desire based upon the market conditions," he said. "When you're going out to shop for a house, you know what your goals are. You know what you'd like. You know what your budget is.
"But in this market, because inventory is down, you might not get close to 100% of what you really want," Salzman said. "Therefore, you need to take a closer look at what's here, and, oh by the way, it's OK to do that and factor in some remodeling."
