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Colorado Springs' lower home prices lure frustrated Denver buyers

June 14, 2015 Updated: June 14, 2015 at 8:40 am
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A home under construction Sunday, June 7, 2015 at Promontory Point just north of Baptis Road. Photo by Mark Reis, The Gazette

The heat from Denver's red-hot housing market is being felt in the Pikes Peak region.

Soaring prices and an exceptionally tight supply of homes for sale in metro Denver, Parker and Castle Rock are driving some buyers to turn to El Paso County and Colorado Springs, where they can save thousands, get more house for their money and avoid bidding wars, according to several Pikes Peak-area real estate agents and builders.

Sure, it might mean the buyers are taking on a stressful Interstate 25 commute. But they feel the trade-off is worth it.

"They come into our market and most of the time they're getting more house, more land and a lower price - and a lot of time they're the only offer," said Joe Clement, broker-owner of Re/Max Properties in Colorado Springs. "And they don't have to put up with this insanity that's going on up in Denver."

How crazy is Denver's housing market? According to a Denver Metro Association of Realtors report that tracks homebuying and selling in an 11-county area, which includes Douglas County and the towns of Castle Rock and Parker:

- The median sales price - or mid-point - of single-family homes that sold in May was $359,000. In the Colorado Springs area, May's median price was $243,000 - a record high but still $116,000 less than up north, according to Pikes Peak Association of Realtors figures.

- Denver has a metro-area population that's roughly four times larger than Colorado Springs, U.S. Census data show. And yet, the supply of single-family homes listed for sale last month in the 11-county Denver area totaled 4,545 - only 1,656 more than the 2,889 listed for sale in the Pikes Peak region.

- A home listed in the Denver area averaged 27 days on the market last month before it sold. In the Pikes Peak region, homes were on the market an average of 74 days in May before selling, according to the Pikes Peak Association of Realtors.

The number of buyers looking beyond Denver and Castle Rock in favor of the Springs is difficult to pinpoint, according to area builders and real estate agents. And yet, they say, they've talked with enough people who have come through their model homes or called about resales to know it's becoming a trend.

"I don't think I could say great numbers, but there are some," said Randy Deming, CEO of Campbell Homes, a longtime Colorado Springs builder.

One of them is Mike May, a human resources and business consultant with payroll and business services giant ADP who is transferring to Colorado from California. He'll work part time from home but spend at least 25 percent of his job at ADP's office in Aurora.

When he and his wife, Julie, began their hunt for a house early this year, they looked online at prices and availability in areas such as Parker, Centennial and Castle Rock. That's when sticker shock set in.

They had hoped to find a new home, or something only a couple years old, at a cost of $350,000 or less, with enough room to accommodate them and their four children.

"The homes we were looking at, for what we wanted, it seemed like they were closer to $400,000 and north of that," May said. "Particularly, in the Parker area, that one seemed to be quite a bit more expensive. It just seemed like it was more than we were willing to digest."

Eventually, May and his wife looked in the Pikes Peak region, knowing from their time living in an area outside Los Angeles that the farther they looked from the big city, the less expensive the homes would be.

They bought a new five-bedroom, 31/2-bath Campbell home in Meridian Ranch, northeast of Colorado Springs in unincorporated El Paso County. The home - with a finished basement, three-car garage, a quarter-acre lot and a little less than 4,000 square feet - cost $374,000. It was a little more than they originally wanted to pay but still less than they found in the Denver-Castle Rock area and with more features and amenities.

Living in the Colorado Springs area will mean one-hour-plus commutes to the ADP office in Aurora and to Denver International Airport for occasional out-of-state travel, May said. But, he said, he's accustomed to lengthy drives after living in the Los Angeles area.

Besides, May said, they have the house and the price they wanted.

"We're excited," he said. "It's a good-sized home and a decent lot."

Anthony Rael, a real estate agent with Re/Max Alliance in Arvada and chairman of the Denver Metro Association of Realtors' market trends committee, said he hasn't heard of buyers abandoning the Denver area for less expensive homes in the Pikes Peak region.

Still, Rael said he wouldn't be surprised if it's happening.

If Colorado Springs' median home price is $100,000 less than in metro Denver, "that would definitely get somebody's attention," he said. And average and median home prices in the Denver area are climbing each month at double-digit rates.

"Regardless of what part of the country you're in," Rael said, "that could be enough to drive somebody to have to go look somewhere else because it's no longer affordable for them."

Historically, Colorado Springs' north side and northern El Paso County have been home to couples whose jobs took one to Denver and the other to the Springs, said Joe Loidolt, president of Springs-based Classic Homes.

"That's always been happening, but now it seems like we're getting even more (buyers) that are from Denver who are coming down," Loidolt said.

As a result, Classic and Vantage Homes, which partnered in 2011 to purchase the Promontory Pointe new-home subdivision in Monument, have talked about whether they should advertise in Castle Rock to attract more buyers, Loidolt said.

Some people will have to decide whether a less-expensive home will offset a daily commute, Vantage Homes owner George Hess said. However, for some buyers, such a trip wouldn't necessarily be different than what they experience in the Pikes Peak region.

"If you drive from Promontory Pointe to the Denver Tech Center, it's 30 to 40 minutes," Hess said. "It takes me that long to get from Black Forest to downtown Colorado Springs."

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Contact Rich Laden: 636-0228

Twitter: @richladen

Facebook: Rich Laden

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