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Housing demand in Colorado Springs is fast and furious

April 22, 2017 Updated: April 24, 2017 at 1:23 pm
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Sold signs, like this one on a home in Colorado Springs' Old North End, have become more common as a shrinking inventory of homes listed for sale has led to a flurry of deals around the area. RICH LADEN, THE GAZETTE

Something is missing from front lawns across Colorado Springs: for sale signs.

Actually, the signs are out there, but there are far fewer around these days.

With the first quarter of 2017 in the books, the resale side of the Springs-area single-family housing market continues to wrestle with an exceptionally tight supply of homes for sale, some real estate agents say.

The result: Some sellers routinely field multiple offers, especially if their single-family homes are priced in the $200,000 to $400,000 range; buyers must act within hours - or even less - to make an offer or risk losing the home; and both sides are seeing prices soar because of the furious demand and supply problems.

"We are experiencing something that I've never seen in this market before," said Joe Clement, broker-owner of Re/Max Properties and a 40-year real estate veteran.

One of his agents recently listed two homes in the $250,000 to $350,000 price range. Within days, the first home had 34 showings and eight offers, while the second had 40 showings and six offers.

"It's like crazy," Clement said.

Michael Labout, a veteran agent with ERA Shields Real Estate, said basic rules of buying and selling still apply; homes must be in good condition and competitively priced, based on what similar houses have gone for in the surrounding area.

That said, when a quality home comes on the market, it doesn't last for long.

"If it's a property that comes on the market, and the location is good, and the condition is good, you're probably going to be competing with additional offers," Labout said.

Numbers compiled by the Pikes Peak Association of Realtors paint a picture of how tight the market is and how fast homes sell:

- In March, 1,454 homes were listed for sale in the Colorado Springs area or nearly 500 fewer than the same month last year. As the market was recovering from the Great Recession five years ago, almost 3,300 homes were on the market in March 2012 - more than double last month's total. At the height of the recession, more than 5,800 were for sale in March 2008.

- When homes are listed, many go under contract in hours and sell in a matter of weeks. In March, homes spent an average of 36 days on the market before selling, compared with 47 a year earlier. In March 2012, homes languished on the market for an average 96 days before buyers came along.

- Home sales totaled nearly 1,250 in March and 2,955 in the first quarter of this year. Last year, sales totaled 1,172 in March and 2,891 in the first quarter. Five years ago, the totals were 723 and 1,711, respectively.

- The median home price reached record highs of $268,000 in March and $264,350 in the first quarter, based on sales during those periods. The median price has jumped by $79,000 from March 2012 and $69,350 from the first quarter of that year.

What's happening in Colorado Springs is taking place in cities nationwide; there simply aren't enough homes for sale to satisfy the demand.

A stronger economy, more jobs and still affordable mortgage rates are among factors fueling demand. Younger people are buying their first homes, existing owners are moving up and empty nesters are downsizing - and they're all looking.

But the supply problem is a Catch-22. Some owners who might want to sell their homes and move up or down in the market are hesitant to list their property for fear they won't be able to find another house, real estate agents say. So, they remain in their homes and don't add to the supply of housing.

Home inventories traditionally increase as the spring and summer buying and selling seasons kick in; March's inventory, while still low, was the highest monthly total so far this year, Realtors Association figures show.

"Because this is the selling season, the natural selling season, we are seeing more inventory hit the market, but then it's getting sold quickly," said Charles D'Alessio, broker/owner of Synergy Realty Group and Realtors Association board chairman. "The real rub is the $150,000 to $200,000 range. There is just nothing available of any consequence for the consumers."

And despite the demand, homebuilders haven't caught up after years of slowing production during the Great Recession, some agents say.

"Vantage or Keller or Classic or whatever, if they get it started, it's sold before it ever even hits drywall," Labout said of prominent local builders. "There just isn't a lot of spec inventory (homes built on the expectation that buyers will come along later). That's one of the big things we're seeing; we're not seeing enough new construction product."

Besides sellers getting multiple offers on homes, the tight supply of homes leads to fierce competition among buyers, who are learning they might have to submit offers above the asking price. For homes in good condition and well located, "people are pricing them $10,000 to $20,000 over market and they're still getting it," Labout said.

Some buyers who've watched in disappointment as homes have been sold before they can make offers are agreeing to concessions before they even get to the closing table, Clement said.

Some buyers are backing off on home inspection demands - agreeing to require sellers to correct only safety problems and skipping cosmetic flaws, Clement said. And if an appraisal doesn't match the asking price, buyers will pay perhaps $10,000 out of their pocket to make the deal work, he said.

Christine Mantych lives in Denver - another vise grip-like housing market - and looked for homes for five weeks but couldn't find anything in her $200,000 to $240,000 price range.

Two weeks ago, she began looking in the Springs. Mantych works as a service writer and manager for an auto body shop, taking care of customers as they pull in for service; despite facing a commute to Denver for her job, she said she was willing to look here.

Just over a week ago, and working with Labout as her agent, Mantych and her husband, Raul Salazar, saw seven homes. Several were too pricey, Mantych said, and one already had offers. But they found a four-bedroom, two-bath home on the high end of their price range - big enough to accommodate Mantych, her husband, her daughter and two grandkids.

Knowing the competition was stiff for homes below $250,000, and after striking out in Denver, Mantych said she and Raul decided to be aggressive. Within two hours of seeing the home, Labout submitted an offer on their behalf that was $6,000 over the asking price.

Not wanting to take any chances, Labout emailed the purchase contract to Mantych to sign electronically - which she did in the car on her smartphone as she and Raul were driving back to Denver. The offer was accepted, and they're scheduled to close on it May 31.

"It's a very quick market," Mantych said. "You definitely have to move quickly. If you don't make that decision and you're not prepared to make that decision, there's really no point in going out and looking at houses."

Some real estate agents, however, say sellers in higher price ranges - roughly $500,000 and up - are frustrated that their homes aren't seeing the same kind of multiple offers and that they're taking longer to sell.

Even so, Clement said, there's increased activity in the higher-end market. Of homes priced at $1 million or more, 22 sold in the first quarter of this year, he said; during the same period last year, there were seven seven-figure sales.

But when it comes to the busier, less-expensive side of the market, will supply problems improve anytime soon?

D'Alessio said there are no quick fixes.

Local governments and developers need to work hand-in-hand toward creating an environment that would foster more housing - including affordable homes, he said. State lawmakers also need to approve construction defect legislation - designed to encourage housing development by easing developer fears about expensive lawsuits, D'Alessio said.

And while nobody wants higher mortgage rates, an uptick would eventually reduce the number of buyers in the market, Clement said.

"The big cities and the medium-size cities like our size all have the same problem: inventory, inventory, inventory and demand, demand, demand," Clement said. "I'm not cheering for high interest rates or a bump-up, but it could help us in this case. It could put a little damper on the fire. It's not out of control, but it's getting there."

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