Buying a Colorado Springs-area home?
Look under those sofa cushions, call that wealthy family member or play the lottery because you're going to need extra cash — lots of it.
The median price of single-family and patio homes that were sold in May climbed to a record $432,095 — a whopping $82,095 or 23.5% higher, than the median sales price of $350,000 during the same month last year, a Pikes Peak Association of Realtors market trends report shows.
May's median marked the fourth straight month of record high prices, according to Realtors Association reports. Those reports capture data from transactions handled by local real estate agents; most of their sales took place in El Paso County, with some in Teller and other Front Range counties.
The latest record high comes just over a month after local business leaders said soaring prices have created a "housing crisis" that could threaten the local economy; businesses can't grow or would be discouraged from locating in the Springs if their employees can't afford to live here, they said.
But don't expect the escalation in local prices to level off anytime soon.
The demand for homes — fueled, in part, by historically low mortgage rates — remains red hot, while the supply of properties for sale continues to wallow near record lows, the Realtors Association report shows.
Several cities are wrestling with similar supply-and-demand issues that have propelled home prices nationwide. For its part, Colorado Springs' population also is booming and the area is seeing an influx of newcomers who have been attracted by the city's quality of life, real estate agents and homebuilders have said.
"I don't personally see that pricing is going to be coming down anytime in the near future," said Dean Weissman, a local real estate agent and partner/owner of The Platinum Group Realtors in Colorado Springs.
"The demand is very, very heavy," he said. "Colorado as a whole has become a hotspot outside of the coastal cities. And so a lot of what we're seeing is a lot of movement from outside of Colorado coming into Colorado."
According to the latest Realtors Association report and Gazette historical data:
• Along with the soaring median price, the average price of single-family and patio homes sold in May rose to a record high of $489,376, which was nearly $96,000 or 24.4% higher on a year-over-year basis. The average, however, can be skewed by a few very high or very low sales; the median, which is the midpoint of all prices, is considered by economists and real estate industry members as a more accurate barometer of housing costs.
• The 24.4% spike in year-over-year average prices in May and the 23.5% jump in the median price were the largest percentage increases in nearly 30 years.
• Home sales in May totaled 1,553, up 37.2% from the same month in 2020. Through the first five months of the year, sales totaled 6,333 or 14.8% ahead of the same period in 2020.
• Properties sold on average in 10 days after hitting the market, though real estate agents say many sell in much less time and sometimes on the same day they're listed. In May 2020, homes were on the market for an average of 21 days before selling.
• The supply of homes for sale at the end of May was just 582 or the equivalent of less than a half-month's supply, based on the pace of recent sales and the available inventory. May's supply rose slightly from the 557 homes for sale at the end of April, yet was down just over 62% from the 1,546 homes listed at the end of May 2020.
The current pace of Springs-area home sales is on track to reach a record high, Weissman said. That indicates there isn't necessarily a shortage of homes for purchase, he said; instead, properties that hit the market are snatched up so quickly that the supply can't build up to traditional levels, he said.
Five years ago in May 2016, the supply of homes for sale was nearly 2,300; in pre-Great Recession years, May inventories sometimes topped 3,000 and even 4,000.
"They're just moving so fast that it makes it seem like there's no inventory," Weissman said of home listings. "There is inventory. It just sells very, very quickly, within two to three days."
Like the continued increase in prices, Weissman said he doesn't see an abrupt end to the supply-and-demand problem plaguing the area.
The tight supply, combined with the furious demand, has led to many sellers receiving multiple offers for their homes — usually for several thousand dollars over their asking price. Buyers, in turn, engage in bidding wars in which there's only one winner and several frustrated and disappointed losers, real estate agents have said.
"Right now, the inventory levels are so low that we'd really have to see a massive increase in inventory in order for the sellers to not be realizing the robust activity that they're getting," he said.
A significant increase in mortgage rates could curtail demand, and therefore slow the rapid rise in prices, Weissman said. This week, 30-year, fixed-rate loans averaged 2.99% nationally, according to mortgage buyer Freddie Mac.
"If rates would move a point, a point and a half, two points, then I think it will create a slowdown, which could create some excess inventory and help balance the market," he said. "But I really don't feel that we'll see prices come down."