Last year was another strong one for the Colorado Springs-area housing market, as single-family home prices soared by nearly 11 percent and sales were the second best on record, according to year-end data from the Pikes Peak Association of Realtors.
Though the pace of price hikes and sales slowed in the second half, the local market should remain healthy heading into the new year and even begin to favor buyers a little more after years of sellers having the upper hand, some real estate agents say.
“It will all kind of even out,” said Donna Major, board chairwoman of the Pikes Peak Association of Realtors and an agent with Re/Max Advantage in Colorado Springs. “It may not be a total sellers market or a total buyers market. I think we’re seeing that with prices kind of stabilized. They’re not jumping up dramatically. That also indicates we’re not heavy on one side or the other.”
The median price — or midpoint — of homes sold in 2018 climbed to $307,798 up 10.7 percent from 2017, the Realtors Association data show. Monthly prices set a record high of $324,750 in June.
But even as prices rose by double-digit percentages during most months of last year, they fell to single-digit gains in the final quarter. In December, the median price of homes sold was $300,855, a 5.6 percent year-over-year increase — the smallest percentage gain in 15 months.
Single-family home sales, meanwhile, totaled 15,576 in 2018 — down nearly 5 percent from last year’s record of 16,337, yet still the area’s second-highest annual total, the Realtors Association figures show. Early in 2018, home sales were on pace to set another record, but slowed beginning in August.
A tight inventory of homes for sale, especially those priced at $350,000 and below, was a major factor in last year’s sales decline, Major said. In December, the supply of homes listed for sale was 1,685, up nearly 25 percent on a year-over-year basis, yet still historically low for the month.
“The lack of inventory has just been our biggest battle,” she said. “We just don’t have that much to sell, so there’s just not that much selling right now.”
Tiffany Lachnidt, a real estate agent with Keller Williams Premier Realty in Colorado Springs, said some buyers just gave up looking because of the tight supply.
At the same time, higher prices — rather than an uptick in mortgage rates — led other buyers to hold off and contributed to the softening of home sales, Lachnidt said.
“Most of the people we talk to that are jumping back from the market have absolutely no idea what (mortgage) rates are doing,” Lachnidt said. More than anything, she said, buyers “have kind of said, ‘enough is enough. We can’t afford what is out there.’”
Many people wound up suffering from “buyer fatigue” as the year went on, Major said. They grew weary of competing for homes — becoming one of several bidders on a house and then losing out as sellers held out for the highest price, she said.
“If things are overpriced, then they’re just not selling,” Major said.
“Buyers, I think, are wising up and not willing to overpay for a house. They’re willing to wait.”
But Major and Lachnidt expect inventory to increase in 2019, especially later in the year.
As that happens, buyers will have more choices and price hikes should stabilize. In fact, Lachnidt said she expects appreciation rates of just 1 percent to 3 percent this year.
“The people that live here...won’t be able to sustain another 10 percent annual increase like we’ve had the last couple of years,” Lachnidt said. “It’s just pricing them out of the market, which is one of the reasons we’ve had some of that buyer falloff. People are just priced out. .”
A strong local economy, more jobs, continued population growth and mortgage rates that remain low — averaging 4.51 percent nationally last week for 30-year, fixed-rate loans — should keep demand and home sales strong in 2019, Major and Lachnidt said.
But the market will be more even-keeled than in the past few years, they said.
“We’re moving into a market where sellers have to have the integrity that they should have — sell a property in good condition at a fair price and they can’t just have a bidding war push the price above what the house should really be selling for in the condition it shouldn’t be sold at,” Lachnidt said.
“We’ve got to reset the consumer expectations that it just is not a whirlwind anymore, but it’s still a reasonably excellent time to be moving in real estate.”