Colorado Springs’ housing market will remain strong in 2019, but should strike a fairer balance between buyers and sellers, one local real estate expert says.
Exceptionally tight inventories gave sellers the upper hand in 2017 and early 2018 — allowing them to select from multiple offers that often exceeded their asking price, especially if they listed a home for $300,000 and below, said Bruce Betts, broker/owner of Re/Max Advantage in the Springs.
The fierce competition for limited numbers of homes in lower price ranges left many buyers disappointed and frustrated when their bids fell short, he said.
The market, however, is poised for improvement. Prices still are headed up this year, perhaps by 5 percent, Betts said. The supply of homes also should rise in 2019, which will give buyers more choices and reduce — though not eliminate — the number of multiple offers for desirable properties.
“Multiple offers under $300,000, we’re going to continue to see that,” Betts said. “It’s unlikely we’ll see 23 offers. Now, we might see four or five. But we’ll still see it.”
Betts’ forecast came as part of the 28th annual economic forecast breakfast hosted by the Institute of Real Estate Management’s local chapter, held Thursday at the downtown Antlers hotel. About 200 people attended.
His outlook was an about-face from last year, when he described the lack of homes for sale as an “inventory crisis.” In February 2018, the supply of homes for sale in the Pikes Peak region plunged to a record low of 1,229.
A lack of homes for sale — especially in lower price ranges — contributed to a decline in sales in 2018, while some fatigued buyers dropped out of the market after tiring of fighting for homes, Betts said. Local single-family home sales fell 4.7 percent to 15,576 in 2018, down from a record high of 16,337 a year earlier, according to Pikes Peak Association of Realtors data.
But in 2019, the supply of homes listed for sale is likely to increase because sellers want to take advantage of rising prices and are more confident they’ll find a replacement house to buy, Betts said. Other sellers will be more willing to list their homes for fear that prices might fall and that higher mortgage rates will slow demand, he said.
“It’s still a very strong market,” Betts said. “It’s what we would like to call a more balanced market. This gives sellers more opportunity to find a replacement. It gives buyers more options for things that they can look at, and they can buy, make an offer, negotiate, come to a reasonable agreement.”
Springs-area homes priced at $300,000 and under will remain most in demand this year, and homes priced as high as $500,000 also will draw strong interest, he said.
Based on listings last week, and the pace of home sales over the last three months, there was less than a month’s supply of homes available priced $150,000 to $300,000, Betts said. Supplies were more plentiful for homes in higher price ranges; there was a 3.7-month inventory of homes priced $450,000 to $500,000.
Demand, however, will be weaker for luxury homes, Betts said. Currently, for example, there’s a 14-month supply of homes for sale priced $900,000 to $1 million.
Attendees at Thursday’s forecast breakfast also heard from industry experts on the state of the commercial real estate and apartment markets.
Broker Caleb David of CameronButcher Commercial Real Estate in Colorado Springs said the retail and industrial segments of the local commercial market will be especially strong in 2019, with rising rents and falling vacancy rates. An improved economy is driving the demand for industrial and retail space, he said.
“The quality of life here is hard to beat,” David said. “We’re no longer just military, we’re seeing the health care, we’re seeing the growth even in manufacturing and really attracting a lot of people to our city.”
The local office market, however, remains somewhat soft, and office vacancies will rise in 2019, while rents will remain steady, David said.
Apartment rents, meanwhile, will rise in 2019, albeit at a slower pace than the last few years when rents rose by almost 8 percent in 2016 and 6 percent in 2017, said brokers Stuart Sloat and Adam Rezner of Olive Real Estate Group in the Springs.
“You can’t have 8 percent rent growth year after year after year, if wages aren’t keeping up, and they have not been” Rezner said.
But the apartment market remains healthy; the demand for multifamily living continues to be driven by an improved economy and solid job growth, Sloat and Rezner said.
The partial federal government shutdown, however, could hurt one segment of the apartment market if it continues, they said.
Owners of apartment buildings who’ve contracted with the federal Department of Housing and Urban Development to provide Section 8 housing for low-income residents aren’t getting their contracts renewed because of HUD employee furloughs, Sloat said. Apartment owners face a loss of income as a result and could be forced to cover operating costs on their own, which some owners won’t be able to afford, he said.