Not even the economic fallout from the COVID-19 pandemic has derailed the Pikes Peak region's robust housing market.
In the first half of the year, home prices set more record highs; houses continued to sell briskly on the resale side of the market; and home construction exceeded last year's pace.
Demand, driven in part by historically low mortgage rates, showed no signs of slowing. That's in spite of fears a few months ago by some real estate industry members that temporary and permanent closures of restaurants, hotels and other businesses, coupled with furloughs and layoffs of their workers, could stall the market.
"It's crazy," said Joe Clement, broker-owner of Re/Max Properties in Colorado Springs. "Even this pandemic did not stop things in its tracks. It just keeps going."
A hot market that's great for sellers, however, has its downside for buyers.
Colorado Springs continues to struggle with a shortage of single-family homes for sale, a problem the community has wrestled with over the last few years and one that cities nationwide also have experienced.
The lack of supply, combined with the strong demand, has sent housing costs soaring and priced some buyers out of the market.
In other cases, buyers find themselves in bidding wars, especially if they're searching for a home among the dwindling supply of properties priced at $300,000 or less. They sometimes wind up offering thousands of dollars above the asking price, while sellers get to choose from multiple bids.
There's only one winner, however, and many buyers walk away disillusioned.
"When you look at our average price of being over $400,000, where, what two years ago it was $300,000, that prices a ton of people out of the market," said Eddie Hurt, a real estate agent with ERA Shields Real Estate in Colorado Springs. "A lot of people don't realize those people aren't buying houses because they can't afford a house anymore, so they go and rent. But because there's so much demand, those people kind of get forgotten in the numbers."
The average price of homes sold during June on the resale side of the market climbed to a record high of $401,980, according to Pikes Peak Association of Realtors figures. It was the first time the average had hit $400,000.
The average price, however, can be skewed by a few very high or very low sales.
The median, which is the midpoint of all sales prices for homes sold over a given time and considered by economists as a more accurate market barometer, tied a record high of $360,000 in June, Realtors Association figures show.
As those prices climb, $300,000-and-under homes now make up a smaller percentage of properties sold.
In June, the Pikes Peak Association of Realtors tallied 1,684 home sales as reported by its members, with most of those properties selling in El Paso County and the remainder in 16 Front Range counties.
Of June home sales in El Paso County, 19.4% sold for $299,999 or less, Realtors Association figures show. Five years earlier, in June 2015, homes that sold for $299,999 or less accounted for two-thirds — 66.1% — of that month's total number of sales in El Paso County.
Hurt said he's had three buyers looking for homes around $300,000, but only one has been able to sign a purchase contract and close on their property.
"If they really, really want to buy a house, we've advised you're probably going to have to look for a $250,000 house and know if it's a good house, and it's worth $250,000, you're probably going to have to pay more than that to get it," Hurt said. "Every house we've looked at and written offers on at $300,000 goes way beyond their ceiling of $300,000."
Demand isn't just limited to lower-priced properties. Real estate agent Rick Van Wieren of Re/Max Properties said he represented a client a few weeks ago who was selling a home with an asking price of $780,000. On the first weekend, the seller received three offers, he said.
"Even in the more expensive homes, we're seeing that kind of demand," Van Wieren said.
Credit mortgage rates for helping to fuel the demand.
On July 16, 30-year, fixed-rate loans dropped to a nationwide average of 2.98%, a 50-year low, according to mortgage buyer Freddie Mac. Rates rose a week later, but still averaged 3.01% for a long-term mortgage. During the same week five years ago, rates were a full percentage point higher at 4.04%.
Those "insanely low" rates aren't just attracting traditional owner-occupants, Hurt said. Investors, too, have jumped back into the market to buy homes, he said. Investors typically will rent a home or make repairs and resell it for a higher price — known as fixing and flipping.
Low rates also help some buyers stay in the market even as prices soars, said Harry Salzman of Salzman Real Estate Services and ERA Shields.
In many cases, shrinking mortgage rates allow buyers to lower their monthly payments, which offsets the rising cost of a home, Salzman said. Homeowners also are eligible for a tax break when they deduct their mortgage interest, while the value of their property typically appreciates over the long haul — more reasons that houses continue to sell, he said.
In addition to the lure of low mortgage rates, Colorado Springs continues to be a desirable place to live and draws newcomers who are attracted by its quality of life, Hurt said.
"This whole pandemic has actually made Colorado and the Front Range even more attractive to people, especially on the coasts," Hurt said. "Because if we're going to get locked down, at least you know we have nice big yards. We probably can go to our big parks and our open space. Even if that got shut down, at least you have a yard where you can walk out and move around a little bit as opposed to, like, New York City and some of those cities."
Despite job losses in tourism and hospitality, other industries such as health care and tech continue to employ people who are buying homes, said Clement, of Re/Max Properties.
And after buying and selling was disrupted during April, when the state temporarily banned open houses and restricted showings in an effort to slow the spread of the coronavirus, the market saw pent-up demand on the part of buyers, Van Wieren said.
Some of those buyers still are coming from the Denver area in search of cheaper housing, he added. For the last several years, skyrocketing prices in Denver drove some residents there to buy in northern Colorado Springs and northern El Paso County. With Denver's median price at $480,000 in June, the Springs still has an advantage with its prices, Van Wieren said.
The market, though, continues to be dogged by a shortage of homes, real estate agents say.
Some homeowners delay putting their properties on the market for fear they won't be able to find another house they can afford. Others, because of the pandemic, don't want buyers coming through their homes for fear of spreading the coronavirus and therefore have remained on the sidelines that put their home on the market.
In June, when the buying and selling season typically is in full swing, the supply of Springs-area homes for sale at all price ranges totaled 1,479, according to the Pikes Peak Association of Realtors.
It was the fewest number of listings for any June for the last quarter century, according to records compiled by The Gazette. And based on the pace of recent sales, the number of homes for sale in June represents less than a one-month supply, Realtors Association figures show.
"It's not a sustainable number," said Van Wieren said. "These are just ridiculously low inventory numbers."
While buyers compete for available homes, the shortage is a boon for sellers, especially if they have a property at or near the $300,000 sweet spot.
"When we list something for $350,000 or $320,000 or whatever it might be, there's like a ton of showings in the first three or four days, and usually several offers. It's insane," said Clement, of Re/Max Properties. "When we list something like that, we tell people be prepared, because they're going to come heavy and hopefully we'll get some multiple offers and we can get you more than the asking price. And a lot of times, that's exactly what happens."
The shortage of homes on the resale side of the market, along with low mortgage rates, has led many buyers to purchase new homes, and builders have been busy as result.
In the first half of 2020, builders pulled nearly 2,100 permits for the construction of single-family homes in El Paso County, a 17.4% jump over the same period in 2019.
Nationwide, builders also are regaining their momentum. The National Association of Home Builders/Wells Fargo Housing Market Index, which gauges builder confidence, jumped in July to a level not seen since before the pandemic took hold in March, according to the association.
"Builders aren't building houses just for the sake of having empty houses on the lots," said Carrie Bartow, board president of the Housing & Building Association of Colorado Springs. "They're building them because they're selling. People are still able to qualify for mortgages."
For now, there are no signs that demand will slow down, Van Wieren said. Pending home sales in June on the resale side of the market — deals that are under contract, but haven't yet closed — totaled 3,040, up from the same month a year earlier when pending sales tallied, 2,559.
And if the economy improves and some people go back to work, homes will continue to be in demand, he said.
Salzman doesn't expect much change in the market, either, and buyers need to be prepared.
"Interest rates are at their lowest level since records began," Salzman said. "So you've just got to be ready to make a decision quick. ... Whether you're an individual buyer, borrower, or you've got two or three kids, you want to have a certain goal of square footage of the home. And when that hits the market, you get a call from a Realtor, you'd better see it yesterday. Because you don't have a choice in inventory."