Summer isn't just about barbecues and ballgames; it's also about buying and selling.
Colorado Springs' hot housing market, which began heating up five years ago, is poised for another summer season of frenetic activity as first-time buyers scout for homes and longtime owners look to move up or downsize, local real estate agents say.
Buyers will find stiff competition because of a historically low supply of homes for sale. Sellers, meanwhile, stand a good chance of getting top dollar for their properties.
And with a strong economy, steady population growth, more employers coming to town (including In-N-Out Burger and Amazon), new and expanded hospitals (Children's Hospital Colorado, Memorial Hospital North and St. Francis Medical Center) and additional tourism venues (such as the U.S. Olympic Museum), Colorado Springs' housing market should remain busy beyond the summer.
"Our city is in for a really good run, unless something catastrophic happens in the country or interest rates really change or something crazy happens nationally that affects us," said Joe Clement, broker/owner of Re/Max Properties in Colorado Springs. "Our city is positioned for great things in the future."
For the present, however, here are some things buyers and sellers should be prepared for as they venture out into the Springs-area housing market:
• Inventory: A shortage of homes means buyers must be flexible.
In April, just shy of 1,600 homes were for sale in the Colorado Springs area, according to a Pikes Peak Association of Realtors report. Even though more homes typically come on the market as the weather gets warmer, summer inventories that typically exceeded 4,000 a month in pre-Great Recession years haven't topped 3,000 for any month in nearly four years, association records show.
With fewer listings, buyers will have plenty of company as they vie for homes, especially if they're seeking houses in the desirable $350,000-and-under price range. Sellers often receive multiple offers on the most sought-after homes.
As a result, buyers should be ready to work with sellers, while positioning themselves to move at lightning speed when the right home comes along.
Meeting a seller's price is important, but sometimes price doesn't always win the day, said Bruce Betts, broker/owner of Re/Max Advantage in Colorado Springs. For example, a buyer should be open to closing the home sale on a certain day that's requested by the seller, while also giving the seller extra time to occupy the house even after the sale has been completed, he said.
A buyer also might want the seller to leave behind a washer, dryer, hot tub or other item, Betts said. But if the seller wants to take it along, the buyer shouldn't quibble, he said.
"One of the most important things a buyer's agent can do is reach out to the listing agent or selling agent and ask, 'What is important to the seller?'" Betts said. "Is there a certain date that's important to them? Are there certain things they want to either leave behind or take with them that are important? Is possession (by the seller) for a few days after closing important?
"That can be very attractive to a seller, particularly if they've had an experience in the past where a deal has fallen through at the last minute. You don't want to be moved out of your house and find out that your deal fell through."
Because of the tight supply of available homes, buyers who can qualify should have a loan approved and in hand — not just pre-approved — when they begin house hunting, Clement said.
"It starts with the real estate professional," Clement said. "Get their buyer totally approved. I don't mean a pre-qualification, I mean they are approved. The credit has been run. All the checking and everything has been done. The only thing they need to do is find the house and, of course, the appraisal part would have to be done after the house is found.
"If they can get in the position where they're like a cash buyer," he said, "they're going to be ready to go no matter what price range, and they're going to be ahead of the majority of people."
• Price: What goes up doesn't necessarily come down.
The median price, or midpoint, of all home prices rose to $328,000 in April, eclipsing the previous record of $324,750 set in June 2018, according to Pikes Peak Association of Realtors data. Over a five-year span from April 2015 to April 2019, home prices are up nearly 40%.
Sellers are getting their asking prices — and sometimes more, especially if they've listed a lower-priced home that's in demand. Buyers, in turn, must swallow hard and frequently bid more than what sellers are seeking in those price ranges.
"We're going to have to deal with it, even on day one," said Harry Salzman, a real estate agent with ERA Shields Real Estate and Salzman Real Estate Services. "Let's make our best offer. We'll take a look at list price. ... And typically, we need to write a higher offer than list price when we're absolutely under $300,000."
Even as lower-priced homes are in demand, asking prices still must reflect the value of the property — based on factors such as location, condition and comparable sales — and sellers can't be unrealistic, Betts said.
"Regardless of market conditions, the buyers will determine the value," he said. "They'll determine what they're willing to pay. Say you have a property on the market at $350,000 and the buyers are just walking around it and they're not interested. They've made the determination that based on that property, they're not interested.
"Other properties might come on the market at $350,000 and buyers are all over it and you get multiple offers and you end up getting more than you're asking," Betts said. "Pricing is still, and always will be, important when you're the seller. You have to price it correctly. Even in a hot market."
Homes also must be in good condition in order to fetch a top price, Clement said. New carpeting or flooring, kitchen and bathroom upgrades and other improvements give a home an updated look and feel, he said. Those investments especially pay off in a hot market and help a home stand out when compared to a tired-looking property.
"We usually don't see multiple offers on something that needs a ton of work, unless it's a giveaway price," Clement said.
• Buyers vs. sellers: Who has the advantage?
Sellers should remember the market still is tilted in their favor and that they control the home-selling process, Clement said. An offer should be to their liking, and they can insist that a deal be subject to them finding another home within a certain number of days or weeks, he said.
"It's their house," Clement said. "When an offer comes in, they don't have to accept it."
• Buying new: Plan ahead — and prepare for rising prices.
Randy Deming, CEO of longtime Springs builder Campbell Homes, says he doesn't like surprises — and doesn't believe homebuyers should be surprised, either.
Buyers looking to purchase a new home should expect as much information as possible from their builder about when their home will be completed and when they can move in.
"How do people plan if they don't know when their house is going to be ready?" Deming said. "They're selling their home, they're in an apartment, they're in a lease. All the situations our buyers are in are different. The only way we'll know what those (situations) are is if we have a full discussion with our customers up front so they know what to expect from us."
For buyers considering a new home, the best time to purchase usually is now, he said.
"All of the components that go into a home are going up on a regular basis," Deming said. "That's why we've always tried to say 'buy now,' because a year from now, you're going to be paying a heck of a lot more. That covers the gamut from our permit fees, our construction costs, our lot costs — every component that goes into a home. I don't know of anything that's getting cheaper today.
• Mortgage rates: Still historically low.
Thirty-year, fixed-rated loans averaged 4.07% nationwide last week, according to mortgage buyer Freddie Mac. A year ago, rates for the same type of loan averaged 4.61%.
"Even before they trickled back down a little bit, they were very, very attractive," Betts said.
Lower rates make home purchases more attainable, but they also encourage buyers to act now for fear that rates will begin to climb, Betts said. Home buying that seemed to slow somewhat in early 2019 has picked up and the upswing possibly is tied to concerns about rising rates, he said.
• Hot areas?: Anywhere prices are attractive.
It's not geography that is determining which neighborhoods are more popular than others; it's price, Clement said. Homes priced around the $300,000 mark, and even some as high as $500,000, are selling wherever they can be found, he said.
"Downtown or Briargate, it doesn't make any difference," Clement said. "If the house in that price range and it's sharp, it's been freshened a little bit or a lot, those are the ones that are selling."
• Poised for a purchase?: Consider costs, not just price.
Buyers should look beyond the asking price of a home and consider factors such as monthly costs, the mortgage tax deduction and how much their property value will appreciate over time, Salzman said. When they do, they'll find that homebuying makes sense, even if they're worried about sticker shock, he said.
"All of this absolutely offsets what typical people only see as the price," Salzman said. "They need to look at what's the real cost of housing, and what do I get for it."