Colorado Springs had one of the nation’s biggest rises in home prices during last year’s fourth quarter, and 2018 promises more of the same, local experts say.
"It’s not stopping," said Harry Salzman, a broker with ERA Shields Real Estate and Salzman Real Estate Services, of the area’s red-hot housing market.
Colorado Springs’ fourth quarter median home price of $285,800 rose 10.8 percent on a year-over-year basis – tying for the 16th largest percentage gain out of 177 metro areas, says a report Tuesday by the National Association of Realtors. The median price was a record high; a report last week by the Pikes Peak Association of Realtors pegged the area’s median in January at $295,000, also a record high by the local group’s figures.
The national report also showed:
– Colorado Springs’ fourth-quarter price hike more than doubled the nation’s 5.3 percent increase. The nationwide median home price was $247,800.
– The Springs also topped Boulder’s 10.4 percent and Denver-Aurora-Lakewood’s 8.6 percent, which were the other Colorado metro areas in the report. Boulder’s median price was $546,400; it was $414,400 in Denver-Aurora-Lakewood.
– San Jose-Sunnyvale-Santa Clara in northern California had the biggest percentage increase in the fourth quarter with 26.4 percent; the area also had the most expensive housing in the report, with a median home price of $1.27 million. An 11.6 percent decline in Glen Falls, N.Y., was the country’s biggest percentage drop, where the median home price was $157,300.
– Home prices jumped to record highs in almost two-thirds of U.S. cities in the association’s report. In addition to the San Jose area, the other most expensive housing markets in the fourth quarter were San Francisco-Oakland-Hayward, Calif., $920,000; Anaheim-Santa Ana-Irvine, Calif., $785,000; urban Honolulu, $760,600; and San Diego-Carlsbad, Calif., $610,000.
– The five lowest-cost metro areas were Cumberland, Md., $84,600; Youngstown-Warren-Boardman, Ohio, $90,200; Decatur, Ill., $100,000; Binghamton, N.Y., $108,900; and Wichita Falls, Texas, $110,400.
Colorado Springs’ historically low supply of homes for sale – similar to what’s happening in the rest of the country – continues to be a driving force in area prices.
At the height of the Great Recession and the years after, the local inventory of homes for sale routinely topped 4,000 to 6,000 a month – and even exceeded 7,000 a couple of months.
As the economy recovered, demand surged and interest rates plunged, which has drained the supply of homes for sale.
In December, listings totaled only 1,350, according to the Pikes Peak Association of Realtors. That number dropped to 1,236 in January. On Tuesday, when Salzman checked the real-time supply, only 895 homes were listed for sale a day earlier.
Why so few homes?
More people are moving into the area and finding jobs in an improved economy – and many are snapping up available homes, Salzman said. Homes priced at $300,000 and under are particularly in demand, although sales of higher-end homes also are on the rise.
Another factor: Many owners are staying put because they like their homes and neighborhoods. Instead of moving and putting their home up for sale, they’re remodeling and expanding, Salzman said.
"People are spending a lot of money on their homes and enjoying them because they plan to be there longer," he said.
The tight supply isn’t the only factor. Builders can only construct so many homes to help pad the supply, Salzman said. Rising building material costs and labor shortages also have driven up new home prices, which create a ripple effect for the resale market, he said.
Even higher mortgage rates aren’t likely to slow the demand, he added. Homeownership remains attractive because of price appreciation, and buyers in most price ranges still have the tax advantage of deducting mortgage interest, Salzman said.
With the strength of the housing market and the local economy, home values are expected to rise 7 percent to 8 percent in 2018, he added.
"Our local economy is ultra positive," Salzman said. "We can’t shoot a hole in anything. We’re fortunate, we’re lucky. Job growth is absolutely here. People want to live here. It’s all the basics of economics. And so, what’s that mean to the homeowner? Today, the appreciation’s going to continue."
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