It seems that all across the Front Range of Colorado it is a seller’s market no matter where you look. For people wishing to buy an affordable home at around $250,000 – $300,000, there is a major shortage and tons of competition when one does come on the market. In fact, sellers are getting over their asking price because of bidding wars.
Colorado Springs, CO, home of the Olympic Training Center, Pikes Peak, and Garden of the Gods, is no different. Based on a recent report by U.S. World & News, it ranks #5 in the U.S. as “Best Places to Live in America” for factors such as affordable housing, access to well-paying jobs, a low cost of living, good schools, and quality healthcare, with nearby neighbor Denver ranking #1. This kind of status perpetuates the housing concerns in Colorado Springs.
This post by the Colorado Springs Gazette gives more information on the pros and cons of being so popular.
Colorado Springs’ hot housing market isn’t without its problems
Colorado Springs’ resale housing market remains red-hot, but not problem free.
The pace of buying and selling in the just-concluded first half of 2016 signals this could be a second straight record-setting year for single-family home sales in the Pikes Peak region. Many sellers of lower-priced homes put their properties on the market and field multiple offers that exceed their asking prices – sometimes within days or even hours.
But bidding wars, delays in getting appraisals, a tight supply of homes in the $300,000-and-under range and an oversupply of half-million-dollar-and-up properties are among problems that have led to head-banging frustrations for buyers, sellers and even their real estate agents.
“The hot market has caused all these side problems, these issues, and Realtors are kind of pulling their hair out, trying to keep it all together,” said Hank Poburka of The Platinum Group Realtors and former Pikes Peak Association of Realtors board chairman. First, the good news.
Slow sales, stagnant prices and record foreclosure numbers in the Colorado Springs area are a thing of the past; those conditions were products of the Great Recession and a lending climate in which too many borrowers with shaky credit histories took out interest-only and other riskier, non-traditional mortgages.
Now, the Pikes Peak region’s stronger economy, rising home values and historically low mortgage rates that have remained below 4 percent throughout 2016 for long-term loans have combined to fuel a robust housing market.
Among its strengths:
– Single-family home sales in Colorado Springs and nearby areas totaled 1,497 in May, a record high that lasted just one month until it was broken in June when 1,651 homes were sold, Pikes Peak Association of Realtors figures show.
– Home sales in the first six months of the year totaled a little more than 7,300, putting the area on pace to break last year’s annual sales record of 13,250.
– The median price of homes sold hit a record high of $262,000 in May, only to be topped by another record of $262,500 in June. Prices also have risen for 19 straight months on a year-over-year basis.
– In the second quarter of 2016, El Paso County homes spent an average of 31 days on the market before selling. In the same period last year, homes took an average of 74 days before selling – more than twice as long.
“The market is strong and I think it’s continuing to strengthen,” said Tiffany Lachnidt, a real estate agent with Re/Max Properties.
Carl and Susan Olson found out just how strong when they listed their four-bedroom, two-bathroom Briargate-area home on the city’s north side in April.
The Olsons had owned their home for a little more than 20 years when they decided to move north to be closer to Susan’s parents, east of Aurora.
Before they put their home on the market, the Olsons made some improvements – rebuilding the kitchen, installing new carpeting and repairing a deck, Carl said. The property also was professionally staged – furniture arranged, clutter removed and other touches to improve its appearance for sale purposes.
The Olsons asked $275,000, which matched the sale price of a similar, nearby home that sold earlier in the year, Carl said. The home hit the Realtors Association’s multiple listing service at 11 a.m. on a Monday. Two days and 12 to 14 showings later, the Olsons had three offers in hand by Wednesday night at their asking price or higher, Carl said.
On Thursday of that week, the deal was done; the Olsons agreed to sell their home for $282,000 – $7,000 more than they asked. The extra money went, in part, to cover the Olsons’ roughly $3,400 in closing costs.
“Everything was completely done – offer, counter offer, counter offer, counter offer, accepting – by 11 o’clock Thursday morning,” Carl said. “We went from being on the market to completely locked in, contracts, escrow money, everything in 72 hours.
“The words that I used at the time, were ‘this is too good to be true,'” Carl said. “It’s been my experience in life in general that, if it’s that way, there’s got to be a catch. But there wasn’t.”
While the Olsons’ sale was quick and relatively painless, buyers Brian and Samantha Wildes saw the market from the other side.
Set to retire in March 2018 after a 20-year Army career, and seeking to move from a townhouse at Schriever Air Force Base, Brian and his wife began looking for a home early this year. The couple was in a bit of a time crunch; Brian said they wanted to find something before his retirement and while his Army income could be used to help him qualify for a VA mortgage.
They wanted a house in the $200,000 to $260,000 price range, with three bedrooms for them and their two children, a large enough kitchen for Samantha who likes to cook and a basement where Brian could have a man cave and Samantha a craft room.
It wasn’t easy. The Wildeses looked at more than 20 houses, Brian said, and encountered disappointments along the way.
They went under contract on one home, only to walk away after an inspection revealed it was infested with mold, Brian said.
A second house came on the market on a Monday, and the Wildeses told their agent they wanted to make an offer just one hour after walking through it. Too late; it already had gone under contract with another buyer.
“There were houses we wanted to go and see, and before we could make an appointment to go and have a showing, the house was off the market,” Brian said. “Houses would come on the market, and within 48 hours, they would be gone. It was to the point where we were feeling like we had to go and see the home and within 24 hours we had to make a decision whether to buy it.
“It was a very stressful time for us because of that window of having to buy the house before March of next year,” he added. “We definitely didn’t want to settle. We wanted to find something that we were excited about, that we wanted to live in.”
Finally, they did.
They were preparing to write an offer on a third property when the second house they liked came back on the market. The real estate agent for that home warned the Wildeses’ agent the couple probably would have to compete with at least one other buyer.
The Wildeses decided to make an offer immediately and agreed up front to pay the sellers’ closing costs as well as the full $249,000 asking price, Brian said.
It worked. On May 11, the Wildeses closed on a three-bedroom, 2½-bathroom home in Stetson Hills on the Springs’ northeast side. The house, with new paint and other upgrades, was in great condition, Brian said.
“We are so happy being in the house,” he said. “We absolutely love it.”
But happy endings belie the problems of today’s market.
The supply of homes listed for sale totaled nearly 2,650 in June, the highest since October. Yet, June’s listings were almost 17 percent below the same month a year earlier – indicative of a tight supply that’s plagued the market since the start of 2015.
As a result of a tight inventory, competition – especially for buyers seeking homes at $300,000 or less – is especially cutthroat.
Of nearly 1,600 homes that sold in June in the Springs and surrounding areas, six out of every 10 were priced at $299,999 and below, according to Realtors Association figures.
Bidding wars triggered by the tight supply have left some buyers feeling like they’re paying more than they want, Poburka said. Buyers looking in lower-price ranges often need to bid at least 5 percent over the asking price, he said.
And there are other market problems:
– Even after finding the house in their price range, buyers might realize it’s not necessarily in the best condition for the asking price, Poburka said. “There’s a lot frustration on the buyer,” he said. “They like the house, but if it’s the only one available, then they’re kind of getting stuck with a house that may not have been their highest choice.”
– While some buyers might settle for a house in less-than-perfect shape, others believe that paying top dollar means they should get a house in top condition, Lachnidt said. As a result, some buyers “nitpick everything on the inspection. They want every screen repaired. They want everything done so the house is perfect,” she said. If a seller won’t make every repair, but has another buyer in tow, then the deal bogs down, a stalemate ensues and the seller goes back to square one, Lachnidt said.
– The pace of sales has been so furious that buyers and sellers often must wait two to three weeks – and possibly longer – for the property to be appraised, Poburka said. An appraisal determines the value of the home and how big of a mortgage a buyer can obtain. At the same time, home prices have increased so quickly that appraisals aren’t keeping up and appraised values are lower than they should be – potentially delaying deals, Poburka said.
– Once they decide to move up or downsize, sellers can’t always find a home they want. So, they must be sure that homes are out there for them to buy before they put their home on the market, Poburka said. If sellers decide to rent instead of purchase, rental homes are tough to find, while rents for homes and apartments are rising sharply, he said. Many landlords also require a minimum one-year lease for a home – and sometimes a two- to three-year commitment, Poburka said.
– Despite the demand for lower-priced homes, the higher-end market – $500,000 and up – remains slow, Lachnidt said. Sellers of those properties are increasingly frustrated because they keep reading the market is so strong, she said. “Not every segment of the market is flying off the shelf,” Lachnidt said. “Over certain price points, we jump from having six months of inventory to 38 months of inventory…We talk sometimes to sellers in those price points that are incredibly frustrated because they can’t understand why they’re not flying off the market. It’s because nobody’s talking about it.”
– Owners of more affordable homes sometimes can’t understand why their properties aren’t selling, Lachnidt said. In spite of the demand for lower-priced homes, properties still must be priced to reflect the market; a home that’s too high by just 3 percent to 4 percent won’t get the offers it should, she said. Homes also must be in good condition, and marketing them for online viewing and in-home walk-throughs is key, Lachnidt said. A dirty home or the smell of smoke will turn off buyers. “Sellers and agents can’t get lazy,” she said. “You still have to have staging, you still have to be priced right and you still have to have good marketing. Otherwise, you’re still not going to sell in any market.”
So, what’s ahead for the rest of 2016? Colorado Springs’ hot housing market isn’t without its problems | Colorado Springs Gazette, News
This tweet provides another ranking factor for Colorado Springs. Lots of good things happening in our great state but with the good, there is always some bad.