Home Prices Drop in Colorado Springs Housing Market

Home prices fell nearly 2 percent last month in Colorado Springs housing market and the Pikes Peak region, the first decline in a little more than three years.

Sales also were down sharply last month. Supplies of homes on the market, meanwhile, were way up.

“That’s why we’re lagging downward,” Benjamin Day, manager of ERA Shields Real Estate’s northern Colorado Springs office, said of prices. “There’s just too many options out there.”

Industry experts were unsure whether the price drop is the start of a trend or a onemonth blip.

The median Colorado home price of residences sold in March fell to $208,000, a 1.9 percent drop from $212,000 in the same month last year, according to figures released Thursday by the Pikes Peak Association of Realtors.

It was the first year-overyear decline since median prices dipped 0.2 percent in January 2004.

Last month, the supply of homes for sale swelled to nearly 5,700, a 26.1 percent increase over March 2006 and the first time March listings have topped 5,000, according to Realtors Association figures that go back to late 1995. March home sales fell to less than 900 from the same time last year, a 14.1 percent decline.

Falling prices and sales and rising inventories aren’t the only bad news for the area’s housing industry; new-home construction during the first quarter of 2007 is down nearly 45 percent compared with the same time last year, as developers awaiting demand for mortgage loans to return.

But a one-month drop in prices doesn’t indicate a downward spiral, some real estate experts and one local economist said.

“I’d be very leery of drawing a dramatic conclusion on month-to-month changes in median prices,” said Springs economist Dave Bamberger. “I’d wait several months to get a better fix on what the trend is.”

Some home sales completed in March reflect contracts and prices that were negotiated a few months ago, when weather was bad and sales were particularly slow, said Kevin Patterson of the Patterson Group, a Springs real estate firm.

“I don’t think the sky is falling,” he said. “I think the year started slowly and with the 30-to 60-day cycle between contract writing and closing, we’re still seeing the effects of January and February.”

The market’s strengths and weaknesses vary neighborhood to neighborhood, said Day of ERA Shields Real Estate.

For instance, the Tri-Lakes communities of Monument, Palmer Lake and Woodmoor — where many people live in large homes in scenic areas and drive to jobs in the Springs — are among the hardest-hit.

In March, Tri-Lakes homes typically sold for slightly less than sellers’ asking prices, Day said. So far this year, homes listed for sale in the area have spent an average 110.7 days on the market, he said. Colorado mortgage activity is expected to pick up as the weather warms.

Based on the pace of sales up to this point, and with the number of homes for sale in the area, Day estimated that there’s a whopping 10.6-month supply of homes for sale in the Tri-Lakes area.

But Briargate, the sprawling suburban subdivision on the Springs’ north side, is in better
shape.

Briargate homes sold in March for slightly more than sellers’ asking prices, Day said. So far this year, Briargate homes have sat on the market an average 90 days. And while it will take 10.6 months to exhaust the Tri-Lakes’ supply of homes, Briargate’s supply is a little less than six months’ worth.

“Where a person lives matters,” Day said. “The dirt that your house occupies is really critical.”

Home prices might remain flat for several months before rising later in the year, when sales activity typically picks up, Day said.

“I’m not optimistic we’ll be seeing that before June, and we may not see it through much of the year,” Day said of price hikes. “There’s just so much to sell through.”

Still, plenty of people are looking to buy, and fixed-rate mortgages in the neighborhood of 6 percent remain affordable for many people, Patterson said.

But with many homes for sale, buyers are taking time to make sure they don’t miss a good deal, Patterson said. In the past, some home buyers looked at 10 to 20 homes before making an offer; now, some are sifting through 30 or 40 homes, he said.

Homes that are competitively priced, in good condition and attractively displayed to buyers when they walk in the door will draw a crowd and offers, Patterson added.

“If they see a good value,” he said, “they rally toward it. I’ve seen some homes sell in a week.”

SOURCE: The Colorado Springs Gazette