Colorado Springs Housing Market Still Sags

A record-shattering number of homes were listed for sale last month in the Pikes Peak region, while construction continued its slump — signs that the struggling Colorado Springs housing market isn’t getting better.

In May, 6,567 homes were listed for sale in the area, a one-fourth increase over the same month last year and breaking the record of 6,200 set in June 1988, according to numbers released Friday by the Pikes Peak Association of Realtors.

“Wow,” said Harry Salzman, broker-owner of Salzman Real Estate Services in Colorado Springs. “The numbers, those are just crazy.”

Too many homes for sale raises fears that prices could plummet; the median price for homes sold in May was $220,000, unchanged from a year ago.

Last month’s home sales, meanwhile, fell 18.4 percent compared with the same time last year.

Some possible reasons for too much supply and reduced demand include recent troubles involving Colorado mortgage brokers, as well as the increased inventory levels.

Too many foreclosed homes on the market, while the buyer pool was drained by low Colorado mortgage rates that prematurely attracted buyers a few years ago.

“Competition is fierce,” Salzman said. “That’s why sellers better price their house right if they want a sale.”

Single-family home building permits in Colorado Springs and El Paso County — which measure how many homes are being constructed — totaled 242 in May, a 30.1 percent drop when compared with the same month a year ago, according to a report Friday by the Pikes Peak Regional Building Department.

For the first five months of 2007, single-family permits totaled 1,134, down nearly 40 percent from the same period last year.

At that rate, permits might total less than 3,000 this year, said Fred Crowley, an economist with the University of Colorado at Colorado Springs.

That would be the lowest total since 2,663 permits in 1992, and a far cry from the more than 5,000 permits issued in each of the record-setting years of 2004 and 2005.

The construction industry employs thousands, and some home builders have laid off workers. Local governments also could be hurting; they rely on lumber, nails and other building materials to generate millions of dollars they use to fill potholes, plow snow and provide other services.

Like the Colorado Springs and Denver housing market, much of the nation has been mired in a housing slump for months.

Michigan-based builder Pulte Homes said this week it will cut about 1,900 jobs nationwide and consolidate several offices, including closing its Springs office and merging it with one in Denver, said Randy Carpenter, vice president of sales and marketing for Pulte’s Colorado division.

The company no longer needs two sets of managers, office workers and the like to serve Colorado, he said. Forty-five people in the Springs and Denver offices are losing their jobs as a result, Carpenter said.

Pulte, however, has no plans to stop building homes and townhomes in the Springs area, Carpenter said.

The builder, which targets entry-level mortgage seekers, remains optimistic because more soldiers are coming to Fort Carson in the next few years.

UCCS’ Crowley thinks the construction slowdown is near an end, and the area is poised for a Colorado home loan upswing — albeit a more modest one.

He based his assessment on historical housing trends, how the latest numbers stack up after they’re adjusted for seasonal swings and his analysis of a three-month average of construction.

Springs economist Dave Bamberger, who often works for the building industry, said the correction in the area’s new-home market could last into 2008. For now, he added, it’s a great time to buy a house because there’s so much supply.

Colorado Springs housing market figures compared with May 2006:

• Home supply: 6,567, up 24.8 percent from 5,260.
• Sales: 1,032, down 18.4 percent from 1,264.
• Median price: $220,000, unchanged.
• Single-family building permits: 242, down 30.1 percent from 346.

SOURCE: Colorado Springs Gazette