COLORADO SPRINGS“The statistics do not tell the entire story. We may show only a 1.1% drop in the median sales price for all properties, and a slight uptick in active properties, but the real
What The Numbers Say, and How It Feels....
Dated: November 14 2023
Views: 411
“What it is, and how it feels is different. You may ask what that even means. Looking at the statistics, you would probably be drawn directly to the fact that the median sales price increased year-over-year and moved on down the road with that in your mind as good news. But that is not how it feels. For those of us selling in the market, it feels very different than one easy 2.6% increase in value year-over-year. We are meeting with buyers who cannot buy. Or they can buy but are not going to buy in this market at these rates because they can rent for far cheaper. This explains the year-over-year drop of 23.9% in sales. And that drop in sales is despite a drop in active properties, down by almost 10%.
The market has also seen double the number of properties that have been withdrawn/canceled from the market. Yes, we are selling homes. Yes, the median price is up. But no, it is not what most feel is a healthy market. How can we say this is healthy when mortgage demand nationwide is now at 1995 levels and interest rates hit 2007 levels? As we look around for the first time in years, we are seeing apartments offering three months of free rent. Or security deposits are waived. I can’t even take a guess at the last time I saw those large yellow and red banners on multi-family units with freebies and concessions. Home sales are competing with rentals for the first time in years on affordability. I can rent a home for far less of a monthly payment than buying that same home at these prices and these rates. And that is what many buyers are choosing to do. I cannot blame them and often recommend they to consider their comfort level and then decide if owning a home is right for them at this time. Because the economy does not feel good to most. It’s that sense of change one gets going from Summer to Fall. We have had five banks collapse in 2023. Layoffs are now making headline news. Corporate bankruptcies have doubled. And the average consumer confidence is low. Fannie Mae’s home purchase sentiment index (HPSI) showed a record 82% of consumers did not think it was a bad time to buy as recently as August.
Where does that take us? Housing has been far more resilient than most thought. But can it withstand the coming changes into 2024 as we discuss a “soft landing”? FEDEX and UPS have seen shipping plummet and Union Pacific saw a 19% fall in profits due to a drop in freight. Typically, these are foreshadowing of a worsening economy. And M2 money supply continues to contract, a complicated indicator that also points to further economic issues. Unemployment edged up to 3.9% and the FED maintains its stance that it will correct shelter costs. With the leading indicators beginning to show an economic slowdown, I believe 2024 will see unemployment begin to head north and that will begin to correct an otherwise resilient housing market here in Colorado and across other areas of the county. But this is one man’s opinion and as we move forward, we will continue to watch the leading indicators to try to predict the lagging indicator, housing,” said Colorado Springs-area REALTOR® Patrick Muldoon.
Patrick Muldoon
I have many interests and hobbies to supplement my busy career in real estate. Although I enjoy my work I also enjoy finding free time to enjoy the most important things in life. This includes being w....
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