Since 2011, the Pikes Peak Region has seen annual appreciation average 8.4%. The last two years have saddled 10% appreciation, with 2017 hitting 9.9% and 2018 at 10.4%. The mind can grow exceedingly lazy and fail to imagine anything different than it’s present reality. The forecast for 2019 is not nearly as robust as any of the last 3 calendar years, but is actually quite normal when compared to the 2013 to 2015 cycle, a cycle which at the time was considered enviably-healthy.2019 Projections
The projections for 2019 include sales that are 1000 units higher than 2015, which ended in a then-record 13,250 units closed. It also includes a slowing in price appreciation to a more moderate 3.9%. Should a property maintain that steady rate of 4% appreciation, over 20 years, the value would double. The projections include a lengthening in time-to-sell and an educated guess that listing inventory will increase by 1000 units in 2019. To sellers accustomed to selling in hours and not weeks, this may be a hardship. To sellers that have weathered more than one market cycle, these are still above-average conditions.
To buyers entering the 2019 market, the slowdown on the seller side is a welcome change in scenery. The previous 36 months have been characterized by an over-caffeinated frenzy of purchasing activity and the sharpest run-ups in value ever seen in the Pikes Peak Region. Bidding wars have been not only common, but the rule, and affordability (both home values and raised interest rates) cooled the midsummer market in 2018 and forced hundreds of buyers to the sideline. But the majority of those buyers were sidelined temporarily, with plans to return in 2019 when they hoped for a.) moderation in prices and b.) more selection. Those buyers have received just that. The 2019 market opens with 30% more homes for sale than the 2018 market. The year begins with homes taking almost 6 weeks on average to sell (when the “normal” for all of 2018 was 28 days). The arrival of 2019 see more sellers willing to negotiate, and not just on price: a health-and-safety-only inspection was becoming the rule in the first half of 2018, but buyer power has increased enough that inspection issues should be on the table at most price ranges over $350,000.
World Events, Domestic Events and Local Politics will continue to apply macroeconomic pressure on the most personal of investments. Wall Street saw a December so bad it was reminiscent of one last seen during the Great Depression. Numerous international trade pacts and a shutdown government created a caution that caused interest rates to slip at the dawn of 2018. This dip is likely temporary, but may prod buyers to act sooner. This site has contributed much to the conversation about peripheral market concerns, and if further reading, pyschographic profiling or meta-think is in your wheelhouse, a deeper read is readily invited. But much of the Pikes Peak Region’s real estate strength comes from:
- A diversified economy
- Low unemployment
- International Desirability of Living
- Some of the Best School Districts in a Highly-Educated State
The continued confidence in the market is underpinned by these specific market metrics:
- At the start of 2018 there are half as many homes for sale as the same time in 2000; and 200,000 more people populate the immediate metro area.
- At the start of 2018, the market is under-supplied by 300%. A flat, not-growing market should have around 4500 to 5000 active listings for sale at the beginning of the year. At the start of 2019, there are just under 1700 single-family homes for sale.
- Banning-Lewis Ranch is one of the Top 50 newly-built neighborhoods in the United States in terms of units sold each calendar year. Depending on neighborhood, builders are barely keeping up with demand or are failing to keep up with demand.
Lastly, while some of the continued loosening of underwriting restrictions with Fannie Mae and Freddie Mac is worrisome, the expansion of the conforming loan limit to $484,350 is of great benefit to a region that appreciates putting less money down and having a larger monthly payment. The same value applies as the new VA conforming loan limit as well.
The market will not likely perform as spectacularly as any year in the 2016 to 2018 cycle. Pricing increases have slowed demand from a frenzy to simply robust. The region’s overall qualities, diversified economic strength and the palatability of Colorado-living will see continued resilience.
For a full break down on December 2018 real estate sales in the Pikes Peak Region as well as an annual recap of the market’s local performance, see the following four-page report.January