Frank Sinatra in the background singing “It was a Very Good Year.” Yes, the local real estate market in the Pikes Peak Region saw one month after another of smashed records. The largest number of single-family units closed in a single year. The highest prices ever seen. The highest rate of appreciation in more than two decades. The shortest average time on market. Sellers enjoyed the highest probability that their home would sell (for every 100 listings listed, 88 sold!) and Buyers suffered through the pains of endless bidding wars, some of which just didn’t make sense.
As seen in the graphic below, the gains were widespread, across product (single-family and condo) and applied to existing and new home sales.
The slightly crazy-in-the-head piece of data was that in the case of both single-family and condo properties, there were more listings that hit the market in 2017 than in 2016. This was actually the largest number of homes listed for sale in a single year since 2007. But buyers gobbled up those homes eagerly, so much that the nearly 3% increase in listed property had no discernible impact at all on the market. To believe in the “average home” is to believe in magic beans, neither exist, but of the 16,337 single-family home sales in 2017, the “average” listing was under contract in 30 days. That speed was only intensified for homes at the median price point ($285,000) and below. The 2017 sales year was the year when sellers expected a bidding war on their home.
How this played out in individual areas it actually pretty intriguing.
For the years, the total of all sales across all MLS areas was up 6.7%. Our start of 2017 projections anticipated fewer calendar year sales, largely due to anticipated interest rate increases that never materialized in 2017. So the increase in unit sales to go along with a 9.9% gain in price was a genuine surprise. But while all areas we track saw at least 5% appreciation (and 9 of our 14 tracked were double-digit percentage appreciation), not all areas saw an increase in sales. These tend to include areas that are “destination” MLS areas, where the particular characteristics of the area define the motivation of the buyer buying the home:
Black Forest. Unit Sales Down 17.4%
Central. Unit Sales Down 7.8%
Northwest. Units Sales Down 12.7%
Old Colorado City. Unit Sales Down 7.7%
In the case of Black Forest, the large decrease in sales is likely translating to new construction contracts and homes presently being constructed for delivery in 2018.
In the case of Central, and Old Colorado City, it appears that WEST and S/W received the buyers’ contracts as both of these “companion” areas saw increases that mirrored the unit sales declines downtown.
What’s also really interesting is that all of these areas with fewer sales saw some of the largest increases in price. Old Colorado City led all MLS areas with a 14.6% appreciation gain in 2017. Downtown was up a handsome 12.5%. The proof in the pudding in these areas is that the more powerful the draw to a particular location, the more buyers exhibited a willingness to pay a premium. That was intensified in a market with scarce supply of available product to buy.
Maybe the oddest pieces of data however are to be found in Northern El Paso County, specifically the TRI (Tri-Lakes/Monument) MLS area. Oddly, average price was up 5.4% in 80132. Why is this odd? The word on the street is that there are all of a sudden a whole class of commuters that now live in Monument and drive I-25 daily to Denver. The word on the street is that Denver buyers are flocking to Monument and Northern El Paso County because “it’s cheap by comparison” to Douglas County and points north. The word on the street is that sellers on the north side of the county have an advantage over sellers in the middle or in Broadmoor because they have access to all these Denver buyers who are used to out-size price gains. Okay, well, that’s just the word on the street. It doesn’t quite pan out in the numbers. The price appreciation in 80132 was lower than any of the other 14 MLS areas tracked, and while unit sales were up a heathy 6.9%, the only area that saw a decline in the probability of sale from 2016 to 2017 was Monument. Granted, most sellers selling a $488,000 product would happily take a 78% chance of success, but it’s worth a future conversation if mere proximity to Denver is enough to activate the long-term success of Monument.
Based on information from the Pikes Peak REALTOR Services Corp. (“RSC”), for the period January 1, 2011 through December 31, 2017. RSC does not guarantee or is in any way responsible for its accuracy. Data maintained by RSC may not reflect all real estate activity in the market.
Additional data for our Annual Report Series provided by Colorado Springs Home Builder’s Association, Pikes Peak Regional Building Dept., The Gazette, The Denver Post, www.FHFA.gov, www.HUD.gov, www.Zillow.com, Fannie Mae, Freddie Mac, Colorado Springs Business Journal, Mortgage Bankers Association, www.Census.gov, www.SpringsGov.com, www.ElPasoCo.com, www.cospringstrails.com, www.bea.gov, www.city-data.com, www.corelogic.com, www.TheDeptofNumbers.com, www.TheBalance.com, www.CNN.com, www.BLS.gov., and The Colorado Springs Business Alliance.