The Current State of the Colorado Springs Real Estate Market: The ‘Unicorns’ Have Galloped Off

Drawing meaningful comparisons between real estate metrics across different years can be a challenging task in a normal housing market. The variability in market conditions can render such comparisons less accurate or meaningful. Unforeseen events can significantly impact the circumstances and outcomes being evaluated.

Attempting to compare this year's numbers to the two extraordinary years we recently witnessed would be of little value. In this context, when we refer to "unicorn" years, we are using the less common definition of the term:

"Something that is highly desired but difficult or impossible to find."

The real estate landscape underwent profound changes in the past few years due to the pandemic. The demand for homeownership surged as people sought homes with dedicated office spaces and spacious backyards. We witnessed waves of first-time buyers and individuals looking for second homes entering the market. Furthermore, historically low mortgage rates reached unprecedented levels, and the forbearance plan largely mitigated the risk of foreclosures. Home values experienced levels of appreciation never before seen.

These extraordinary circumstances created a market that was "highly desired but difficult or impossible to find"—a true 'unicorn' year.

However, the situation is now gradually returning to normal. The 'unicorns' have galloped off. Consequently, comparing today's market to those exceptional years would be nonsensical. Allow me to provide three examples to illustrate this point:

Buyer Demand

At first glance, headlines might lead you to believe that buyers have vanished from the market. However, in the United States, we continue to sell over 10,000 houses daily. While it is true that buyer demand has decreased compared to the 'unicorn' years, data from ShowingTime indicates that buyer activity remains strong when compared to more typical years (2017-2019). Please refer to the graph below for a visual representation:

Home Prices

It would be unfair to compare the current increases in home prices to the exceptional growth witnessed in the past couple of years. According to Freddie Mac, both 2020 and 2021 recorded historic appreciation numbers. To provide a balanced perspective, here is a graph illustrating the more normal home value increases observed during the years 2017-2019:

As depicted, we are now returning to a more typical pattern of home value appreciation. While the second half of 2022 experienced several months of minimal depreciation, Fannie Mae reports that the market has since reverted to more normal levels of appreciation in the first quarter of this year.

Foreclosures

Recent headlines have highlighted alarming increases in foreclosure filings. However, it is crucial to bear in mind that these percentages reflect increases from historically low foreclosure rates. The following graph, based on data from ATTOM, a property data provider, provides further context:

The lifting of the foreclosure moratorium has resulted in higher numbers compared to the past three years. Each year, unfortunately, some families face the heartbreaking loss of their homes to foreclosure. Nonetheless, when we contextualize the current figures, we realize that we are returning to the more typical filing rates observed from 2017 to 2019.

In Conclusion

It is important to recognize that this year's Colorado Springs housing market will likely generate unsettling headlines. Many of these headlines will stem from inappropriate comparisons to the 'unicorn' years. To ensure you have a comprehensive and balanced understanding of the situation, I encourage you to connect with an expert who can provide guidance and help you maintain proper perspective throughout this evolving market.