Affordable housing inventory low in El Paso County

As of the second week in August, El Paso County’s available housing supply in the $150,000 to $200,000 range amounted to a half-month’s inventory, specifically 46 listings. That range qualifies as affordable housing, according to RE/MAX commercial broker Donna Major.

While the economy has seen steady improvement since the last recession, the thriving real estate market has caused an inventory shortage in single- and multi-family units in all price ranges. The lack of inventory is even more pronounced in the affordable housing price range, according to Pikes Peak Association of Realtors CEO Amy Reid.

According to Pikes Peak Regional Building Department records, 2,420 single-family home building permits have been pulled thus far this year. The total number of permits pulled for all of 2016 was 3,519.

But there aren’t any regional developments focused on affordable single-family homes, Major said.

“In the last six months, we sold 851 [single-family homes]. With [46] listings available, that gives us less than a half month’s supply left to sell. … That doesn’t leave a lot if we continue down that path,” said Major. “There are just not enough available homes for sale in that price point. There are more buyers than there are sellers. … There are not enough people selling their homes, so the prices of the properties are going up.”

Reid said she has noticed fewer options and higher prices in real estate over the past few years, and not just in Colorado Springs, but in the state and across the nation.

“In the affordable range there’s even less inventory for people to buy from, and that includes not just single-family, but often multi-family [such as condos and town homes] where first-time homebuyers start,” she said.

According to PPAR’s market analysis for July 2017, 720 single-family homes sold in the affordable range, while 402 sold at $300,000 or higher. Out of the 1,646 single-family homes sold, 1,482 of those homes were already built.

Reid said for all price ranges, there are two months’ worth of supply for single-family homes and about one month for multi-family homes.

According to Major, new listings of existing homes in the $150,000-$200,000 range in El Paso County have increased by 0.5 percent since last July, sales have increased by 5.6 percent and the average sales price of homes has increased by 11.2 percent.

“As prices are rising, that pushes some of those houses at the edge of $199,000 above $200,000 now,” said Major. “We’re not keeping up with the lower-end homes being available. First-time buyers are really [struggling] right now.”

As of July, single-family homes stay on the market for up to 22 days as opposed to 44 days in January. The average sale price of homes in the region is $323,247, compared to $287,294 in January. The median sales price is $285,000, according to PPAR records.

The number of single-family homes sold this year reached 9,284 in July — a seven-month figure that equals the highest 12-month total since 2013.

This number has increased by at least 1,000 each year since 2014, when the total number of homes sold was 6,434.

Major and Reid agreed that as housing prices increase and listings in the lower price range decrease, many first-time homebuyers are moving south from Denver to Colorado Springs, while people competing for affordable housing in Colorado Springs are looking at Fountain or Pueblo.

No current developments

Most developments in Colorado Springs are building homes worth more than $300,000, according to both Major and Reid.

“The affordable housing issue with single-family [homes] is difficult. We’re not seeing builders build in the affordable range, which brings people to existing housing,” Reid said. “When we see the influx of people moving into Colorado -— for builders it’s hard for them to keep up with the demand.”

Scott Smith, CEO for the Colorado Association of Homebuilders, said it is difficult to build homes in the affordable housing price range due to the costs of regulations, building codes and labor laws, among many others.

“You can’t build a house and sell it for $150,000 and make any money, because your costs exceed the purchase price,” Smith said. “It’s for profit. You can’t make it up on volume if you lose money on every house.”

Scott added that labor costs are already expensive and are increasing. And lumber can cost an extra $3,000 on a home, he said.

“If you can’t make a profit, no one’s going to build in that price range,” he said.

The economic impact

According to Bob Cope, economic development manager for the city of Colorado Springs, workforce housing is the main issue to be solved in order to attract and retain companies in Colorado Springs.

“One of the many things they’re considering is cost of housing for their employees, so it’s here where we get compared to other communities,” Cope said. “I would like to have housing that’s available at a cost that most people in the workforce can afford. In addition to having the right regulatory and tax environment, there are ways we could potentially incentivize workforce housing.”

Reid added that people are willing to make longer commutes to work in order to live in affordable communities.

“We’re having people who work in Denver choosing to move to Colorado Springs because we have a little more inventory and are a little more affordable than the Denver metro area,” said Reid.

Smith said the lack of affordable housing isn’t an issue he sees being resolved soon.

“The problem is it really hurts people on the lower end of the income scale, because they have fewer choices in housing,” he said. “It’s a big problem and a big concern. I don’t see anything out there that’s going to turn it around anytime soon. We just try to keep it from getting worse faster.”