The single-family housing market in the Pikes Peak region remains red-hot, despite the COVID-19 pandemic.
Real estate and economic development experts cite several reasons for this, but mostly they boil down to this: People still want to live here and are continuing to move in.
“We have had positive net migration to the Pikes Peak region year over year for quite a while,” said Cecilia Harry, vice president, economic development with the Colorado Springs Chamber & EDC.
For the past several years, the average has been 1.5 percent positive net migration, Harry said, indicating that more people are moving into the area than are leaving it.
“You have to have the housing supply to meet that, so I think the market continuing to be tight makes a lot of sense,” she said.
According to the Pikes Peak Association of Realtors, 1,978 single-family and patio homes were sold in July, along with 263 townhomes and condos. Sales topped July 2019, that year’s peak month, when 1,661 single-family and patio homes and 252 condos were sold.
In July of this year, there were 1,969 new listings of single-family and patio homes, exceeding the number of July new listings in 2016 through 2019.
Homes are selling quickly as well.
Single-family and patio homes stayed on the market for an average of just 20 days in July, compared with 23 days in July 2019. Sales in April, May and June 2020 were similarly brisk, selling in an average of 20, 21 and 18 days, respectively.
Home prices also continued to rise in July.
According to PPAR’s figures, the median price for a single-family or patio home stood at $377,000, while the average price rose to $427,593. A year ago in July, homes were selling for an average price of $372,607, and the median home price was $332,000. Those numbers represent a 14.2 percent increase in average price and a 13.6 percent jump in the median price.
Home prices have risen sharply since May of this year, with the median increasing $20,000 and the average price jumping by more than $28,000 between May 1 and July 31.
Although the majority of single-family homes sold in July (1,800 of 1,978 total) have been existing homes, builders are continuing to supply homes for the Springs market.
“2020 got off to an extremely hot start, and the construction industry is still going strong,” said Greg Dingrando, public information officer for the Pikes Peak Regional Building Department.
Year-to-date, single-family home permits are up about 14 percent over 2019, Dingrando said, pointing out that the figures include detached single-family homes, townhomes and condos.
“July was a very strong month, with 399 single-family home permits,” he said. “That’s an 18 percent increase over July of 2019.”
Although townhomes make up a fairly small percentage of single-family home permits, townhome permits jumped in July. Of the 399 permits pulled, 56 were for townhomes.
Single-family permits totaled 373 in April (350 detached and 23 townhomes); 350 in May (329 detached and 21 townhomes), and 374 in June (349 detached and 25 townhomes).
Although development of new homes is ongoing, it’s not happening at a dangerous rate, said Jacob Curbow, owner of Curbow Real Estate and board chair of the Pikes Peak Association of Realtors.
“I don’t feel [developers] have ramped up and overbuilt like they did in 2006-07,” Curbow said. “Demand still has not caught up.”
MOVING UP, DOWNSIZING
An influx of people moving out of the Denver area and local buyers looking to move up or downsize are fueling the single-family housing market.
“For a little while, move-up buyers had stopped,” because they were not finding the houses they were looking for, Curbow said. Now inventory has increased and buyers have more choices; that’s helping to motivate move-up and downsizing buyers.
Curbow said the area is seeing more local buyers and fewer buyers from out of state.
“A lot of that has to do with the fact that [military] people who would normally be transferred in, generally didn’t see transfers in April and May. It’s crazy that the market’s still hot with that not happening,” he said.
But interest rates are low and rental markets are tight, inducing some frustrated renters to start looking to purchase homes, he said.
Curbow said real estate agents “were all scared” when the stay-at-home order went into effect in March.
“We couldn’t have open houses, we weren’t allowed to show properties, and we weren’t sure about inspections,” he said. “We felt like we were going to get completely shut down.”
Most real estate agents are independent contractors, Curbow said, and many were able to take advantage of expanded unemployment benefits or find other jobs temporarily.
“But as an association and an MLS, our population hasn’t really decreased,” he said. “Our industry is known for people getting out, but we’ve added just as many as have left.”
Now that restrictions have been loosened, real estate businesses are following careful procedures to keep employees, homeowners and potential buyers safe.
They are scheduling residential showings so that they don’t overlap and limiting the number of people on a property to one agent and two people. Masks, gloves, hand sanitizer and disinfectants are commonly in use.
“One of the things we have adopted as an office — we are asking, after the last showing, that [homeowners] stay out of their home for a couple of hours,” Curbow said. Agents use that time to clean frequently touched areas, such as doorknobs and cabinets.
Curbow said virtual tours of properties are continuing.
“We opened up virtual staging as well,” he said. His company works with Pixel 360 Solutions, a real estate photography company that produces virtual tours, to measure rooms and add correctly scaled furnishings such as TVs, couches and throw rugs.
Curbow doesn’t expect the single-family market to slow down any time soon.
“Unless something tragic happens, we’re going to continue up that path for another year to 18 months,” Curbow said.
COMMERCIAL MARKET EFFECTS
Holly Trinidad, owner and managing broker at Hoff & Leigh, thinks that the pandemic and stay-at-home recommendations have benefited the housing market.
“People have the mindset that they’re going to be staying home,” she said. “I thought we would see the market tank, but housing has become so much more important to people because they’re staying home.”
With 30-year fixed mortgage rates hovering around 3 percent, people are thinking now is the time to buy, she said.
Trinidad has a client who owns a multimillion-dollar home that sat on the market for a year. “But during the main COVID shutdown, he had like four people tour the house. It’s because people are wanting more space and they’re thinking, ‘I’m going to be spending more time at home and I need to have the perfect home.’”
Because prices have gone up so much, people have a lot of equity in their homes.
“In theory, you’d be able to trade into a nicer house,” she said.
In comparison with across-the-board strength in the housing market, the commercial real estate market, Trinidad’s specialty, has been impacted unevenly by the pandemic. “In 2008, the entire housing market crashed, and then, as a byproduct of that, so did the commercial market — and it was the entire commercial market, including the industrial sector,” she said. “So far, there are only sectors of the commercial real estate market that have been hit really hard.”
Retail, hospitality and senior and student housing have been negatively affected, but the industrial sector “is chugging along like nothing is going on in the world,” she said. “That’s primarily because a lot of those businesses are logistics companies that are delivering goods and services to people’s homes.”
Even though offices are only half full, “I haven’t heard of any tenants wanting to renegotiate office leases yet,” she said.
That could change, though, if businesses decide to continue work-at-home policies and want to downsize their spaces.
“It’ll be interesting to see what happens in another three months,” Trinidad said.
QUALITY HOUSING CHOICES
Although Colorado Springs’ housing market is still short on affordable homes, the market presents a variety of homes for in-migrants and local buyers to choose from, including a large stock of existing homes.
“The region has consistently made what could almost be like timeless housing investments that continue to be appealing as long as they’ve been maintained,” Harry said.
“We have a lot of desirable neighborhoods across the region that have different price points and speak to different sorts of individuals and families, depending on what lifestyle they want and where they are in life,” she said.
“Some of the neighborhoods around the downtown area, where a lot of those homes are older and smaller, are definitely appealing to a certain demographic who’s willing to pay a good price for a home with character, close to downtown amenities and that sort of thing,” she said. “And then we’ve had different developments that have really made their mark in terms of their footprint in the community.
“You have some families that are very interested in being closer to the mountains. And so the neighborhoods in the west are of interest. And then for families looking for affordable new homes, the eastern part of the region has been very popular.”
As for new builds, “I think we have a lot of savvy developers in the region who are watching … the positive net migration happening here year over year, consistently enough for it to be a trend we can expect to see into the future,” she said. “It makes sense that new developments and new builds will continue to come online.”
The pipeline of projects that will bring all of those buyers into the local housing market is still strong, Harry said.
“We have not seen or heard of many projects at all, coming to a dead stop to the pandemic,” she said. “We’re very busy in that area. … Some of the projects that we announced in 2019 are still in the pipeline, but there are going to be lots of quality jobs associated” with them.
She points to primary employers like In-N-Out Burger, which is locating its regional headquarters on a 20-acre tract southeast of Interquest and Voyager parkways.
Those jobs will be coming online within 18-24 months, and those employees will need places to live.
“Regardless of your family’s income, you still need a quality place to call home,” she said.