September 4th, 2007 3:12 PM by Brian Wess
Most of my clients have heard me say it many times...real estate is a local phenomena and what may be true in one market is usually not true in another. Despite all the gloom and doom from some of those in the media and elsewhere, more than halfway through 2007 the current real estate market correction has not brought the slash & burn market devastation to the Colorado Springs and Pikes Peak Region that many had predicted. In fact, 2007 looks to be on its way to being among the top years in the Pikes Peak Region.
Many of you will remember one of my newsletters from last year when I spoke about the national housing market study that evaluated how much markets across the United States were over or undervalued. In that newsletter I addressed the "bubble theory" and the fact that unlike areas of the country like Naples, Florida; Las Vegas; and most of California, the Colorado Springs market was neither over or under value and that indicated not only a very healthy housing market in the Pikes Peak Region, but also that there was no bubble here to pop.
While there has been a significant slowing of sales to more pre mid to late 1990's historical levels and the pool of qualified buyers has been substantially shrunk due to the current chaos in the lending industry, people are still getting loans and both the median and average sales prices of existing homes have continued to increase...albeit at a slower pace.
While there was a decrease in single family home sales in July 07 of 14.9% over July 06 and 14.3% for the period of January to July 07 over the same period last year, that is actually a drastic improvement from the 29% to 35% decreases in the number of sales we were seeing in the late winter and early spring of this year. While the number of competing single family properties in July 07 was 18% higher than July 06 at over 7000 on the market, the average sales price has actually increased 2.2% to $274,308 and the median sales price has increased 1.1% to $227,000. Existing homes have actually seen an even larger increase in the average sales price in July 07 of 3% (to $258,432) over July of 06 and year to date of 4.2% over the same time period last year.
As I predicted, this trend strongly indicates that while the rapid home appreciation rates we have seen over the past several years have slowed substantially, home prices remain fairly stable in the Pikes Peak Region. I see this as an "equity correction" where sellers may not be getting the large equity run ups that the seller's market of the last 10 or so years was allowing them, but, unless they purchased in the last couple years and are trying to sell now with no improvement investments, they are still getting some equity out of the property or at the worst breaking even. This "cooling" is a very healthy trend in a real estate market and helps to keep home pricing in line with incomes.
Townhomes and condos have seen a similar trend with the number of sales down 11.9% over July 06 and 10.9% year to date over Jan - July 06, but builders and owners alike seem to have taken the trend in stride since the number of competing listings on the market has actually also decreased slightly by 0.3% remaining around 2,000. Bucking tradition, The average townhome and condo prices have increased 2.9% ($180,236) over July of last year and 6.5% ($173,256) year to date, while the median has also increased 3.9% ($159,975) in July 07 vs. July 06. The interesting trend in townhomes and condos is that, unlike the single family home market, the new build townhomes and condos are not only getting an increasing portion of the market, but they are seeing much better appreciations than existing properties are currently. For the period of Jan - July 07 all townhomes and condos sales saw an increase of 6.5% in the average sales price while existing townhomes and condos saw only an increase of 3.7% over the same period last year. This would indicate that the new build luxury townhome market is having a fairly significant impact on the current townhome market.
Existing single family homes are faring better than new builds by continuing to hold the largest and steadiest portion of the market, but the opposite seems to be true of the townhome and condo market with figures indicating that new built townhomes and condos have increased their share of the sales in the market as well as their price point.
I'll have August's statistics next week