Real Estate Year in Review

By Marquesa Hobbs, Realtor, CNE & MRP

Pikes Peak Producer 2022, ERA Shields, Leadership Circle, As seen on American Dream TV and The Negotiators - 719.238.0330 - Marquesa@ColoradoHearthstone.com

The beginning of 2022 began like 2021: Fewer than 300 homes actively for sale (compared to Jan 2000 with 2665), along with high demand, exasperated by record low mortgage rates. The competitive environment caused buyers to: 1) often pay more than list price, 2) offer appraisal gaps, and 3) waive contingencies.

Mortgage rates more than doubled within the year; 3% in Jan, 6% in Jun, over 7% in Nov. Impact on affordability was substantial: a typical home with 20% down at 3% interest had a mortgage payment of $1,500. At 7% that mortgage jumped to $2,400 per month.

These rate increases caused many buyers to pause; but our market stayed healthy due to the fewest number of homes available in seven years.

Inventory levels went from 10 days in January to two months by end of 2022. On the surface, a 400% increase is stunning; however, when considering the perspective of the past 20 years, we had never sustained inventory levels of two-months or lower until 2015. The market has slowed AND demand is still healthy.

“I see 2023 as a far more “normalized market” for BOTH buyers and sellers to achieve their goals”

Q4, ’22: THE MOST VOLATILE SINCE THE FINANCIAL CRISIS IN 2007-08:

• Active listings up >200% - New listings down 27.8%

• Sales down 35.7% - Inventory up nearly 400%

• Under contracts down 28% - Mortgage rates up 120%

As 2022 ended, the market began to normalize - a welcome adjustment. Mortgage rates dipped three-quarters of a point, and with it, hope returned for many buyers. With lower demand over the last six months, home values increased at more reasonable rates. Home prices dipped in Dec ’22 when compared to Dec ‘21. The days of multiple offers and homes going under contract in less than a week faded.

FUN FACTS FROM 2022 FOR EL PASO COUNTY

• Most expensive home: North of USAFA on 213 acres - $7,000,000

• Largest home sold: -The Broadmoor22,000 s.f, indoor basketball court, six-car garage

• Cheapest home: The town of Ramah - a stick-built home sold for $50,000

• Smallest home: A 432 s.f. cottage in Fountain.

2022 STATISTICS FOR EL PASO COUNTY

• Units sold: 12,327 (2022’s all-time high:14,929)

• Average sales price $537,609 (up 10%)

• Median sales price $473,727 (up 13%)

• Active listings on 1/2023 compared to 1/2022 tripled (still historically low)

• Inventory levels averaged 5-weeks, compared to 2-weeks in ‘22

• New home permits: 3605, down 1469 units

• 489 homes sold for >$1,000,000; up from 394 in 2021 -only 38 in 2015

• 79 homes sold for under $200,000 (3,736 in 2021)

FOR BUYERS

2022 presented as a more normal market compared to the past 18-24 months. Aggressive multiple offers are no longer standard; however, most Sellers should be in a good financial position due to the 60% appreciation many homes enjoyed during the last five years.

Lack of inventory and solid demand should keep the market healthy. Experts predict home values to increase 1%-3% annually and the number of sales in the range of 5%. Lower inventory will help keep home values stable.

FOR SELLERS

Sellers must understand the market has adjusted. Selling a home now is a combination of condition, location, price, and time. To understand this market means to prepare and price your home properly without leaving money on the table.

Announcements like that of Entegris and Zivaro along with our high quality of life, educated workforce, and a relatively low cost of doing business compared to many other desirable cities continues to attract people from around the globe.

I see 2023 as a far more “normalized market” for BOTH buyers and sellers to achieve their goals.

REDUCING INTEREST RATES

Today, buyers can be more selective. Interest rates are expected to vacillate slightly. Some buyers utilize tools like “Rate Buy Downs” and “ARMS” to help reduce interest rates to their comfort level. Expect to pay a fair price and receive fair concessions from the seller. Additionally, buyers will be able to compare homes, then decide on a home that best fits their wants and needs. Expect sold price/list price to be just below 99% (down from 100.6% in 2022).