Home prices roared to another round of record highs last month in the Colorado Springs area, as mortgage rates that have spiked in recent weeks did little to cool the frenzied demand for housing.
A Pikes Peak Association of Realtors market trends report released this week shows the median price of single-family and patio homes sold in March jumped to $475,000, a 15.6% year-over-year increase and surpassing the record of $465,000 set in February.
The average price of homes sold in March increased to $539,684, up 14.1% when compared with the same month last year and beating the record of $514,757 that also was set in February. The average price, however, is considered less reliable than the median, or midpoint, by some industry experts because it can fluctuate with just a few extreme sale prices.
The latest increases continued a more than seven-year streak of monthly price hikes in the Pikes Peak region, where real estate agents have said a furious demand for homes and a shortage of properties for sale have combined to send housing costs higher and higher.
Those supply-and-demand factors were evident in the latest Realtors Association report.
A total of 1,361 homes were sold in March — the most for any March in the nearly 30 years for which The Gazette has compiled data. Most sales took place in El Paso County, with homes also selling in Teller and other Front Range counties, according to the Realtors Association report.
The inventory of homes for sale by month's end, however, tallied just 705, according to the Realtors Association report.
While March's supply rose 52.6% on a year-over-year basis, it remained historically low. Five years ago, the inventory of Pikes Peak region homes listed for sale in March 2017 topped 1,450, Gazette records show. A decade ago, after the Great Recession, the supply totaled 3,271.
March's record high prices, strong sales and tight inventory took place against a backdrop of rising long-term mortgage rates that some real estate experts have said could slow homebuying and selling.
Nationally, 30-year, fixed-rate mortgages climbed to 4.67% last week, up from 3.13% a year earlier and the highest in just over three years, according to mortgage buyers Freddie Mac.
That bump in long-term rates might have caused some homebuyers to rethink their purchases, said Ann Kidd, broker/owner of True North Realty in Colorado Springs and board chairwoman of the Pikes Peak Association of Realtors.
Faced with a higher monthly payment, some buyers won't be able to afford as much home for their money and will lower their sights, she said. Others might turn to less expensive townhomes. And some buyers might have to reconsider the neighborhood where they wanted to live.
Even so, plenty of other buyers remain in the market. As a result, bidding wars that have been common over the last several years have raged on, which push up sale prices, Kidd said.
Kidd recently represented a seller whose 1958, tri-level home was listed for sale at $380,000.
Though it was nothing special, she said, the house generated more than 120 showings over six days. The seller ultimately received 25 offers, and agreed to sell it for $430,000 — $50,000 over the asking price, Kidd said.
That was great for her seller, she said. But the sale also left 24 would-be buyers frustrated, while their real estate agents — who don't make money until a sale is completed — also walked away without a commission despite the time and resources they invested on behalf of their clients, Kidd said.
But don't expect much change in the market, said Chris Lutyen, managing broker for Coldwell Banker Residential Brokerage in Colorado Springs.
Mortgage rates likely would have to go even higher before demand slows to a point where price hikes level off, he said.
"We've have so much demand that's been pent up for the last several years that people will continue to want to buy," Lutyen said. "This is a popular place to move to. We have great infrastructure, it's a great city to live in, it's beautiful. We're probably more popular that some of the other places. ... It's going to take a few more increases to pump the brakes on the market."