COLORADO SPRINGS (AP) – The Pikes Peak region’s housing market showed signs of life in 2012.
Colorado Springs-area homebuilding, sales and prices all rose after having slumped for five to six years, while foreclosures declined. Renters paid higher rents, in part, because apartments were in greater demand, which signaled a stronger multi-family industry.
But will last year’s recovery extend into 2013? Several real estate industry experts in Colorado Springs say “yes” – although not without a few qualifiers.
The pace of the recovery will continue to be steady, but not spectacular. It will rely on mortgage rates remaining near historic lows and the national economy continuing to rebound, they say.
“We should continue to see the same levels as in 2012, with maybe an uptick in 2013,” John Bissett, founder of JM Weston Homes and board president of the Housing and Building Association of Colorado Springs, said of homebuilding levels that rose more than 50 percent last year.
“Having a 50 percent increase is, I think, beyond what anybody had predicted,” he said. “We won’t see another 50 percent increase. But I do feel confident that buyer sentiment is in the positive range, and buyers are realizing that it doesn’t make any sense to wait any longer if they were contemplating a home purchase.”
Here’s a look at what some experts say is in store for Colorado Springs-area residential real estate in 2013.
Single-family homebuilding permits, which are a key indicator of the health of the industry, jumped 58.5 percent, to a total of 2,218, in 2012 according to the Pikes Peak Regional Building Department, which issues permits. Last year’s permit total was the highest since 3,446 permits in 2006.
In 2013, expect building permits to rise again this year; some experts suggest an increase of 5 percent to 10 percent, which would translate to about 110 to 220 additional permits.
Affordable mortgage rates and pent-up demand on the part of buyers, which helped drive last year’s rebound, will continue to fuel this year’s recovery, said Joe Loidolt, who heads homebuilding for Classic Cos., the city’s largest locally owned builder.
The Colorado Spring’s population also has grown to a point where it would support increased levels of home construction, Loidolt said, quoting a pair of economists who have worked for Classic.
But rising prices also will drive buyers to act, he said. When the homebuilding slump started in 2006, suppliers held off on raising prices on lumber, concrete and other building materials, Loidolt said. Now prices are headed up for those items, and some builders will pass on their higher costs to buyers – some of whom will purchase now to avoid higher prices down the road, he said.
Prices also will rise because some builders are looking to recoup profits that were practically nonexistent during the last several years, said John Bissett, founder of JM Weston Homes. But builders won’t push prices too far or too fast for fear of turning off buyers, he added.
Existing home sales
Last year, home sales totaled 9,146, an 8.1 percent increase from the previous year and the first time annual home sales have topped 9,000 since 2007, according to the Pikes Peak Association of Realtors, based on home sales handled by its members. The median price of homes for the year was $201,000, up 7.5 percent from $187,000 in 2011.
In 2013, expect more of the same this year – an increase in sales and prices, as long as mortgage rates continue to attract buyers. Rates continue to hover near record lows.“Interest rates are really driving the market,” said RE/MAX Properties owner Joe Clement.
There also is still a pent-up demand on the part of buyers who have been on the sidelines for the last several years, said Hank Poburka of The Platinum Group Realtors and this year’s Realtors Association’s board chairman. He expects the pace of home sales in 2013 to return to levels of six years ago. In 2007, sales totaled nearly 10,000, and they topped 11,900 in 2006.
“Barring anything catastrophic, I see the future being very bright,” Poburka said.
He also suggested prices will rise a modest 4 percent to 6 percent this year.
Clement, meanwhile, said a decline in foreclosures is helping to buoy prices. Banks that had foreclosed on homes and put the properties back on the market usually did so at a discount, dragging down prices for other sellers.
Not everyone is quite as optimistic. The market recovery will depend on the ability of buyers to obtain a mortgage – and tighter lending rules mean many people still can’t borrow unless they have top-notch credit scores, said Nancy Rusinak, co-owner of Rusinak Real Estate.
And with continued uncertainty about job security and changes in tax laws, some area residents will hold off making big-ticket purchases, she said.
“Cautiously optimistic. Headed in the right direction,” Rusinak said about the local re-sale market. “But nobody’s ready to break out the party favors just yet.”