The white-hot real estate market continues. Here’s what you need to know about buying in Colorado Springs now, with pro tips on how to prepare.
When John and Sarah Ruddell made an offer to buy a home in Colorado Springs last summer, they had never set foot inside. The 20-something couple “toured” the Skyway split-level by video chat tour with their real estate agent and sister and brother-in-law. The house received multiple offers on its first day on the market. The Ruddells’ offer was the first backup. When the first buyers backed out of their over-asking-price, cash offer a day later, the Ruddells got their home, and John booked a flight from California’s Bay Area to come see it. “We had been monitoring the market for quite some time before we made the jump to move,” John says. “We had known we wanted to live in this area for a long time.”
In fact, John planned their honeymoon in the Pikes Peak region years earlier in part hoping Sarah would fall in love with the area too. But their careers took them from their native Texas to California, where she worked as a nurse and he as a software engineer in Silicon Valley.
When Sarah became pregnant with their second child, they knew they needed more room than their urban San Jose condo provided. The pandemic provided the tipping point. John’s company had to close its office when California went into lockdown, and its founders discovered the benefits of working from home. With John able to keep his job and work fully remote, it was time to move to Colorado.
The Ruddells experience is not unusual. The pandemic has granted more mobility and flexibility through WFH, giving people a gateway to go where their hearts are.
“The pandemic has changed everybody’s approach to real estate,” says Ben Day, managing broker of LIV Sotheby’s Colorado Springs office. “The attraction to quality of life as a want has fueled the need for a change of scenery across the United States. That has landed firmly in Colorado.”
People want to live here. Colorado Springs was the 25th Fastest-Growing Large City in the U.S., those with more than 300,000 people, in 2020, according to WalletHub. And while the COVID-19 pandemic made some changes to the way we buy and sell houses—wearing masks and gloves and limiting showings to three people at a time, for example—it did nothing to slow down the local real estate market.
With record-low interest rates, the already white hot real estate market has gone full supernova, roaring through 2020 at a record pace. From February through April, Realtor.com ranked Colorado Springs the No. 1 Hottest Housing Market in the country, based on online search activity and median number of days homes remained on the market. July 2020 saw the largest number of existing sales in a single month in Colorado Springs history, with 2,241 closings on single-family homes, condos and townhomes, according to data from the Pikes Peak Realtor Services Corp (RSC). New home construction hit a record pace too, with about 4,500 permits pulled for single-family homes—a 28% increase over the previous year. And in what can be a challenge for buyers, the average sales price hit all-time highs of $385,000 in October and again in January, 2021.
The torrid pace of the market has been fueled by the high demand of lots of interested buyers and the low overall supply of available homes. The results have been fast sales—through January, 2021 year-to-date, the average days on the market was 19, according to RSC. Multiple offers above asking price have been common in the highly competitive marketplace. “In the 26-plus years I’ve been doing this, it’s been a very different market than I’ve ever seen in the past,” says George Nehme, board chair of the Pikes Peak Association of Realtors.
While he and other real estate professionals expect the competitive market to continue through this year, they also express hope that more homes will become available and more normal seasonality will return as the pandemic loosens through widespread vaccination, already underway.
Regardless, buyers can still find their dream home in Colorado Springs. “The No. 1 thing someone has to do to buy a house in 2021 and most years going forward is be prepared,” Day says. Here are ways to prepare yourself and strengthen your case as a home buyer now in Colorado Springs.
Do Your Research
“Real estate is about dirt. It’s about location,” Day says. “You can can always change a house; you can’t change a location.”
Learning about the area and zeroing in on particular neighborhoods goes a long way toward zeroing in on a home that meets your needs and aligns with your priorities. For example, do you value historic character or prefer the new amenities of a planned community? Do you crave open acreage, urban walkability or low-maintenance community? How far are you willing to travel to work, if it’s not in your living room or home office?
“People that grew up in Los Angeles could [not] care less if they have to drive an hour and a half,” says Tiffany Lachnidt, lead realtor with The Distinctive Group. “People who grew up in southern Florida think 10 minutes is a long way. We just do a lot of pre-prep work with them so that we can start to understand their needs.”
Day recommends zeroing in on two or three neighborhoods that you would really want to be in. “It’s got to be something you can give your yes to,” he says.
If you’re researching remotely, use a variety of websites to evaluate neighborhoods as thoroughly as possible. “Use Google street view, see what amenities are around,” Day says.
Of course, he and other local realtors commonly work with people even before they get to town, using video conferencing and other digital tools to help clients assess and prioritize their needs and wants.
Once in town, Day likes to take clients on an in-depth tour of the city to explore entire neighborhoods, including schools, restaurants, trails, shopping centers, soccer fields, gymnastics studios, art installations or vegan eateries. “Places where the flavor is,” he says. “Things you would never figure out while you’re fixated on Zillow.”
SpringsMag.com is also an excellent resource for exploring neighborhoods, schools and other community insights.
Working with a realtor who knows and understands the Pikes Peak region is an extremely valuable, if not essential, advantage when it comes to buying in 2021. “Have a realtor guide you through the step-by-step process, especially if you’re a first time home buyer,” Nehme says. “Make sure you understand what you’re getting into, and understand the bidding war process in the market that has been tough for some people, especially at lower price points.”
“Residential real estate purchases are an emotional as well as financial investment, and a real estate agent will help you get clear,” Day says. “Use someone who will will help you better understand what you’re purchasing and why you’re purchasing it. That’s the person who can really be your advocate in the process.”
Thoroughly evaluate your real estate professional, making sure you have good, clear lines of communication with him or her before and during the process. That communication can alleviate stress and help you reach your goals. For example, what happens if the home you offered over asking price doesn’t appraise that high? “That’s the how part of it,” Day says. “Everything gets thoroughly discussed, so you have a really good idea as to how you’re approaching the market strategically.”
In a competitive, fast-moving market, it’s paramount to have your financial plan set and your mortgage pre-approved. Talking through the ins and outs of the process with a lender will help you clarify your strategy and purchasing power.
“Sit down with a lender. Position yourself to see where your payments will be and what price point are you going to be comfortable in, “ Nehme says.
That’s true if you want to build a new home too. “I would always suggest you get pre-approved with a lender,” says Jessica Scott, marketing manager at Oakwood Homes. “If you are going to build a new home, do your research and pick a builder. Then get prequalified with their lender so you can cash in on any incentives the builder offers.”
Wayne Bland, vice president of Kirkpatrick Bank, advises people to gather recommendations and shop multiple lenders. “Don’t just look at the interest rate. Look at the closing costs and the points and fees as well and compare those apples to apples,” Bland says. “Sometimes the wording isn’t exactly the same from one fee estimate sheet to another.”
Continuing low interest rates and Colorado’s always low escrow costs should continue to be advantageous for buyers in the coming year. “Our property taxes are really reasonable. Our insurance … is still really reasonable,” Lachnidt says. “Your cost of ownership here is not as high as it is in a lot of states like Texas and the East Coast and some places with really high property taxes. We have people that come in from other markets who see what our annual taxes are and assume they’re monthly.”
Even as home costs have risen, the Springs has retained its affordability in the region. “We’re still less expensive than Fort Collins. We’re 20-25% less expensive than most of the Denver metro area, and significantly less than Boulder,” Day says. “Of the major Front Range metro areas, we’re still the least expensive.”
While the inventory of new and existing homes catches up with demand through 2021, competition will remain high. Keeping a long-term perspective will serve buyers well. “Understand you’re going to lose a couple of offers that you’ve presented,” Nehme says. “It’s just a matter of making sure you’ve positioned yourselves well to help you not be discouraged with the buying process.”
Day says the ups and downs can be part of the process of finding an even better home. He describes one well qualified couple who relocated from Texas last year who lost two or three homes when sellers instead accepted unusually high, “silly” overbids. “They knew they were willing to step away from the table and say, ‘Not for us,’” Day says. “At the end of the day, they liked the house they ended up getting more and paid a whole lot less.”
For buyers who decide to build a new home, you still need patience. Scott says Oakwood Homes has opened new collections in 2021, but have sold them quickly. “If you plan to build a new home, prepare yourself to wait some time as most of our inventory has already been sold out,” she says. “Land is scarce, and builders are so far sold that we are all fighting hard to keep up with the demand. Be patient, know what you want, and enjoy the process!”
Overall, the better prepared you are heading into the buying process, the more enjoyable it can be. The worthwhile reward will be putting up your feet and enjoying those mountain views from your new home in Colorado Springs.