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Housing momentum in Colorado moves down the Front Range: The Colorado Springs housing market exploded last year

Housing Momentum in Colorado moves down the Front Range

By Aldo Svaldi - Denver Post

Metro Denver’s housing market has run so hot for so long, it is hard to imagine another part of the state having more momentum.

But demand along the southern Front Range accelerated in a big way last year, and Denver and Boulder homeowners, flush with equity, sought vacation homes in the neighboring mountain counties, supporting those markets.

“The Colorado Springs market exploded last year,” said Jay Gupta, a real estate agent with Berkshire Hathaway.

Gupta said the Colorado Springs region recorded a 15.6 percent jump in home sales in 2016 versus 2015, and a 23.2 percent increase in the dollar volume of homes sold, according to information from the Pikes Peak Multiple Listing Service.

By contrast, new listings and sales for homes didn’t change much last year from 2015 in metro Denver, according to the Denver Metro Association of Realtors.

Although sales were flat in metro Denver, an 11.4 percent jump in median prices pushed the dollar volume of sales up from $20.3 billion in 2015 to $22.2 billion in 2016. The Denver market isn’t slowing so much as running at full throttle, leaving it no room to accelerate.

Elbert, Huerfano, Pueblo and Teller counties, along with El Paso, ranked on top for market acceleration, according to a Denver Post analysis of single-family home statistics provided by the Colorado Association of Realtors.

The analysis scored the percentage increase in listings, sales, home prices and the percentage decreases in the number of days it took to sell a single-family home in every Colorado county with 10 or more sales on a multiple listing service last year.

Adding those scores up, Elbert County was the state’s hottest housing market last year, followed by El Paso. Moffat and Phillip counties came next, and then Huerfano and Pueblo counties. Broomfield County did the best among the metro counties, but it ranked only 24th for acceleration.

For example, the average number of days a single-family home spent on the market before going under contract dropped from 73 days in 2015 to 36 days in El Paso County. In Denver County, homes still turnover much faster, within 24 days on average, but that is up from 22 days in 2015.

Even though the southern Front Range heated up, price gains remained more constrained. The median price of a home sold in El Paso County last year was up 6.3 percent versus a 9.6 percent gain in Denver.

In some ways, the southern Front Range looks like it is following a path taken in the northern Front Range two years ago.

Gupta said the El Paso County housing market started really heating up in the summer of 2015. As the supply became more constrained, skeptical buyers came off the fence, fueling a big wave of buying last spring.

Rising rents and historically low interest rates left many tenants anxious to buy, Gupta said. Several buyers he worked with secured a monthly mortgage payment below what they had been paying in rent.

Diminishing affordability in metro Denver was also at play. The median price of a single-family home sold in Denver last year came in at $400,000, but it was only $255,000 in El Paso County, according to the Colorado Association of Realtors.

“People are finding the commute from northern Colorado Springs to south Denver isn’t so bad,” Gupta said, especially when compared to driving from the northern suburbs to the Denver Tech Center at rush hour.

Gupta said he even has heard of a metro Denver worker who purchased a home in Fountain, south of Colorado Springs, and is commuting from there.

Spillover from metro Denver’s strong market also seems to be providing support to the mountain counties.

“The Front Range has been a big contributor to our market the past year,” said Onie Bolduc, past chair of the Vail Board of Realtors.

Buoyed by a solid economy and large home equity gains, residents in metro Denver and Boulder are purchasing vacation homes in nearby mountain towns, he said.

While “strong” might overstate the situation, housing markets in Routt, Summit and Eagle counties showed a momentum that was missing in more removed counties like Pitkin and Gunnison.

A stronger U.S. dollar has made it more expensive for international buyers to purchase vacation properties in Colorado, and the election of Donald Trump as president depressed the Mexican peso by an even larger amount.

Many Texans, another important source of demand in Colorado’s mountain resorts, were coping with depressed oil and gas prices, making them less active. But in-state buyers were active, and driving distance, not to mention price, made a difference in what they bought.

The median price of a single-family home sold in Pitkin County dropped 37.1 percent last year, while it increased 17.6 percent in Eagle, 15.4 percent in Routt and 10.3 percent in Summit.

Some of that discrepancy reflects the ultra high-priced homes that sold in Aspen back in 2015. But the number of home sales was down 18.3 percent in Pitkin County last year while it was flat or up slightly in Routt, Summit and Eagle counties.

“A little bit of this was a pullback from buyers saying it might be overheated,” Telluride real estate agent George Harvey said of the slump Aspen suffered.

Mesa County saw home sales rise, up 5.6 percent, and homes sold in 95 days on average versus 137 days. But median home prices dropped 5.2 percent, the only metro area in the state where that happened.

As for metro Denver, buyers and sellers can expect another year living on what some market observers have called the “high plateau.” A constrained inventory is restraining sales, and pushing up prices. But higher mortgage rates are expected to reduce the number of buyers, capping how much home values rise this year.

“Barring something unusual we will see the same kind of spring as we did last year — limited supply and high demand,” said Mark Trenka, chairman of Colorado Association of Realtors.

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Posted January 29, 2017