The Colorado Springs housing market is reaching record high prices for homes. In spite of that, plenty of people are still buying.
News 5 spoke with local realtors to find out why. They explain that the growing population in Colorado Springs is creating a high demand for homes at a time when the city’s inventory is very low.
So if you are looking to buy there are some important things to consider first.
"Understand that whatever decision you make is probably a 10-year decision."
It’s advice that Associate Broker Rob Thompson of The Agency wants every potential homebuyer to take to heart.
"Encouraging people to exercise caution…and look at the long horizon, that’s something I failed to do when I bought my first house."
Thompson purchased a home in Las Vegas about 10 years ago when the housing crisis hit.
"I ended up short selling it for 67 percent loss…it significantly put me into some debt that I had to work off."
Thompson has learned lots of lessons since then and is now passing them along to buyers in Colorado Springs who are finding themselves in a very tight market.
Thompson said, "It’s not easy. A lot of homes going for significantly above list price, $10,000 to $15,000 above list price."
Amy Reid, CEO of Pikes Peak Association of Realtors, says the median price for a single family home in March 2017 was $268,000.
For March 2018, Reid said, "The median price is just under $300,000 for existing homes."
Thompson references the low inventory in Colorado Springs and that "even a small demand eats up that inventory."
So if you are trying to buy a home Thompson says there are a few questions you need to ask yourself.
"Is it reasonable for me to expect the 7-10 percent appreciation that I need to sell this home in the future in the time I intend to hold it…if not, then you’ve got to ask yourself am I willing to be a landlord because this will be future rental for you possibly."
If you are willing to be a future landlord the next question is "does this house cash flow as a rental? So you need to take your mortgage, add at least 10 percent for property management and if possible, 10 percent more for maintenance."
Thompson’s reasoning behind all of this is that you can’t bank on continued appreciation in the market.
With the tight market some people are concerned that Colorado Springs could be headed for a bubble. Reid says current indicators are not pointing to that.
For those who are looking to buy a home soon, Reid says the city is entering into the big spring/summer selling season where more inventory will come on the market. She says it should help to bring down prices for some homes.