Housing market remains unfavorable in El Paso County, but interest rates could fall in next year
EL PASO COUNTY, Colo. (KRDO) - With interest rates up, the housing market in southern Colorado still faces less than favorable conditions. Still, one local expert says to expect a tax cut in the near future to potentially spark a change in tides.
Tatiana Bailey runs a local firm in El Paso County, called Data Driven Economic Strategies. She says that experts in her field anticipate a cut in interest rates to happen in the next six to twelve months.
She also says, however, that buyers and homeowners should not expect those rates to go as low as they did when rates were around the 3-percent mark. Instead, Bailey explains that a decrease to four or five percent could, for example, mean a $1,000 dip in your monthly mortgage payment, for a home valued at $500,000 dollars, with a 20% down payment.
"We're not in some type of economic emergency, but should they come down, let's just say to that four and a half or 5% level, is not going to change the baseline prices, which are higher." said Bailey, who continued to say that prices are 40 to 50 percent higher than what they were just a few years ago.
The latest data from realtors in the Pikes Peak Region shows that the median price for a single-family household is $564,715. You can read a second report, here.
More data shows that total home sales dropped in the last two years by nearly 1,600 homes in El Paso County, and for those homes that are on the market, they were taking as many as 56 days in March 2024 to get sold, before dropping to 40 in April 2024.
Bailey says that this stagnant trend within the market is result of people of all ages, but namely older residents, or 'empty nesters', hanging on to those low-interest rates they were able to nab in 2021, and 2022.
"A lot of people are kind of locked out of the market, or they're locked in, because why would they move if their interest rate is at 3% or less?" explained Bailey.
The demand for housing still remains high in El Paso County, tailing a similar trend plaguing the entire nation.
"The National Association of Realtors has estimated [a shortage of] 5 to 6 million homes in the United States, and that's multi-family and single family combined. And then my office several years ago did a similar analysis. And we came up with, you know, about 8000 units short." said Bailey of El Paso County.
She adds that developers and builders creating brand new homes will play a key role in filling the need created from less existing houses on the market.
"They're responding to the demand. And the demand for new homes is really quite high. And that's good news for the builders. And they are waiting with bated breath for interest rates to come down." said Bailey.
She adds that the large presence of military members, their families, and employees of installments in El Paso County only add to that need given their usual income levels.
"The military is is another population that really validates almost an overemphasis that we need to have in this community in terms of building affordable stock." she said.
Bailey concluded that if first-time homebuyers must entertain the market this summer they should consider the following:
"Take advantage of some of the concessions that new builders are putting out there right now, like mortgage buy-downs. You know, they're not charging any type of commission. You know, sometimes they're even willing to negotiate a bit on price, and... they're doing that because they know that interest rates are high." explains Bailey.
