I like to stay in touch with past clients and one of the most frequently asked questions I get is “How’s the Colorado Springs real estate market doing?”.  In the past week I had the opportunity to hear Alex Charfen, founder of The Distressed Property Institute and the Certified Distressed Property Expert (CDPE) real estate designation, speak to our company and my response to a recent client inquiry reflected what I heard Alex say.  We are not out of the woods yet.

My family built a new home in Colorado in 1988 and it did NOT appreciate for 5 years until MCI opened their headquarters in Colorado Springs in 1993 and did massive hiring.  Many new jobs followed in the technology and service sectors.  Colorado Springs grew.  Our home has appreciated nicely since 1993, even though those first years were not good, but we didn’t build our house intending to rake in appreciation in 12 months, 18 months, or even 3 years.  Many people had that mindset as they bought between 2004 and 2007.  It hasn’t worked out for them as we as a nation have experienced a devastating recession and billions of dollars of wealth has been lost.  What does it take to get positive home appreciation?  Jobs!!!  Until we see the job situation improve, we will not see a robust real estate market.  Does that mean you shouldn’t buy now, or sell and buy a nicer home?  Absolutely not.  Over a lifetime, home ownership has proven to be an amazing vehicle for wealth accumulation compared to renting and paying someone else’s mortgage.  But you do have to pay attention to your personal financial circumstances and lifestyle and decide whether you can afford to not have any appreciation for the next 2-3 years.  That is what we will probably see locally and nationally.  We expect Colorado Springs to improve ahead of many markets, but there is no guarantee when that will happen.

So what did I tell my client?  Here’s my response.  Do you agree with me?  Or do you believe the national press telling you all is good, no worries, things are looking up?  Stayed tuned for more facts in the coming weeks.  Then you decide.

We’re doing better with the number of sales than last year, but last year was the worst year in about 20 years in Colorado Springs.  The $8000 first time homebuyer tax credit is helping increase the number of sales for 2009 and 2010, but prices are not going up.  Rather we expect them to either stay flat or decrease again once the tax credit goes away 4/30/10.  It’s an awesome buyer’s market, but a lousy seller’s market.  My team and I are telling people that if they have to sell or they are looking for a great move-up deal and are willing to take a price hit on their current home to get the $6500 move-up buyer credit and great pricing and low interest rates on a larger or newer home, then go ahead and list their home, but if they just want to “try” to sell, this is not the market for that.  There is another wave of foreclosures coming as ARMs reset in 2011 so we don’t expect prices to improve locally for at least another 2 years.  We’re encouraging people to pay down their mortgages and pay in additional principal to build equity in the coming few years.