Why We Aren't Headed for a Housing Crash in Colorado Springs

Why Colorado Springs' Real Estate Market is Stable and Growing

If you've been waiting on the sidelines, hoping for the Colorado Springs housing market to dip and bring prices to a more accessible point, it's time to reconsider. Contrary to some expectations, a plunge in home values isn't forecasted. In fact, local real estate experts are predicting a continued upward trajectory in home prices.

The real estate landscape in Colorado Springs today bears little resemblance to the pre-2008 housing bubble. Today’s market is very different than it was before the housing crash in 2008. Here’s why.

Tighter Lending Standards Enhance Market Stability

Obtaining a mortgage in today’s climate is not as easy as it was before the 2008 financial crisis, and this is actually beneficial for the Colorado Springs market's health. Stringent lending criteria mean that buyers are more financially stable and less likely to default on loans.

A comparison with the past shows a significant shift. The Mortgage Bankers Association (MBA) has data illustrating how mortgage accessibility has changed: the higher the index, the easier it is to get a mortgage. Today's lower numbers reflect stricter lending practices, reducing the risk of defaults and foreclosures that previously flooded the market.

Inventory Shortages Support Sustained Price Growth - Fewer Homes for Sale

Unlike the excess of homes available during the 2008 crisis, Colorado Springs is currently experiencing a shortage of inventory. This scarcity is a key factor in maintaining stable or increasing home values. Data from the National Association of Realtors (NAR) and the Federal Reserve highlights this stark contrast in inventory levels compared to the period of the crash.

With just a 3-month supply of homes on the market today versus the 10.4 months seen in 2008, it's clear that there simply isn't enough inventory to trigger a price collapse.

Home Equity Usage Shows Financial Prudence

The approach to home equity has shifted significantly since the early 2000s. Today, Colorado Springs homeowners are more cautious, choosing not to leverage their home equity for extraneous expenses. This financial prudence has led to an all-time high in tappable home equity, according to Black Knight.

“Only 1.1% of mortgage holders (582K) ended the year underwater, down from 1.5% (807K) at this time last year.” - Black Knight

This conservative approach means that even as home prices have risen, homeowners are in a stronger financial position, reducing the risk of underwater mortgages and foreclosures. This stability limits the introduction of distressed properties to the market, supporting price resilience.

Final Thoughts

While some may wish for a market downturn to snatch up homes at lower prices, the current data and trends in the Colorado Springs area do not support this outcome. Today's real estate market is fundamentally different from the past, characterized by stronger financial safeguards and a healthier balance of supply and demand.

Engaging with the Colorado Springs real estate market now, with the guidance of experienced professionals, offers a pathway to homeownership and investment in a region that continues to demonstrate robust growth and stability.While you may be hoping for something that brings prices down, that’s not what the data tells us is going to happen. The most current research clearly shows that today’s market is nothing like it was last time.

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Posted by: Mariana Wagner
The Colorado Home Team
Marketing Manager

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