Colorado homebuyers couldn’t catch a break last year, having to juggle mortgage rates approaching 8% by early fall and home prices that remained stubbornly high despite reduced affordability.
Home and condo sales dropped nearly 20% last year and sales times stretched out by an additional week to 62 days on average, according to 2023 counts from the Colorado Association of Realtors.
But higher rates didn’t cause prices to fall in a meaningful way or boost the inventory of listing, leaving buyers in a tough spot. Looking at full-year numbers, the median sales price of a single-family home sold in Colorado fell 0.6% from $533,000 in 2022 to $530,000 in 2023. By December, the price was even lower at $515,500, although that represented a 2.7% increase compared to December of 2022.
Condo and townhome median sales prices only rose by $1,000 in 2023 to $420,000. But the median price rose 3% to $424,995 comparing December to December 2022. If there was an upside, it was that the craziness of the pandemic years faded in the rearview mirror. But the market has largely left entry-level buyers stranded by the side of the road with no way to get a home.
“It was a slower year — in a healthy way,” said Cooper Thayer, a market spokesperson with the Colorado Association of Realtors and a broker with The Thayer Group in Castle Rock. “We were coming off three incredibly hot years. It was good to see a slowdown.”
One reason home prices held up despite higher financing costs was a lack of inventory. Sellers, many sitting on mortgage rates below 4%, listed 21,000 fewer single-family homes and 3,200 fewer condos and townhomes last year than they did in 2022. Unless they had a strong motivation to sell, many current owners would prefer to stay put.
The year ended with 14,941 single-family listings on the market, down 14.8% from a year earlier, and 3,254 condos and townhomes, down 8.3% from a year ago. Inventories ended the year down in 38 out of the state’s 64 counties and flat in another four.
“The fundamental economic principle of supply and demand emerged as the dominant force preventing a price downturn,” said Steamboat Springs-area Realtor Marci Valicenti in comments accompanying the CAR report. “In 2023, the number of new property listings in our market reached the lowest point in the last 18 years, underscoring the scarcity of available housing.”
Higher mortgage rates proved a “death-knell” for first-time homebuyers without a minimum down payment, but they also stopped the move-up market, said Chris Hardy, a Fort Collins Realtor in his comments in the CAR report.
“This has further exacerbated low inventory challenges for those buyers still in the market which has led to median prices remaining stubbornly high,” Hardy said.
Yet, things could have been worse. The unemployment rate remained low in Colorado, job creation held up nationally and inflation cooled significantly, Consumer spending stayed strong, allowing the economy to defy numerous forecasts of a recession, which could set the stage for a “rebounding” housing market once mortgage rates drop, Hardy predicts.
“Interest rates have come down and there is a fresh, new outlook on the market. Buyers are adapting to the new normal and sellers are learning that, with fewer competitors, they can still win in this market,” said Boulder/Broomfield-area Realtor Kelly Moye in her comments.
If rates can continue to decline, buyer activity will heat up, prices will go up and the time it takes to sell a listing will come down, she predicts.
Tough for buyers almost everywhere
The CAR numbers are for the state as a whole and what happens in metro Denver, which accounts for about 44% of single-family sales and 70% of condos and townhome sales, heavily influences the statewide counts. Although single-family home sales overall were down 19.1% last year statewide, seven counties saw the number of home sales rise.
The counties with the greatest sales momentum in 2023 were Baca, up 80%, followed by Sedgwick, up 71.4%. But combined those two counties had only 31 sales last year, so it didn’t take much to move the needle. Yuma County had a 29.4% jump in sales, while Mineral and Conejos were up about 22%. Gunnison and Pitkin counties, with nearly 400 single-family home sales between them, saw gains of 13.9% and 7.6%.
On the flip side, nearly two dozen counties had sales declines larger than the statewide average, led by Hinsdale County with a 42.3% decline and Cheyenne County with a 40% decline. Montezuma, Lake, Rio Grande, Saguache, Kit Caron and Ouray counties all saw sales declines topping 28%.
Most of the big decliners were lightly-populated counties with a handful of home sales in a given year, but two more heavily populated counties in the state stood out for an above-average sales decline — El Paso County, where single-family sales were off by 24.5%, and Weld County, where sales were down 23.8%.
Those two counties also have home prices below the statewide median, making them popular with first-time buyers priced out of the metro Denver market. The median price of a single-family home sold in El Paso County in December was $467,635, while the median price in Weld County was $492,318.
But those buyers are also more sensitive to interest rates, Thayer said. Over the past seven years, home prices have appreciated on average 10% a year in Colorado Springs, but incomes have only risen 4.5%, creating an affordability gap, he said. Weld County, with its heavy reliance on oil and gas jobs, was among the last in the state to recover from the job losses suffered in the spring of 2020 during the early months of the pandemic.
“I would begin by saying 2023 was anticlimactic. Home prices held and the stalemate between buyers and sellers remained. In general, buyers opted out in 2023 as shown by the month-over-month declines in sold listings, and sellers didn’t budge on pricing. What did sell in 2023 pushed median prices up, but overall, stagnant may be the word of 2023,” said Colorado Springs Realtor Patrick Muldoon in the CAR report.
Despite having above-average sales declines, El Paso and Weld managed to also see above-average increases in median single-family home sales prices — up 5.1% and 3.6% respectively in December versus a 2.7% annual gain statewide.
Ten counties appeared to still be living in 2021, with double-digit gains in single-family sales prices, although some of those gains, especially in mountain areas, appear to reflect lower-price-tier buyers getting knocked out of the picture.
Leading the group of big price gainers was San Miguel County, home to Telluride, with a whopping 179.3% jump in single-family home prices and a 36.9% jump in condo and townhome prices based on 38 sales of each category. The median price of a home sold in San Miguel County went from $1.13 million in 2022 to $3.14 million in 2023, while for condos the median jumped from $1.55 million to $2.23 million.
“My perspective is that the upper 10% of our market, the truly high-end luxury segment, still has buyers who can afford the best and their wealth lets them fly above the potential turbulence of the economy, no matter what that means. The other 90% of buyers are looking for a deal and are being cautious. We are seeing weekly price drops, mostly in the bottom 75% of the market segment and that is generating some purchases,” said Telluride-area Realtor George Harvey in the report.
Kiowa County saw a median sales price gain of 131.4% and Baca County had a 39.6% gain, but those were on five and nine sales respectively. But Garfield County pulled down a 32% annual gain in the median price of a single-family home sold in December, but across the entire year, the median gain was 2.3%.
Gunnison, Saguache, Montrose, Eagle, Teller and Alamosa all had gains ranging from 10% to 20% in single-family prices. Looking at the median price in 2022 vs. 2023, Eagle County stood out, with a 20.1% gain in single-family to $1.82 million and a 39.1% gain in condos to $1.4 million. Looking at December vs. December, condo prices have more than doubled in the county to $2.31 million.
The biggest price declines were concentrated in rural counties with a low volume of sales and below-average home prices. Double-digit declines ranging from 17.6% to 10.6% were recorded in Otero, Dolores, Yuma, Hinsdale, Rio Grande, Las Animas and Rio Blanco counties. Except Hinsdale County, home to Lake City, the median price of a home sold last year in those declining-price counties was all under $300,000.
Pitkin County continued to hold title to the state’s most expensive housing marketing, with a median price sold of $6.7 million for single-family and $167,000 for condos. That gap can be explained by the heavy amount of subsidies provided for workforce housing, which is almost all multi-family. That low price points to how dominant deed-restricted condos have become in that market given the lack of market-rate options affordable to wage earners.
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Pitkin was followed by San Miguel at $3.14 million; Eagle at $2.13 million; Grand at $900,279; and Gunnison at $897,000, all highlighting the premium ski-resort towns command. Ouray, Routt, La Plata and Summit were also up there in terms of prices.
The most expensive Front Range counties last year in terms of median sold prices for single-family homes were Boulder at $775,000, followed by Clear Creek at $720,000 and Douglas at $705,495.
The most affordable counties for housing were concentrated on the Eastern Plains. Sedgwick, Otero, Bent, Crowley, Kiowa, Cheyenne, Baca, Phillips, Prowers, Kit Carson, Costilla and Yuma all had median home sales prices of $250,000 or less, with the median in Sedgwick at $132,000, according to CAR.
Listings were taking four months or more to sell on average in Dolores, San Miguel, Baca, Gunnison, Ouray, Crowley, San Juan, Conejos and Huerfano counties. Home listings were taking a month or less to sell in Broomfield, Arapahoe, Denver, Jefferson and Jackson counties.