Realtors look to falling mortgage rates for a better year for home market

December was a downer for the Colorado Springs-area home market, as prices and sales dropped sharply last month to cap one of the weakest years for the local market in recent memory.

But that was 2008. Local real estate agents say they're optimistic mortgage rates hovering around 5 percent, lower housing costs and ample inventory in all price ranges will help boost the market in 2009.

The median price of homes sold in Colorado Springs and surrounding communities fell to $180,000 in December, a 16.2 percent decline from $214,882 during the same month in 2007, according to figures released Thursday by the Pikes Peak Association of Realtors.

It was the lowest median price for homes sold in any month since $179,900 in February 2004, and December's percentage decline was the biggest during the 16 years the association has tracked the statistic.

The median is the mid-point of sale prices; in December, half of the homes that sold had a price of less than $180,000, and the other half went for more.

Home sales totaled 495 in December, a 23.1 percent drop from the 644 homes sold during the same month in 2007. For all of 2008, home sales totaled 8,332, a 16.6 percent decline from 2007. Last year also was the lowest annual sales total since the early 1990s.

The supply of homes listed for sale, however, fell to 4,951 in December, down 8.1 percent from 5,385 during the same month the previous year.

The Realtors Association figures include homes sold and listed by its members, not those sold by individual owners. Also, the association's figures reflect homes sold and listed mostly in El Paso and Teller counties, with a few in other Front Range counties.

Jay Gupta, past president of the association's board and managing broker of Gloriod & Associates in Colorado Springs, said sagging consumer confidence has been the biggest reason for the downturn.

About nine out of every 10 homes that sold in El Paso County during December carried price tags of $400,000 or less, which helped drive down the area's overall median price last month, Gupta said.

Rising numbers of foreclosures and sales of other distressed properties also have driven down prices, said Charles D'Alessio, an owner of Keller Williams Partners in Colorado Springs.

The latest housing figures notwithstanding, there are reasons to feel positive about the market, the agents said.

Thirty-year, fixed-rate mortgage rates average 5.01 percent nationally, according to a report issued Thursday by mortgage giant Freddie Mac. Some home buyers locally are finding rates below 5 percent.

Homebuyers should consider the long-term savings of lower mortgage rates against the short-term gain from a lower home price, he said. Over the 30-year life of a mortgage, the rock-bottom rates could save a homeowner $30,000 or $40,000 in interest payments, which would be better than waiting for a home price to drop by a few thousand, Gupta said.

Lower mortgage rates will give a bigger boost to the housing market than a federal economic stimulus package because the federal action provides consumers only with a short-term boost, D'Alessio aid.

Sharon Roshek, of The Roshek Group of Coldwell Banker, 1st Choice, in Woodland Park, said she thinks lower rates are having an effect. She's written four contracts in the past two weeks, the same number she had written over the past two months.

"It's very much a buyer's market," Roshek said.