Signs of hope in local housing

The Colorado Springsarea housing market is showing early signs that it may have bottomed out, according to statistics released Friday.

The inventory of area homes on the market rose in March from a year earlier by the smallest amount in 2½ years, while the median price declined by the smallest amount in six months, according to data from the Pikes Peak Association of Realtors.

"The market is correcting itself and balancing supply and demand," said Jay Gupta, chairman of the association and managing broker for Gloriod & Associates. "We expected the market would begin to pick up in the spring and see gradual increases for the rest of 2008."

The number of homes on the market in March was up 3.4 percent from a year ago, to 5,849, the smallest year-over-year monthly gain since September 2005. Home inventory grew at double-digit rates throughout 2006 and 2007.

New listings in March were down 18 percent from a year earlier, perhaps a sign that sellers are reluctant to put homes on the market when prices are falling.

The median price of homes sold in March (the midpoint of all sales) fell 2.9 percent from a year ago to $202,000, the smallest decline since September. Area median prices have dropped from the same month a year ago for eight consecutive months.

Housing sales show no signs of recovery yet - the number of homes sold by Realtors in March fell 19 percent from a year ago, to 722. Sales for the first three months of the year were down 19 percent from a year ago, to 1,811. Local home sales peaked in 2005.

Fred Crowley, senior economist for the Southern Colorado Economic Forum, said an index he calculates that measures the balance between the supply of homes on the market and sales to buyers shows the Springs-area housing market bottomed out in September.

The index uses 100 as its base to reflect a market that is balanced between supply and demand. It hit a low of 79 in September before recovering somewhat to 88 last month, reflecting that the housing market still favors buyers, but less so than in September.

"It looks like the housing market has really bottomed out. It is not showing signs of recovery yet, but it is not going down any longer," Crowley said. "We went through 2½ years of oversupply and the market weakened. Now, the market is stabilizing."

The latest statistics come as housing construction continues to decline from a year ago, although Crowley said the numbers appear to be improving once seasonal fluctuations are eliminated. Local housing construction has declined every month since late 2005.

Crowley said he doesn't expect the local housing market to recover significantly until the number of homes going into foreclosure levels off and begins declining. Foreclosures filed in El Paso County have reached record levels during three of the past four months.

The record foreclosures shouldn't push the housing market back into decline because they likely will be resold by lenders during the summer, when the local housing market is the strongest and most able to absorb the additional supply, Crowley said.

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