Colorado Springs Real Estate Market
What's going on with the Colorado Springs Real Estate Market, updated 9/19/2020.
Ok, here's what I know about the real estate market in Colorado Springs. I'm assuming you are here because you want to know, why Colorado Springs? Why is it booming? Why do so many people want to move here? What's the science behind it?
I am not a scientist, but I do like to explore things, and combined with being a real estate agent, my interest helps my profession. I have some opinions about why the Springs is doing so well, even with COVID-19 shutting down a lot of businesses and dampening the commercial real estate market.
Oh, this article is about the residential real estate market, which is doing really well, as opposed to the commercial real estate market, which as you can see around you, not so well, due to businesses with physical locations taking a hit from everyone staying home for so long. So, on we go.
We will cover the following topics:
- Military Bases
- IT/Cybersecurity Jobs
- Business Incentives
- Specific Supply and Demand examples in Colorado Springs
- New housing projects
First, some quick stats about the city, as this will be helpful later:
World Population Review (2020) lists the 2020 population of Colorado Springs as 485,946, with the United States Census Bureau's last official count of 472,688 as of 2018.
According to Zillow (2020), the median home value in Colorado Springs is $323,194, compared to the national median of $248,857 (Zillow, 2020).
The average market rent in Colorado Springs is $1,458, vs nationally at $1,594 (Zillow, 2020).
According to the Bureau of Labor Statistics (2020), the national unemployment rate as of July 2020 is at 10.5%. Compare that to 6.9% unemployment rate for the city of Colorado Springs, vs 7.4% for the State of Colorado as a whole.
Neighborhood Scout elaborates on home appreciation rates:
"In the last 10 years, Colorado Springs has experienced some of the highest home appreciation rates of any community in the nation. Colorado Springs real estate appreciated 59.59% over the last ten years, which is an average annual home appreciation rate of 4.79%, putting Colorado Springs in the top 20% nationally for real estate appreciation. If you are a home buyer or real estate investor, Colorado Springs definitely has a track record of being one of the best long term real estate investments in America through the last ten years."
Being largely derived from CoreLogic, which through the PPMLS and RECO MLS, has access to a majority of the housing data in Colorado, Neighborhood Scout is not to be ignored when it comes to consumer info about neighborhood data, crime rates, housing data, and schools. The remainder of my analysis will derive from Neighborhood Scout’s summary of living trends in Colorado Springs:
“There are many members of the armed forces living in Colorado Springs. You will notice when you visit or live here that some of the people you meet or see around town are employed by the armed services - even if they are not always in uniform.
Also of interest is that Colorado Springs has more people living here who work in computers and math than 95% of the places in the US.”
With five military bases in Colorado Springs (Fort Carson, Peterson Air Force Base, Schriever Air Force Base, and the United States Air Force Academy (Military.com, 2020), there is a lot of transit traffic. With many military members getting stationed in the city for a few years, there is a guaranteed turnover of housing from this aspect alone. Rentals near the military bases are also highly desired.
Also in demand is the need for IT and cybersecurity jobs, which largely stems from the DOD and DOJ, but with the generous business incentives that Colorado has given to new local businesses, non-government IT and security jobs are also available. These types of degrees often require a high level of understanding of math and computer technology concepts, as well as security clearances and/or specialized certifications, which explains the high amount of computer and math educated Colorado Springs-based employees.
“Colorado Springs is one of the most attractive larger cities for people who are young, single, educated, and upwardly-mobile career starters. This makes it a good place to live for young singles in their 20s and 30s and who have undergraduate or graduate degrees and are starting their professional careers. Although Colorado Springs is a large city, this demographic is significant enough that young professionals will find many others like themselves here, with really good opportunities for friendships, recreation, romance, and more.”
The above seems more like conjecture than statistical data, however there are ideas mentioned that can tease out some useful information: Given the typical nature of IT-based employment, where typical hours for an employee are often above 40 hours a week, this type of job is more suitable to a person who has few to no outside obligations, like a family, another job, or those who are still attaining their education requirements. “Young, single, and educated” indicates a demand for energy, vitality, with no obligations that would limit the work capabilities of an employee. “Upwardly-mobile” indicates a young career with less experience, which itself assumes that there is ample room for career expansion and jobs in Colorado Springs.
Colorado Springs also offers business incentives to businesses who relocate or expand here. ChooseColorado.com, the official state site that interested business owners can apply to, states what Colorado offers to these businesses, including tax credit, business grants, debt and equity, and cash incentives, among other things.
The Colorado Springs Chamber & EDC mentions a couple other benefits: no state or county sales tax on manufacturing equipment, and no inventory tax.
This is a big draw for all businesses both small and large, and it means our city has seen large commercial growth as new businesses set up shop here and take advantage of the tax breaks and free money. We're now seeing Amazon build its new distribution center here, and the Space Force also homing in the Springs (although that's not confirmed until next year).
Colorado Springs is a big hub for business, and though COVID-19 slowed in person shopping down quite a bit, online shopping has actually increased, and businesses that can or already have transitioned to an online format are recovering.
“One important feature of Colorado Springs is that it is one of the most car-oriented large cities in the country. In fact, 83.69% of people commute to and from work every day by private automobile, eschewing alternative forms of transportation, which are not widely available in Colorado Springs anyway. So, if you like to drive, Colorado Springs is the city for you! The landscape around Colorado Springs reflects this: wide streets, parking lots, plenty of highways, malls, and shopping centers are what you'll find.”
This is a commonly espoused feature of Colorado Springs, which is that the city itself is more spread out, particularly when compared to other similarly-sized cities like nearby Denver. Being that the layout of Colorado Springs does not support a more compact environment in terms of efficiency of space, regular personal transportation is a must. Because of the early design of the city, mass transit would be difficult and expensive to implement, meaning that personal transportation is more of a requirement for work in the city.
“The citizens of Colorado Springs are very well educated compared to the average community in the nation: 38.99% of adults in Colorado Springs have a bachelor's degree or even advanced degree.”
In line with the availability of IT/cybersecurity jobs in the Springs, and given the unemployment rate of Colorado Springs vs the national average, a bachelor’s degree or higher will be important in securing employment for these kinds of jobs.
One final noteworthy demographic stat Neighborhood Scout reports is the percentage of the top three languages spoken (86.9% English, 8.4% Spanish, and 0.8% German/Yiddish). This would indicate a sizeable market for Spanish and German speaking real estate agents as well.
Crime is an important factor to many people interested in moving to Colorado Springs, with many real estate agents having to fend off such questions so as not to violate Fair Housing Laws. Again, Neighborhood Scout summarizes the presence of crime in Colorado Springs:
“When NeighborhoodScout compared Colorado Springs with other communities its size, we found that the crime rate was near the average for all other communities of similar size. So, whether Colorado Springs's crime rate is high or low compared to all places in the US, when we control for population size and compare it to places that are similar in size, it is near the middle of the pack in crime rate; not much more or less dangerous, and about what we would expect from the statistics.
For Colorado Springs, we found that the violent crime rate is one of the highest in the nation, across communities of all sizes (both large and small). Violent offenses tracked included rape, murder and non-negligent manslaughter, armed robbery, and aggravated assault, including assault with a deadly weapon.
In addition, NeighborhoodScout found that a lot of the crime that takes place in Colorado Springs is property crime. Property crimes that are tracked for this analysis are burglary, larceny over fifty dollars, motor vehicle theft, and arson.
Importantly, we found that Colorado Springs has one of the highest rates of motor vehicle theft in the nation according to our analysis of FBI crime data. This is compared to communities of all sizes, from the smallest to the largest.”
It is important to note that violent crimes only make up 14% of all crimes committed in Colorado Springs, while property crimes make up the remaining 86%. Any neighborhood or area specific crime rates within the city that may shed more light on these numbers would likely be found with further searching from consumers on the Neighborhood Scout site, or similar sites with crime statistics.
A final important trend for Colorado Springs to be aware of is housing availability. What this means is simply: how many people live in the city, compared to how many people on average live in a singular residence, compared to how much housing is currently available. This will reveal how much supply is available. It is understood that demand for housing in Colorado Springs is high, but can the city currently keep or create enough supply to meet that demand? Understanding this information is a requirement in being able to answer the question: “How is the housing market in Colorado Springs?”
To make this easy, we will take a look at the current data:
Neighborhood Scout lists 178,623 homes and apartments in Colorado Springs (2020).
As an alternative population number from World Population Review, Neighborhood Scout cites a total of 472,688 people in Colorado Springs.
The United States Census Bureau lists an average of 2.52 persons per household in Colorado Springs (2020).
So if we take the number of people (472,688), divided by the rate of persons per household (2.52), we arrive at 187,575, which is the minimum number of homes/apartments needed needed to fulfil the housing demand in Colorado Springs.
If we take a look at our first number, we only have 178,623 homes and apartments available, which means we have a deficit of 8,952 living units. That means there are almost 9,000 homes and/or apartments that could be built and immediately filled from the demand. That’s a lot of housing that needs to be created!
Future Housing VS Job Creation
There are two more numbers that we should look at, which are the upcoming housing projects in Colorado Springs, and the upcoming job creations. More housing projects means more supply, and more job creation means more demand. Both will alter our total number of living units available.
Upcoming housing projects: 847 (Laden, 2020).
Upcoming job creations: 6,749 (Moix, 2020).
Most of the upcoming housing projects in the above number are for apartment units in downtown Colorado Springs, but one could also factor in new build communities in various parts of the city, and new project developments as the builders get permission for new build sites.
Also note that the number of housing projects and job creations listed here is not exhaustive, and so the final numbers can be tailored further.
Moix claims that "El Paso County saw the creation of 6,749 new jobs in 2019" (2020). If a similar number of jobs is expected in 2020, this would help explain the lack of housing: the city cannot possibly keep up with the new housing demand due to the abundant job creation.
Estimated job numbers expected as a result of new employers to Colorado Springs, according to Moix, such as the U.S. Space Command, producing potentially "1,500 jobs and a $1 billion construction budget, plus defense contractors with potentially thousands of employees," as well as Amazon, with 1,000 new jobs expected as a result of their new distribution and sorting center in Colorado Springs (2020). That's a lot of new employees who will need housing!
Harrison (2020) brings a more concrete number to the goal Colorado Springs has for available housing:
"Housing officials said they are gradually meeting the goal of Mayor John Suthers -- announced in 2018 -- to add 1,000 new affordable housing units to the city's inventory over five years."
Further down in his article, Harrison quotes Beth Hall Roalstadt, executive director of Homeward Pikes Peak, a local housing agency, on why more apartments are being built than single family houses, and why public opposition to apartments has been less than for residential homes:
“"More of them are being built in commercial areas instead of residential neighborhoods," she said. "It's all in how you sell them, how you convince people of the need. I think most people realize we need more housing and more of it that's affordable and available.""
What one can derive from these numbers is that even with the upcoming housing projects, the preexisting deficit, combined with the new job creation, means that there is too steep of a deficit for any upcoming housing to make a noticeable impact on the demand for housing in Colorado Springs.
So to simplify the answer to the question of “how is the housing market in Colorado Springs?” one can confidently answer, “the housing market is doing well, and consumers are confident in buying real estate in Colorado Springs!” However, being able to support that answer is an impressive feat that fewer agents can boast.
As an example of the demand vs supply of housing in Colorado Springs, the Cottages at Sand Creek is an 84-unit complex, which opened for lease in April 2020. As of the writing of the article (03/09/2020), Middaugh stated,
"The units are essentially duplexes -- each one shares one wall with another unit. At last check, Kniep said there were 168 people on the waiting list for the 84 units."
Saul Levy, a director with the Denver office of Newmark Knight Frank Multifamily, points out a few factors that, according to Laden (2020), are the reason for the apartment housing demand in particular:
· a growing population
· an influx of millennials
· more jobs and higher wages
· a flurry of high-profile development projects downtown and in outlying areas
· business expansions on the part of In-N-Out Burger, Centura Health and others
· the formation of the Space Force armed-service branch, which at least for now is based in the Springs.
Ryan Heeter, chief operating office of GE Johnson Construction in the Springs, lists some of the high-profile projects, according to Laden (2020):
· Summit House on Pikes Peak
· downtown U.S. Olympic & Paralympic Museum
· multiuse stadium housing the Colorado Springs Switchbacks
· new headquarters for Ent Credit Union
This is all helpful information to know, when forming an opinion of the housing market in Colorado Springs! This is the same kind of information that is used to make predictions about the economy and the housing market of a location.
Again, I'm not an expert at putting this kind of data together. However, I don't think you need to be an expert in order to see what's happening in Colorado Springs. I've given you a breakdown of what I think keeps Colorado Springs booming: the military bases, the IT/Cybersecurity-based companies, the business incentives our city gives out, and of course, the views and climate.
Then we went over the spread out transportation, crime, and the current housing availability, how much supply and demand we have specifically, and what residential and commercial projects are coming up.
I hope that gives you a better understanding of our city's success. It's a great place to live, but you already knew that. ;)
Bureau of Labor Statistics. (09/03/2020). Colorado Springs Area Economic Summary. Retrieved from the Bureau of Labor Statistics website: https://www.bls.gov/regions/mountain-plains/summary/blssummary_coloradosprings.pdf.
ChooseColorado. (09/19/2020). A Repository of Business Funding and Incentives. Retrieved from the ChooseColorado website: https://choosecolorado.com/doing-business/incentives-financing/.
Colorado Springs Chamber & EDC. (09/19/2020). Incentives and Taxes. Retrieved from the Colorado Springs Chamber & EDC website: https://coloradospringschamberedc.com/doing-business/incentives-taxes/.
Harrison, S. (02/12/2020). City council approves affordable housing project in west Colorado Springs. Retrieved from the KRDO website: https://krdo.com/news/top-stories/2020/02/12/city-council-approves-affordable-housing-project-in-west-colorado-springs/.
Laden, R. (09/03/2020). Downtown Colorado Springs poised for wave of housing projects. Retrieved from The Gazette website: https://gazette.com/business/downtown-colorado-springs-poised-for-wave-of-housing-projects/article_9d81f1fa-a6ca-11ea-a3fe-fba62256715f.html.
Laden, R. (01/23/2020). Experts tout more growth for Colorado Springs residential and commercial real estate in 2020. Retrieved from The Gazette website: https://gazette.com/business/experts-tout-more-growth-for-colorado-springs-residential-and-commercial-real-estate-in-2020/article_0a67bf3e-3e11-11ea-bea3-a769c106b515.html.
Middaugh, J. (03/09/2020). More housing coming to southeast Colorado Springs. Retrieved from the KKTV website: https://www.kktv.com/content/news/More-housing-coming-to-southeast-Colorado-Springs-568625441.html.
Military.com (09/06/2020). Colorado Springs Military Bases. Retrieved from the Military.com website: https://www.military.com/base-guide/colorado-springs-military-bases.
Moix, C. (01/01/2020). How’s the Job Market? Strong and Growing. Retrieved from the Colorado Springs Relocation Guide website: https://springsrelocationguide.com/hows-the-job-market-strong-and-growing/.
Neighborhood Scout (09/06/2020). Colorado Springs CO: Appreciation Rate Trends and Housing Market Data. Retrieved from the Neighborhood Scout website: https://www.neighborhoodscout.com/co/colorado-springs/real-estate.
U.S. Census Bureau. (09/06/2020). Population. Retrieved from the Google website: https://www.google.com/publicdata/explore?ds=kf7tgg1uo9ude_&met_y=population&idim=sub_county:0816000:0862000&hl=en&dl=en.
United States Census Bureau. (09/06/2020). QuickFacts: Colorado Springs city, Colorado. Retrieved from the United States Census Bureau website: https://www.census.gov/quickfacts/coloradospringscitycolorado.
World Population Review. (09/06/2020). Colorado Springs, Colorado Population 2020. Retrieved from the World Population Review website at https://worldpopulationreview.com/us-cities/colorado-springs-co-population.
Zillow. (09/06/2020). Colorado Springs Home Prices & Values. Retrieved from the Zillow website: https://www.zillow.com/Colorado-Springs-co/home-values/.