A seller’s market in the Steel City

The issue of affordable housing is trickling down to places outside the Denver-Metro area.

Ten years after the housing mortgage crisis of 2007, the problem that exists locally and nationally is one of high demand and a shortage of supply. The housing market that was once very much buyer controlled is now dominated by sellers.

Since there are currently few people choosing to list their homes, the ones who do list, list them for higher.

The Pueblo Association of Realtors monthly indicators report for December 2016, the most recent available, shows that despite a few spikes in recent years, housing affordability is trending downward overall.

“Not a lot of people are choosing to list their homes right now. Supply is down- naturally that has an upward pressure on pricing, if you’re the only game in town you will price it up,” said Jeff Falletta, a Remax associate who has worked in Pueblo real estate for 22 years.

A few key trends cited in housing markets nationally by Nationwide’s Health of Housing Markets Report for 2017 fiscal quarter, compiled by Nationwide Economics are: strong demand metrics such as job and income improvements, low housing supply and falling affordability.

The report says that fast-pace price increases have caused affordability levels to drop in many large metropolitan regions “to a concerning level.” The major concern is that lower affordability is hindering future growth by pushing would-be homebuyers out of the market and causing many first-time homebuyers to turn away from the market all together.

Denver most notably has been experiencing growing costs of living — so much so that the legislature has taken on the issue of affordable housing several times throughout the last couple of years, but the problem persists. The average listing price for a home in Denver is

$357,000. Renting isn’t much better, with the average one bedroom, one bathroom rent at $1,300, according to apartmentlist.com.
Falletta illustrated this same issue on a local level.

“It’s tough, you know it’s tough when there are only five to six houses available in University Park, and the lowest is about $275,000 and there are only about 15 to 20 for sale in Belmont. That’s just a snapshot of what we’re dealing with in this market,” he said.

According to chair of the Pueblo Association of Realtors, Mike Tripp, last month, the average price for a home for sale in Pueblo was $167,000. Which is a significant difference from historic average that Tripp cited being around $120,000.

Since homes are not as affordable, moving out of a current home and buying another is not as appealing as it has previously been due to the high prices.

“Folks that own their homes are staying in them a lot longer than they normally would, people used to move every five to seven years, right now it is 10 plus years,” Tripp said.

With few listing their homes for sale, the ones on the market are becoming more expensive.

“It’s tough, you know it’s tough when there are only five to six houses available in University Park, and the lowest is about $275,000 and there are only about 15 to 20 for sale in Belmont. That’s just a snapshot of what we’re dealing with in this market.” — Jeff Falletta, Pueblo Remax associate

“Another factor is homebuilders in Pueblo are in the doldrums and haven’t built homes in a significant amount since 2007. That downturn just now starting to see rebound, but the problem is building affordable homes is difficult because of prices, codes, and government entities that have adopted policies that have made the price of building housing higher for homebuilders to build,” Tripp said.

With higher prices for starter homes, newly built homes and listed homes across the board, it has become difficult for first-time homebuyers.
“So the affordability has gone down and a lot of folks that should be first time homebuyers aren’t finding what they need,” Tripp said.

Tripp cited millennials as being a big group that should shortly start becoming first time homebuyers, but due to the economy and student loan debt that many millennials locally are not currently finding the types of jobs that pay enough to enable them to do so.

“Typical Pueblo first time homes are now much more expensive than they were even just a year ago,” Falletta said.

As for the future of Pueblo’s housing market, both Falletta and Tripp say it is hard to predict since it depends on so many larger economic factors.

“I can predict that I don’t see any time soon where we’re going to not have a shortage of inventory for the rest of this year,” Tripp said. “Until the economy improves and good paying jobs are more attainable I believe our market is still going to be in a shortage of homes locally, statewide and nationwide.”