Looking Forward to 2025
Reflecting on our 2024 predictions for the local real estate market, we’re pleased to say we got it right! We anticipated a modest price increase of 1%-3% and relatively flat sales activity. This is exactly what happened; prices rose by just 3% and the total number of sales dipped slightly. We also foresaw mortgage rates holding steady in the 6% range, which proved accurate.
This stability has set a solid foundation for 2025, as more buyers and sellers come to terms with 6% rates being a reasonable norm. As a result, we expect an uptick in market activity. Our forecast for 2025 includes a healthy 3%-5% increase in home prices, a 10% rise in total sales, and mortgage rates largely remaining in the 6% range.
Interestingly, REALTOR.com predicts Colorado Springs will be the hottest residential real estate market in the U.S. in 2025. While we see improvements ahead, we’re cautious about such a bold outlook. Our local economy is solid and we will continue to see an influx of high paying jobs in the high-tech sector which announced thousands of new jobs in recent years. The enduring appeal of Colorado Springs—its climate, outdoor recreation, job growth, and expanding cultural scene—continues to attract newcomers to the region.
However, challenges remain. The Colorado Springs metro area still faces a significant housing shortage across single-family homes, townhomes, and condos. New construction in 2024 was modest, and restrictive construction defect laws make building affordable condos particularly difficult.
Another pressing issue is property insurance. Rising premiums, higher deductibles, and coverage restrictions are becoming the norm, driven by increased risks of hail and wildfires. Many homeowners have faced non-renewals, and those with roofs over 10 years old may find their coverage limited.
While hurdles exist, 2025 promises growth and opportunity for our real estate market, fueled by a strong local economy and sustained demand for the unique lifestyle Colorado Springs offers.
