Colorado Springs’ single-family home and apartment markets appear headed in different directions, which could mean more frustrating news for buyers, but a better outlook for renters.

Like last year, homebuyers in 2024 could continue to find a tight supply of properties for sale, while high prices of the past several years aren’t expected to come down anytime soon. Apartment dwellers, however, already have seen rents start to fall because of a bulging supply that will continue to swell this year.

Those were some of the highlights from the 34th annual economic forecast breakfast sponsored Thursday by the local chapter of the Institute of Real Estate Management, where five speakers discussed various sectors of the local economy and real estate market.

The event, which took place at the Great Wolf Lodge & Water Park on the city’s north side, attracted about 150 real estate industry members.

Demand for housing remains strong in Colorado Springs, but today’s market is being driven by mortgage rates, not buyers, said Tiffany Lachnidt, a longtime local real estate agent with Keller Williams Premier and one of Thursday’s speakers.

Long-term mortgage rates that hovered around 3% in early 2022 have more than doubled since then; on Thursday, 30-year, fixed-rate loans rose for the third straight week to an average of 6.9% nationally, a two-month high, according to mortgage buyer Freddie Mac.

The spike in mortgage rates has priced many homebuyers out of the market and triggered a slowdown in buying and selling; Lachnidt cited figures that showed a 23% year-over-year reduction in sales during 2023 and a 13.6% drop in the supply of properties for sale.

Homebuyers, meanwhile, are being forced to dig much deeper into their pocketbooks.

In January 2020, when home prices averaged $325,000 and mortgage rates were 3.65%, homeowners had a monthly house payment of $1,486, which included just their principal and interest, Lachnidt said.

In January 2024, prices averaged $440,000 and mortgage rates soared to 6.65%, which sent homeowner principal-and-interest payments skyrocketing to $2,824.65 a month — nearly double from four years earlier, she said.

As a result, housing affordability is now a front-and-center challenge in Colorado Springs, Lachnidt said.

Some national economists and real estate industry experts had predicted prices would fall because of the slowdown in housing around the country.

But prices aren’t necessarily dropping in Colorado Springs, Lachnidt said.

The Pikes Peak Association of Realtors’ latest market trends report showed the $450,000 median price of homes that sold in January rose 1.1% on a year-over-year basis, the fifth straight monthly increase.

The number of homes listed for sale in January was up 6.7% when compared with the same month last year, though inventories in January in the five years leading up to the Great Recession regularly topped 3,000.

There are, however, a few signs that the housing market might be loosening a little, Lachnidt said.

Sales in February are trending up, while Multiple Listing Service sales that are pending currently total 994 this month, which is an increase over the total of 920 during the same month a year ago, her figures showed. The listing inventory also is growing, she said.

When it comes to inventory of properties for sale, help also might be on the way from the new home side of the single-family housing market.

Plans submitted by builders, which show their intent to construct homes, fell 16% in 2023 when compared with 2022, said Greg Dingrando, a spokesman for the Pikes Peak Regional Building Department and one of Thursday’s speakers.

But builder plans for new single-family homes began to ramp up during the last four months of 2023 and are up in the first two months of 2024, he said.

“We started to see the number of plans for single-family homes trending up toward the end of the year,” Dingrando said. “That’s a good sign for what’s coming this year. So far this year, we’re up in the month of January and in February, we haven’t even finished yet, and we’re already up 30% (on a year-over-year basis).”

The apartment side of the residential market is seeing more positive trends — at least, for renters.

Anecdotally, some apartment owners and landlords have said their occupancy levels have slipped, said Bill Morkes, a senior vice president with the Denver office of commercial real estate company Colliers International and another of Thursday’s speakers. Stated another way, falling occupancy levels mean vacancy rates are climbing.

Morkes’ comment mirrors recent apartment industry reports from 1876 Analytics, an affiliate of Denver-based Apartment Appraisers & Consultants; those reports have shown the Springs-area apartment vacancy rates have increased over the last few quarters.

As a result, apartment owners and landlords are reducing rents, Morkes said.

In 2023, average Colorado Springs rents fell to $1,438 a month from a 10-year high of $1,457 in 2022, according to figures Morkes presented Thursday. For 2024, his figures showed another reduction to $1,427 a month.

“We think rents are going to go down to try and offset that (increasing) vacancy,” Morkes said.

Still, the apartment supply is expected to grow, which could exacerbate rising vacancy rates.

On the one hand, developers pulled permits in 2023 that would create 2,248 new apartments, which was down 54% compared with a record-breaking year in 2022, Dingrando said.

And yet, 3,058 apartments were completed and opened to renters in 2023, he said. Also, at the end of last year, 8,858 apartments were under construction and will be added to the area’s multifamily supply at some point, Dingrando said.

Those apartment projects — including several in downtown Colorado Springs — were launched during record-breaking years for multifamily development in 2021 and 2022, he said.

“Those are the projects that are going to be finishing up,” Dingrando said, “so we are expecting a very large number of apartments that are going to be coming on line this year, as well.”