Your 2025 Colorado Housing Market Outlook: Rates, Inventory, and Opportunities
As 2024 wraps up, it’s clear that it has been a challenging year in real estate. The number of home sales nationwide hit lows not seen since 1995. While that’s tough news for many, there’s a silver lining if you already own a home in Colorado: property values across the state are still showing 2% to 10% growth, depending on where you live. And for those who are thinking about buying, there’s a bit of good news from realtor.com, which predicts that Colorado Springs will see a 27.1% increase in home sales in 2025.
Housing Inventory and Home Values
Even though the news highlights that the number of homes listed for sale is increasing, the bigger picture is that we still have fewer homes on the market today than we did a decade ago. In Colorado, we’re short by roughly a million homes today compared to 2013, while our population has grown by about 600,000 people in that same period. This shortage helps home values remain steady overall, though it may slow how quickly they rise.
Interest Rates: Ups and Downs
We entered 2024 with mortgage rates averaging around 6.61%. Rates peaked at 7.22% by May, then dropped as low as about 6.09% by September. The Federal Reserve has lowered short-term rates by a full percentage point since September, which has helped consumers with credit cards and other short-term loans. However, mortgage rates haven’t followed the same path. They’ve ticked up by nearly 1% since the Fed started cutting rates, largely because inflation concerns keep bond markets cautious.
The Impact of Inflation and Rising Debt
Inflation continues to make everyday items more expensive. More people are leaning on credit cards to manage these costs, which has pushed credit card balances to record highs. In Colorado, residents carry the 11th highest credit card debt in the country, with average rates above 23% a year. Late payments are also on the rise. If this sounds like your situation, you’re not alone—it’s a national trend that can feel stressful and overwhelming.
Using Home Equity to Your Advantage
If you have equity in your home, a Home Equity Line of Credit (HELOC) or second mortgage could be a way to consolidate high-interest debt into one manageable payment. We recently helped a client save over $2,000 a month by rolling their higher-interest bills into one loan. Another growing trend is using HELOCs for remodeling. If your current mortgage rate is in the 2%, 3%, or 4% range, you may prefer to stay put rather than sell, especially if you like most things about your current home. Remodeling can improve the layout or add features you want—all while hanging onto your existing low mortgage rate. Even if you don’t have a lot of equity, there are loan options that base your qualifying amount on what your home would be worth after improvements.
Looking Ahead to 2025
No one has a crystal ball, and experts have been off in their predictions for the past few years. Rates could stay higher for longer than many people anticipate, but that doesn’t mean life has to be on hold. If you’re interested in buying, selling, or exploring how you can tap into your home’s equity, it might make sense to investigate your options sooner rather than later. Waiting for a big drop in rates could keep you sidelined longer than you’d expect.
We remain optimistic that 2025 will bring opportunities, whether that means property values holding steady or rising modestly. If you’re curious about ways to make the most of your current mortgage or want to explore new financing, we’re here to help. Feel free to reach out and have a wonderful 2025.
