Pueblo’s real estate market is continuing to slow down, and the fallout is impacting businesses industrywide. It’s not just Realtors feeling the impacts — it’s home builders, mortgage lenders and title companies too.
“Overall, the housing slowdown is having a ripple effect across the industry as we see more title companies, mortgage companies and builders reducing staff,” said Dave Anderson, Pueblo Association of Realtors communications chair.
“There’s layoffs coming, I am sure,” said Randy Nobiensky, self-employed contractor with RH Builders who is seeing the impact on builders and Realtors. “We are all connected, all in the same boat, and with the interest rates where they are. People are not buying, they are buckling down.”
Nobiensky, who is vice president of the Pueblo Area Home Builders Association, said the cost of materials, supply chain issues, rising interest rates and inflation have all made the industry challenging for builders. The big bright spot of his year was being named builder of the year by his peers, but he said he is seeing some longtime builders opt for retirement.
New building permits are slowing
Just 16 new building permits were issued in Pueblo County in November.
“Looking at the first 11 months of the year, we’re down 202 permits compared to the same period in 2021,” Anderson said.
The impact has led builders, especially spec home builders who don’t have a buyer lined up in advance of the build, to halt construction on new homes, sell down their inventory and “wait it out,” Nobiensky said.
“They have five, 10 or 15 homes on the market, so they are going to stop building until the inventory they have has sold,” he explained. “For our community, that is 90% of us.”
“It’s scary because that’s how we make a living. It’s not looking good, but it’s just a cycle,” Nobiensky said.
The builders with a lot of homes on hand may be trying to liquidate them with sales very soon, he explained.
As a custom home builder, Nobiensky is not impacted quite as much, but he’s gone from producing four to five homes in a year to two under construction right now. He has been able to make ends meet by shifting to a commercial finish job and remodeling work to “fill in the gaps.”
He predicts other builders also will likely shift to remodeling work as homeowners shift focus to improving the homes they live in because many can’t afford to purchase a new home right now.
Mortgage interest rates have almost doubled from a year ago and are hovering between 5% and 7%, based on the buyers’ credit scores. That means mortgage payments can be almost double, too.
Nobiensky said his customers tend to be retired couples who are not impacted as much by the mortgage rates because they have cash from the sale of another home.
Prior to the interest rates rising, Pueblo’s real estate market suffered from low inventory and high demand. Now, due to the sharp increase in the interest rate, the exact opposite is true.
More real estate news:Let’s talk business: Residential real estate sales continue to slide
Activity across Pueblo’s real estate market continued to slow in November, with new listings down approximately 25%. Pueblo saw 116 fewer listings this November than it did in November 2021, Anderson said.
“Pending sales were down 43.3% compared with last November, nearly matching the big drop in sold listings, which were down just shy of 47%,” he said.
Last November, 320 homes sold in Pueblo; this year it was just 178. The amount of money the sales generated dropped too, from $88.7 million last November to $53.5 million this November.
Nobiensky said while conditions are challenging, he believes the 2008 economic downturn and real estate crash was far worse.
“I don’t think any of us really know for sure,” he said. “But it’s not going to be as long because part of the problem is inflation and getting products like concrete, windows and garage doors — all of which is fixable.”
“COVID-19 took its toll” on building material prices and availability, and “now we are just trying to get caught up,” he said.
What will the future bring?
Mortgage Lender Russ Lane said it’s his personal belief that interest rates will remain “at about the same place they are now or go just a little higher for about six months.”
Anderson said, “Many in the industry are predicting a tough year ahead.”
“I think we will be all right. We can weather the storm,” Nobiensky said.
One thing is for certain: Pueblo is not alone in experiencing the real estate slowdown.
“The slowdown can be seen across a multitude of categories with numbers that are a far cry from the market frenzy of a year ago,” said Martin Schechter of the Colorado Association of Realtors.
More real estate news:Is Pueblo becoming a buyer’s market? Residential real estate sales dropped 29% in September