The supply of Colorado Springs-area homes for sale swelled to a nearly nine-year high last month, an increase possibly driven, in part, by investors who are dumping properties on the market because of tighter government regulations on the rental industry, one local housing official says.

At the end of June, 2,974 single-family homes were for sale, a 44.4% increase over the same month last year and the most since 3,215 properties were listed in September 2015, according to the latest Pikes Peak Association of Realtors market trends report and historical data maintained by The Gazette.

A new state law, enacted during this year’s session of the General Assembly and signed by Gov. Jared Polis, requires landlords to show cause before they can evict residential tenants.

It’s one example of regulations that have spurred some investors to sell homes they had been renting — boosting the inventory of properties for sale, said Gordon Dean, a real estate agent with Re/Max Advantage in Colorado Springs and board chairman of the Pikes Peak Association of Realtors.

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“A lot of landlords are not happy with these very tenant-centric rules and laws that are coming out that are making it less profitable or even more challenging to own investment property,” Dean said. “I think we’re seeing more investment property come on the marketplace that people probably hadn’t planned to do.”

Dean said he’s selling his own investment properties because of some of those rules and the high cost to own townhomes and condominiums.

“You can’t just say, ‘the lease is over’ any more,” he said of rental properties. “That’s considered an eviction now, which blows my mind. … The pressure on landlords has finally made them say, ‘we’re done with this, we’ll just liquidate and see what we can do with our money,’ versus this.”

Despite more homes on the market and a greater selection for buyers, sales slumped again last month.

A total of 1,115 homes were sold in June, down 13.3% on a year-over-year basis, the Realtors Association report showed. Sales now have declined in 24 out of the last 25 months dating back to June 2022.

Through the first half of 2024, home sales totaled 5,614, a 9.6% reduction from the same period in 2023, according to the report.

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Mortgage rates that have doubled from two years ago continue to keep some buyers on the sidelines, local housing experts have said. Those rates soared after the Federal Reserve hiked interest rates starting in early 2022 in an effort to tamp down inflation.

This week, 30-year, fixed-rate mortgages averaged 6.95% nationwide, an increase from last week’s 6.86%, according to mortgage buyer Freddie Mac. At the beginning of 2022, the long-term rate averaged 3.22%, Freddie Mac figures show.

Higher borrowing costs, combined with home prices that remain at historically high levels, have priced many buyers out of the market and led to slower sales, housing experts have said.

In June, the median price of homes sold during the month remained unchanged from May’s record high of $499,000, which was an almost 3% increase from June 2023.

“Those numbers, that’s kind of a tough entry-level home,” Dean said. “The (homebuyer) incomes, even dual incomes, are not supporting those higher numbers.

“We’re in a situation where the marginally qualified buyer, the one that’s right on the bubble, that needs a significant amount of help with a down payment from the seller, they’re not going to be able to buy in today’s market. It’s just not going to happen,” he added. “But the well-qualified buyer is still OK.”

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The second half of 2024 might see more of the same trends, Dean said.

He doesn’t expect mortgage rates to fall significantly, possibly only dipping to around 6¾%.

Likewise, Dean said he doesn’t forecast much of a change in prices.

If sales remain slow, prices for “average maintained homes” might trickle downward, he said. But well-appointed homes in nicer neighborhoods will continue to fetch higher prices, Dean said.

“The cream of the crop is always going to sell and is always going to sell for more,” he said.