Has the Correction Happened Already?

Every other way of looking at this market runs through the mortgage rate. Payments, affordability, what it costs to own versus rent, all of it moves when rates move. There is one measure that does not. The price-to-rent ratio compares the price of a home directly to the rent it can produce, with no mortgage in the math at all. It is the cleanest read on whether homes are actually expensive, and in Colorado Springs it says something that cuts against the common story.

Twenty years of price-to-rent

The ratio fell to about 14 times annual rent after the last crash, when homes were cheap relative to rent and investors bought everything in sight. It climbed through the 2010s, peaked at 20 times rent in 2022, the richest homes have ever been against rent in this data, and has fallen every year since. Today it sits at about 17.9, only a little above its 20-year average of 16.6.

The part that cuts against the story

The price-to-rent ratio topped out in 2022 and has been falling for four straight years. On this measure, Colorado Springs homes are cheaper relative to rent today than they were in 2022, and close to their long-run normal.

Here is the key: that did not happen through a price crash. Prices are essentially flat since 2022, up about one percent. It happened because rents rose 13 percent while prices stood still. The overvaluation relative to rent is correcting itself, quietly, through rent catching up to price rather than price falling to rent.

What this signals

There are two different corrections, and only one has happened. Priced against rent, the income a home actually produces, Colorado Springs homes are near fairly valued, so the valuation correction has largely run its course, and it came through rents rising into prices rather than prices falling. Affordability is the other correction, and it has not happened. The monthly cost to own is still far above a normal market, and that gap is the mortgage rate. So this is both a price story and a rate story: the price is close to fair against rent, but the cost of owning is still broken, and bringing it back takes rates easing and prices giving some ground, together.

The overvaluation that existed has largely unwound. At 20 times rent in 2022, homes were stretched. At 17.9 today, they are close to the long-run line. The rent fundamentals no longer point to a home that is badly mispriced.

It shows how the market heals. If rents keep rising a few percent a year into flat prices, the ratio keeps drifting back toward and below its average, which makes homes steadily better valued against rent. Pair that with any rate relief and it is what brings buyers back. The rent line rising into the price line is the quiet half of the recovery.

One honest caveat. A home being fairly valued against rent does not mean its price cannot fall. Affordability and rates can still push prices down even when the rent relationship is sound. The point is narrower and more useful than a forecast: the rent fundamentals do not demand a crash the way they would at 25 or 30 times rent, and the stretch that did exist has mostly corrected already. It just corrected through rents rising, which is why most people never saw it happen.

This is one lever in a bigger picture. See how rents, rates, and prices move together in what moves the Colorado Springs market, follow the rent trend on the rent tracker, or read the rent versus cost to own companion.

Sources: median closed price from El Paso County and ELEVATE MLS records, median asking rent from ELEVATE MLS leased records, 2006 through 2026. The broader Zillow rent index puts the ratio higher, near 22 times rent today against a 2021 peak of 23, but shows the same rise and rollback. Price to rent is median price divided by annual rent; gross yield is its inverse. Prepared by Rob Thompson, Realtor, Iconic Colorado Properties.