Last year's Halloween party, hosted by the Pikes Peak Association of Realtors, seemed a little spookier than usual.
Patrick Muldoon, president of Muldoon Associates, a real estate firm with offices in Colorado Springs and Pueblo, noticed that many attendees who had enjoyed the festival the previous year were missing. Of course, this year has been tough for industries across the country. High interest rates kept potential buyers and home sellers on the sidelines.
But Colorado Springs is feeling the pain more than most other areas, at least those hired to help people buy and sell homes. The concentration of real estate agents in and around the city is three times higher than in the U.S., according to federal labor statistics. That means more competition to represent owners or buyers of the few homes on the market. Some agents may have struggled to justify the event's $66 ticket price, especially in a year when sales fell 25%.
“Real estate agents are feeling the pressure and, in my expression, becoming very cautious with their spending,” said Muldoon, whose company has sponsored the party for the past two years.
The rise and fall of active real estate professionals closely reflects trends in the residential real estate market. And the local market remained tense in April, with just 860 units sold, a new low for April. This is about a third less than five years ago.
The impact on membership at the Pikes Peak Association of Realtors is significant, down 4.2% from a year ago, but current membership is 4,247, which is within normal limits, PPAR board chairman Gordon said.・Mr. Dean stated.
“That 4,200 to 4,400 number has been pretty consistent throughout the 20 years I've been in real estate,” Dean said. “Sometimes it's 6,000, sometimes it's 4,000. But on average, he's always been around 4,500. I think that's a number that supports the amount of business.”
PPAR did not have data available for past years. The company's “About Us” page says it has “more than 4,700 members,” which is a 9.6% decrease since the page was updated in mid-2022, according to the Internet Archive. ing.
The number of real estate agents, named for their membership in the National Association of Realtors, has also declined nationwide since 2022, when the pandemic spurred home sales. NAR membership decreased to 1,509,195 as of April 30, a 2% decrease from a year ago, the group announced. Eight states, including Colorado, saw year-over-year membership declines of more than 5%, Real Estate News reported.
Why Colorado Springs?
Colorado Springs still has a large share of real estate agents. In its occupational employment and wage statistics, the Bureau of Labor Statistics tracks the concentration of various occupations within a region relative to the United States, or what is known as location quotient.
According to the latest report using data from May 2023, the location index for real estate agents in the city was 3.05 compared to 1 real estate agent in the United States. This ranks the city 11th nationally as having the highest concentration of real estate agents. Florida metropolitan areas took the top spot.
Bill Craighead, an economist and executive director of the UCCS Economic Forum, was trying to figure out why the region's recent job growth numbers for the first quarter of this year appeared weak. I noticed that agents were concentrated in
“I think it makes sense that we're finally starting to see some of the impact of rising interest rates on the labor market,” Craighead said. “In Colorado Springs, real estate activity is so high that the local economy will be more sensitive to interest rates than in many other places. It's not just growing, it's also experiencing very high population turnover. The proportion of real estate agents in the local workforce is three times that of the national workforce.
There are several military installations in the region, with 5.9% of the population serving in the military. As a result, the statistics revealed that Colorado Springs has nearly twice as many people moving from other states as Denver. A year ago, 6.6% of the population in the Colorado Springs metropolitan area lived in another state, compared to 3.5% in the Denver metropolitan area, according to the U.S. Census.
Dean estimates that 20% to 30% of real estate sales each year are military-related, during what he calls “PCS season” (abbreviation for permanent station), when members of the military receive movement orders. pointed out.
“Usually it starts in June, but we're seeing more activity start in April,” he said. “That always helps our market.”
Additionally, many newcomers moved into town from Denver and other parts of the state during the pandemic-induced housing frenzy.
“At the time, our median sales price was $300,000, and their (Denver) median sales price was about $600,000. Then the pandemic hit and everyone wanted to move and no one was home anymore. You don't even have to live in Denver. It's too expensive,” Dean said. “They sold a house in Denver, and it sold in about a second, with no inspection or appraisal, and they took all that equity to Colorado Springs, where they sold it for 20,000, 30, 40,000 more than the list price. , I was paying 50,000 more.
The number of active real estate agents in Colorado peaked at 44,710 licensed professionals in July 2022, according to the state Department of Real Estate, which regulates licensed real estate professionals. That number has since fallen by about 2,000 active licensees, according to the department's research. License database.
The Denver area is by far the largest with 11,000 agents. Greenwood Village ranked second with 4,440, and Colorado Springs had the third-highest number of licensed agents with 3,127, according to data from state regulators. Of course, agents are not limited to working within the confines of a city. And not everyone is a real estate agent. Local Realtor associations represent only dues-paying members, and the Pikes Peak Association includes real estate agents in El Paso and Teller counties.
The department also added a new feature to its database to search for people who are licensed to sell real estate in Colorado. You can search for expired licenses, and on Wednesday he had 9,756 records listed. A spokesperson for the department said the option was based on requests from local real estate agent associations who wanted to compare their memberships against expiring listings.
Too many agents or enough?
But beyond the concentration of agents in Colorado Springs, it's actually about the job in general. According to the national association, the typical real estate agent works part-time and only makes a few transactions a year. Many people have a second job or a second source of income. Statistically, the longer you stay dedicated to your business, the more money you can make. The NAR study found that the median gross income for real estate agents with less than two years of experience was $9,600, compared to $80,700 for real estate agents with 16 years or more.
“We have an overabundance of agents, but (we) don't do zero deals a year that make up much more than 50% of our agents,” said Scott O'Connor, who owns Re Max Advantage in Colorado Springs with his wife, broker Tracy. “There's only one case,” he said.
Many feel the tough housing market has more to do with high interest rates than the number of agents in town. As shown in the graph below, more homes went on the market in April than a year ago, but there is a lack of new listings.
As mentioned earlier, April was one of the lowest sales months in years. Only 860 homes were sold in El Paso County, down from April, before the pandemic, when the county regularly sold between 1,100 and 1,200 homes.
Muldoon said homes are still being sold, but most of them are to buyers looking for nicer, more expensive homes, which is why the median price has increased. Entry level housing is too expensive. Muldoon said he listed the home for $850,000 and received multiple offers. His asking price was $770,000, and the deal was closed within seven days. But the lovely little house listed for $430,000 has been on the market for six weeks. And there aren't enough homes for sale yet on the market.
“I don’t think the problem with this number is that we are on average (in the number of real estate agents). We are selling so few units that this average is going to go down as the number of units continues to decline every month. It's hard to justify,” Muldoon said. “We're at a level of revenue that we haven't seen since 2012, 2013. And if you go back to that period, I think we had about 3,000 agents. I don’t know.”
PPAR had 2,654 members in 2013, according to a report in the Colorado Springs Business Journal.
Muldoon's sense is that real estate agents decided to hang on because the Federal Reserve has hinted that interest rates could be lowered in 2024, and many people feel there will be another housing boom.
“I think a lot of people have renewed that hope,” Muldoon said, but “there's no evidence of that. I've talked to a lot of real estate agents and they're really struggling. They're not selling. … And the real estate agents who have already paid their dues … I think they're going to give it their all this year.”
back to basics
Although O'Connor is no longer in sales, he runs his own company with about 80 agents in the Colorado Springs area. He has his Re/Max franchise, which was named franchise of the year, and he said it helps attract top agents. We have a similar work ethic and philosophy. Agents share questions on their internal Facebook pages and help each other find resources for their clients.
“The first transaction with a client is often the beginning of a long-term relationship,” O'Connor says. “Clients have a lot more options than they did 10 years ago, so we keep them top of mind and make sure we provide resources, like finding someone to help blow out the sprinklers. ” or having your house painted is an important way to increase your value and maintain your presence with clients. ”
One of his agents, Michelle Gatchik, became a real estate agent just before the pandemic hit, so she doesn't know what it was like before. But what a great year 2021 has been, she said.
“It was a little exciting and overwhelming, but I thought, ‘Is this normal? And it was an easy way to get into it,” said the Colorado Springs-based self-described “well-trained introvert.”
Gaczyk, who has been praised by her colleagues for using social media to grow her business, said that while her business isn't growing at the same pace as it will in 2022, it's still growing as she continues to build on existing relationships. She's a former middle school music teacher, so she knows what it takes to teach, guide, engage and keep things in order. She uses social media to celebrate past and future clients' big days and milestones when she comes across them, like their children being accepted into college.
She hosted client events such as music bingo and painting parties with her family. She is thinking of a silent disco event.
“I think for people who want to do business, there's a lot of business out there. If you look at the numbers and dig into the weeds a little bit, you'll find that a quarter of them aren't doing any (sales) at all, but the rest… A quarter of them may be doing one or two transactions a year,” she said. “It's like the old 80/20 rule where 20% does 80% of the work. I don't worry about it too much. I just take it seriously, do the work, meet people, be a part of the community. Well, to be honest, I think there's really enough work.”
