Colorado REALTOR® Magazine February 2023

RIDING WITH THE BRAND IN COLORADO

PLUS:

2023: Things Are ImprovingThe Question Is by How Much? Page 10

Homes Stay on Market Longer, Prices Flatten as Buyers and Sellers Wait Out Rate Hikes

14

Artificial Intelligence: Revolutionizing the Real Estate Industry

27

The COLORADO REALTOR® is published by the Colorado Association of REALTORS®

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EDITOR: Lisa Dryer-Hansmeier, V.P. of Member Services: lhansmeier@coloradorealtors.com

DESIGNER: Monica Panczer, Creative Marketing Specialist: monica@coloradorealtors.com

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RE ALTOR®

PHISHING ATTACKS DON’T HAPPEN ON A POND OR

Riding With the Brand

Rocky Mountain High on REALTOR® Spirit

Making the trek from Columbia, South Carolina and climbing more than 5,000 feet in elevation to Denver, Colorado, the Riding with the Brand motorcoach pulled into Denver’s bustling downtown to the fanfare of more than 220 Colorado REALTORS®. REALTORS® from across the state – professionals who serve Colorado’s high country, the beautiful plateaus of our western slope, the open countryside of our fruitful plains, and our bustling urban areas – descended upon our capitol city to engage with their lawmakers and learn about what the economy has in store for our industry at the Colorado Association of REALTORS® Economic Summit and REALTOR® Day.

Day one started on a high note with a Riding with the Brand welcome message from VIP Kristy Hairston, NAR’s 2023 RPAC

Fundraising Liaison, followed by an economic keynote presentation provided by Nadia Evangelou, Senior Economist and Director of Forecasting for NAR, and Patty Silverstein, Colorado Economist and President of Development Research Partners. The day continued with a market trends analysis and attainable housing discussion facilitated by Boulder REALTOR® and CAR Spokesperson Kelly Moye, who engaged with industry experts on ways Colorado is leading the nation in affordable housing development and credit building programs. The Colorado Young Professional’s Network partnered with CAR to bring in New Jersey REALTOR® and 30 Under 30 winner Kyle Kovats, who explored how seemingly unrelated consumer trends can help REALTORS® predict house buying activity.

Throughout the day, Colorado REALTORS® had the opportunity to meet and greet with Kristy Hairston and CAR 2023 President Natalie Davis and interact with the Riding with the Brand motorcycle and motorcoach. The motorcoach attracted a lot of attention from both REALTORS® and Denverites alike as it was positioned only a block from the capitol building and steps from 16th street mall. Many photos were taken as Colorado REALTORS® were challenged to post to social media and talk about why they are proud to be a REALTOR®. Within the hotel, attendees enjoyed networking and playing a friendly game of cornhole.

Colorado REALTORS® raised more than $53,000 for RPAC at the REALTOR® Day Reception, thanks to a room of dedicated Colorado REALTORS® who continue to fight for property rights while keeping their eyes on affordable housing solutions to

CAR leaders on the NAR Bus.

Kristy Hairston, Dana Cottrell and Natalie Davis

COLORADO’S RIDING WITH THE BRAND EVENT WAS A BIG SUCCESS!

make homeownership more attainable for more Coloradans.

Day two started bright and early with attendees returning to enjoy breakfast with their legislators, as we were joined by Colorado lawmakers from both the House and Senate. Eleni Angelides, Deputy Legislative Director for Colorado Governor Jared Polis, spoke to Colorado REALTORS® about the importance of housing policy in Colorado. Senator Roberts, Representative Bird, and Representative Mabrey also took the stage to discuss current housing-related bills being considered this session.

The event concluded with an inspiring fireside chat with 2023 CAR President Natalie Davis, NAR’s 2023 RPAC Fundraising Liaison Kristy Hairston, and CAR CEO Tyrone Adams. This powerful trio discussed how the REALTOR® brand impacted their careers, embracing and preparing for change, how to balance work, leadership, and life, and how to make a difference in the real estate industry.

“Colorado’s Riding with the Brand event was a tremendous success as we created an opportunity to showcase the value of a REALTOR® with our members as well as with our local elected officials and community partners. One distinct difference of working with a REALTOR® can be found in our advocacy work, and this year we had the opportunity to identify proposed bills that could directly impact homeownership and property rights for Coloradans.

When it comes to Riding with the Brand, REALTORS® are the brand, and the brand is us. Together, we are working to protect private property rights and advocate for housing availability and attainability,” said 2023 CAR President Natalie Davis.

“Our entire association was honored to be one of the early cities on the Riding with the Brand tour. It was an absolute honor to welcome Kristy Hairston to Denver and our Economic Summit and REALTOR® Day as we came together to share perspectives, gain insights on our state and national economy, meet with our state’s elected leaders, and celebrate the strength and power of the REALTOR® brand and our work on behalf of consumers across the country,” said CAR CEO Tyrone Adams.

CAR’s 2023 Leadership Council kicked Riding with the Brand to the next stop on the tour, Oklahoma, by “kicking it” with the Riding with the Brand motorcoach.

See event photos here: https://coloradorealtors.smugmug. com/2023/2023-Rday

CAR ECONOMIC SUMMIT & REALTOR® DAY HIGHLIGHTS

Natalie Davis and Jason Witt have fun on the bus.

CAR Spokesperson Kelly Moye gives an update at the Economic Summit.

Kate Kelly, Aline Pitney and Kyle Kovats at the RPAC reception.

Kiplynn Smith and Matthew Hintermeister at the bus.

State Representative Richard Holtorf.

Mike Papantonakis, Robert Walkowicz, Stephen Foster, and Chris McElroy.

Fun times on the bus.

Brain Anzur was the social media winner with this post. Congratulations Brian!

Tyrone Adams, Natalie Davis and Kristy Hairston at the Fireside Chats.

Heather Hankins, Holly Duckworth, Janet Marlow, Bonnie Smith, and Melissa Maldonado.

Attendee Stew Meagher asks a quesion.

Janene Johnson, Jay Brown, Connie Tremblay, and Aaron Ravdin

Dave Mauro, Deanna Westerby, Mike Spoone, and Robert Tibbs.

The RPAC Reception was a huge success, raising over $53,000.

Nadia Evangelou, Senior Economist and Director of Forecasting for NAR.

Marlene Berrier is Riding with the Brand!

Chris McElroy, Ashan Chamberlin, David Barber, and Randy Reynolds.

Attendees ask Representative Bird questions.

Catherine Abiera-Lumbres, Kendall RothSukach and Melissa Nowlin.

Legislator Breakfast Panel.

COLORADO PROJECT WILDFIRE –2022 RECAP

Interest and engagement in Colorado Project Wildfire initiatives continues to rise as the growing number of wildfires and severity of those fires captures the attention of our primary target audiences – including our members throughout the mountain communities, as well as the front range following the catastrophic Marshall Fire at the end of 2021.

As a result, our program participation was at an all-time high from members in the past year, highlighted by the growth of several existing programs in local communities ranging from (chipping and slash removal efforts to planning for the improvement of fire escape routes in select communities and overall community protection plans). In addition, we engaged with several new associations/members to begin and/or expand partnerships and program initiatives in new communities.

This past year, we had a record number of our local associations apply for and receive CPW grants from CAR to implement wildfire education and mitigation programs in their local communities.

Those grant recipients tapped funds to support programs in:

• Aspen

• Boulder

• Castle Pines

• Castle Rock

• Colorado Springs

• Douglas County

• Durango

• Edwards

• Estes Park

• Evergreen

• Grand Junction

• Johnstown

• Kiowa

• Littleton

• Vail

Our CPW Task Force meetings and leadership planning efforts were highlighted by presentations from REALTOR• members who are leading program efforts in their local communities, as well as industry experts with specific expertise in insurance, mitigation practices and access to local, state, and federal resources.

Those speakers included representatives from:

• Colorado State Forest Service

• Rocky Mountain Insurance Association

• Wildfire Preparedness Services

• Colorado Department of Natural Resources

• Boulder Longmont Association

• Mountain Metro Association

Other highlights include:

• Completed distribution of 8,500 Colorado Project Wildfire brochures to local associations and partners organizations for distribution to Colorado residents.

• Engaged with our members, the CAR Foundation, NAR, and the REALTOR• Relief Foundation to provide financial housing resources to several hundred Marshall Fire victims.

• As a result of our long-term relationship building, our partnerships with the Colorado State Forest Service, Insurance Association and countless community leaders and wildfire experts across the state continue to improve the public’s awareness of wildfire risks and provide access to information, tools and local resources that can help them protect their homes and their communities.

• A prime example of that relationship includes CAR being asked by State Forester Matt McCombs to serve on the Colorado State Forest Service Working Group for the Wildfire Mitigation Education Outreach program that will launch in 2023 and continue through 2024.

• CAR/CPW has been asked to be a panel participant at the 2023 annual meeting of the National Fire Protection to talk about the importance of public-private partnership efforts in educating the public about wildfires.

• We continue work to update our Member Tool Kit materials to incorporate the latest content and learnings from our stakeholders/partners (Colorado State Forest Service, National Fire Protection Association, Rocky Mountain Insurance Association).

• Held a successful community program in March about Wildfire Mitigation and Planning. A “best practices” article was published in the Colorado REALTOR® magazine for holding a similar event, to encourage REALTORS® and brokerage managers to replicate the program in their own areas.

2023: THINGS ARE IMPROVING THE QUESTION IS BY HOW MUCH?

By Mathew Schulz President/Owner at Firelight Mortgage, Board of Directors at the Colorado Mortgage Lenders Association

Goodbye, sayonara, arrivederci, hasta luego, verabschiedung, get the heck out of here 2022! I think that we are all ready to embark on a new year, get 2022 behind us and start to thrive again in 2023. Yet, how is 2023 going to look? If you listened to my forecast presentation for 2022 last January, you would know that I have no business making predictions – however in my defense, I would say that just about everyone got it wrong last year! Whether it was predicting where rates would be in 2022 or 2023, or transaction volumes, most economists missed the mark. How badly they missed the mark made things hurt even more. I got my low to mid four percent prediction range for rates from the Mortgage Bankers Association, and shockingly, we were at that point by February, not to mention topping out close to seven percent (for a standard conventional 30-year fixed purchase mortgage) in October. Fortunately for us, rates have come down to the high five to low six percent range on conventional loans and mid to high five’s on most government loans –please refer to your own mortgage advisor for more accurate rates and fees. But how and why did this happen?

INFLATION

If you have been reading these articles, you may have picked up that I am very upset with inflation, she and I are not good friends presently. As a reminder, mortgage interest rates, by definition, come from mortgage-backed securities. These securities are bought and sold as bonds. Simply stated, a bond is an investment tool that is secured

or guaranteed by something. Our mortgage bonds are secured by the homes the mortgages are written on. Bonds, in general, do not have a large rate of return based on being a “safer or guaranteed” investment tool. If bonds don’t make much money in the first place, when inflation is bad (the cost of goods going up substantially and quickly), those bonds make even less money. A thought that our mortgage bond investors do not like, generally yielding lower bond prices and higher interest rates.

FORECASTS

The rubber meets the road where we think rates will be later this year. Below are the Mortgage Banker Association’s predictions for the next three years. Again, I want to remind you that the economist’s get it right less than they get it wrong.

Items of note are the rate predictions for the rest of this year hitting 5.2% and getting to the mid-four percent range in 2024 and 2025. While I am not a “consumer confidence index” expert, I believe that if rates can get back to the low five percent range (the fours being frosting on the cake), the sticker shock that buyers have faced recently - along with a bit of the “spoiled child” attitude around rates in the twos and threes - would go away and a lot of buyers would feel more comfortable selling their existing homes (homes that likely have financing on them that are in that two to three percent range) and buy another home. This is where upgrading

homes becomes less painful than it is now, and renters may be more attracted to purchasing as well.

It is also appropriate to note several things that have made buying more appealing than it has been in the past couple of years despite interest rates. Today’s market has come back to a much more neutral buyer/seller market. One is no longer competing with 10-15 other offers. One does not need to offer tens of thousands of dollars above the asking price. One is not being asked to pay tens of thousands of dollars in appraisal gap coverage. These are benefits that bring that cost to purchase back to the reasonable range.

PREPARING FOR 2023

My last thought to prepare you and your clients for the mortgage environment in 2023 is to discuss how banks are preparing themselves for a wave of loans that will be paid off in the first 12-24 months of their conception that were originated in 2022 and early 2023. While mortgage origination volumes have been substantially lower than standard volumes, there have been many transactions still completed since the beginning of 2022. With rates already .5-1.0% lower than their peak in October of 2022 (and rates expected to continue to fall) banks are hedging against these loans being refinanced “prematurely” into lower rate mortgages. How does a bank accomplish this? A bank will create interest rate options that highly incentivize borrowers to “buy down” their interest rate at the inception of the loan, paying discount points to get these lower rates. The incentive comes in making it incredibly affordable and enticing to buy down that rate. In a typical market, it might cost roughly .5% in discount fee to lower one’s rate by .125%. From a cost/benefit analysis perspective, this typically is not a strong value. However, in our present environment, banks are only charging .1-.3% of a discount fee to lower the rate that same .125%, making it a strong value to ultimately buy down the rate anywhere from .25-.75%. When the borrower starts their loan at an already lower than market rate, even if rates do come down, the likelihood of a borrower refinancing to lower their rate is greatly reduced. Also, by receiving discount fee at

the inception of the loan, even if the loan does payoff early, the bank has collected several thousands of dollars to help offset the cost to produce that mortgage. This is a conversation that all lenders should be having with their borrowers and you as real estate agents should be advising your clients to ensure they are receiving quality mortgage advice from a skilled and experienced mortgage loan originator.

Please remember that there is always opportunity in adversity. After originating mortgages for twenty years and seeing several difficult up and down cycles, I have learned that it isn’t always the smartest or even the hardest working agent or originator that survives these cycles, it is the agent or originator that can remain positive and optimistic. A person that will find those opportunities and use them to the fullest. A person that can adapt to change and thrive. Remember, in these times, the inexperienced, the part-timers, the one transaction a year agents and originators tend to fall out of the pool. You will be the one receiving a larger piece of a smaller pie and loving every bite!

Mathew Schulz, CML, is the President of Firelight Mortgage Consultants in Greenwood Village, Colo., a mortgage company that he has owned for 15 years. He is also a board member and past president of the Colorado Mortgage Lenders Association. You can reach him at mschulz@FirelightMortgage.com. Matthew provides a regular look into the market called MMG Weekly. Click here if you’d like to subscribe.

InterestRates 30-YearFixedRateMortgage(%)3.95.35.76.66.25.65.45.25.04.74.44.43.26.65.24.44.4 10-YearTreasuryYield(%)1.92.93.13.83.53.33.23.02.92.72.52.51.53.83.02.52.5 MortgageOriginations Total1-to4-Family(Bil$)6896784803983334975175414706285955864,4362,2451,8882,2792,468

CAR Foundation Welcomes New Board Chair, Announces Grants

The CAR Foundation, the philanthropic and community engagement arm of the Colorado Association of REALTORS®, is beginning 2023 by ramping up community involvement. The Foundation Board recently approved $75,000 in program grants to Colorado nonprofits serving communities with initiatives targeting attainable housing, emergency shelter, homelessness prevention, homebuyer education and down payment assistance.

“Colorado REALTORS® know that stable housing is fundamental to the wellbeing and self-sufficiency of Coloradans and their communities, having been helping our neighbors through the Colorado Association of REALTORS® Foundation for over 30 years. We are honored to continue to fund programs that are moving the needle for Coloradans seeking attainable housing, those struggling with homelessness, and ultimately helping more Coloradans become homeowners,” said Janene Johnson, 2023 CAR Foundation Chair.

Hundreds of Coloradans’ lives will be touched by those grants, which were awarded to organizations in every District, something the Foundation strives to do in each grant cycle.

“The challenges of finding stable housing that Coloradans can afford, preventing homelessness and educating potential home buyers affect our entire state,” said Amy McDermott, CAR Foundation Executive Director. “These grants were a direct result of fundraising support from REALTORS® across Colorado, and it is important that we support organizations in as

widely diverse a geographic area as possible.”

With nearly 30 years of experience in real estate and high-profile volunteer roles in her background, Janene Johnson brings expert perspective to the Foundation as 2023 Chair. “Our goals for the Foundation in 2023 are to establish ourselves as the leader in REALTOR® philanthropy,” says Johnson. “To do that, we’ll be looking to expand the education we provide to members and continue our consulting to other states.”

Johnson has served on the Foundation Board since 2019, when she became an ex-officio member due to her role as CAR President-Elect. A past Grand County Board of REALTORS® President and REALTOR® of the Year, she also has a passion for legislative involvement, having served on CAR’s Legislative Policy Committee.

In her free time, Johnson enjoys hiking around Winter Park and Fraser, skiing, and spending time with her family.

Look for multiple opportunities to get involved in the CAR Foundation’s mission in 2023. The Colorado’s Heart Award, launched in 2021, will again invite applications from REALTORS® who give back to their communities by volunteering, donating, or holding leadership positions in local nonprofits. Brenda Case, REALTOR® from Grand Junction, was honored as the 2022 Colorado’s Heart Award winner.

The CAR Foundation’s mission to support safe and attainable housing, advance homeownership for all Coloradans and provide housing related disaster assistance continues to transform lives thanks to the support of REALTORS® and industry partners. Learn more by viewing the Strategic Plan.

Janene Johnson 2023 Foundation Chair

WHY I INVEST IN RPAC

2022 LEGISLATIVE ADVOCACY SUCCESSES

REALTORS® Advocated for Affordable Housing (HB22-1304, SB22-159, and HB22-1242)

CAR advocated to include homeownership in the millions of dollars in ARPA (American Rescue Act) funds and worked to ensure a statewide approach to affordable housing legislation.

• HB22-1304 leverages $178M in federal economic recovery funds to build housing infrastructure and provide gap financing to projects that include affordable units. Local governments and nonprofit organizations can access funding to help pay for land acquisition, tap fees, building permits, and impacts fees. Grant awards can also be used for infill infrastructure or addressing much needed affordability in areas where workforce housing is scarce.

• SB22-159 established a revolving loan fund to make $150M in affordable housing investments statewide. Local governments, for-profit developers, and nonprofits can access below-market-rate loans to build affordable housing, infrastructure, land and building purchases, or to maintain existing affordable units. CAR ensured funds allocated for distribution

meet average median income levels that are appropriate to the area.

• HB22-1242 establishes statewide standards for the manufacture, assembly, and installation of tiny homes and cleans up tax provisions. CAR supported the bill because this type of public policy can bring affordable, small square footage housing and great jobs to Colorado.

CAR Supports Funding for Wildfire Mitigation (HB22-1007

and HB22-1011)

HB22-1007: CAR amended the bill to ensure that the wildfire tax deduction for property owners was extended and advocated for local government matching funding (HB22-1011) because the voluntary mitigation of property owners makes a big difference in making Colorado more resilient to wildfire prevention.

REALTORS® are engaged at the State Capitol to create proactive housing policy that is good for the real estate industry and private property rights.

Updated January 2023

The REALTORS® Political Action Committee (RPAC) is one of the strongest bi-partisan advocacy organizations in the nation.

It is the voluntary contributions from REALTORS® that enable us to be the voice of real estate in all levels of government.

Your investment in RPAC enables advocacy for REALTOR® Party interests at all levels of government and supports the future of real estate.

MARKET TRENDS

Homes Stay on Market Longer, Prices

Flatten as Buyers and Sellers Wait Out Rate

Hikes

Both home buyers and sellers continue to feel the effects of the Federal Reserve’s interest rate hikes designed to help curb inflation and slow the market, according to the January 2023 Market Trends Housing Report and analysis from the Colorado Association of REALTORS® (CAR). Housing prices across the seven-county Denver-metro area and state continued to fall slightly as buyers struggle to justify higher monthly payments and weakened buying power, while sellers, locked into lower interest rates, don’t see the value of a move just yet.

Although the combination of factors has led to some nice bumps in active inventory and months supply of inventory, overall inventory remains extremely low across a majority of price points. The supply and demand equation is helping keep prices from falling significantly keeping many buyers on the sidelines while others are getting a little more time to consider a purchase, make offers and complete inspections.

The average days on market has doubled or more in the sevencounty Denver metro area and has increased approximately 60% statewide compared to the same time last year. On the opposite side of that scenario, in some markets across the metro area and state, bidding wars have re-emerged after taking a few months off, demonstrating once again the local variables across all product types and price points.

A LOOK AT SOME KEY METRICS –STATEWIDE:

• Median price for a single-family home is identical to January 2022 at $520,000

• Average Days on Market goes from 35 last year to 60 in January 2022

• Solds fell 30% from January 2022 with at 3,441

SEVEN COUNTY DENVER METRO AREA:

• Median price for single-family and condo/townhome combined is down 1.4% over last year, $525,000 vs $531,000. That represents the first year-over-year decrease since December 2019.

• Average Days on Market more than doubles from last year, 50 days in January 2023 vs 22 days in January 2022.

• There is four times the Months Supply of Inventory from this time last year, 1.2 months vs. 0.3. At the same time, new listings fell to 3,709 from 4,300.

Looking at the CAR Housing Affordability Index, a measure of how affordable a region’s housing is based on interest rates, median sales price, and median income by county, the reports show slight improvements over the past three months however, affordability continues to be a major issue for many potential buyers across the state.

Taking a more in-depth look at some of the state’s local market data and conditions, the Colorado Association of REALTORS® Market Trends spokespersons provided the following assessments:

AURORA

“January was off to a colder, snowier, gloomier start in more ways than just the weather. Adams and Arapahoe County were almost double the inventory with pricing down 5% in all zip codes. This would make January an ideal time for buyers, experiencing more choices and lower home prices. That all said, January is typically a little slower. The better numbers will be February and March. As the sun is shining and the crocus start to pop up, we are seeing more inventory. With increased inventory, we are seeing more buyers. My personal experience is that some sellers are very motivated after sitting on the market for the past couple of months. Buyers have the opportunity to negotiate on pricing and seller concessions. As we move into spring, that option will be a thing of the past. As of the first two weeks of February, we are seeing more showings, more motivated buyers, and the phone ringing. I look forward to seeing the January numbers which I’m sure will not be as good as February 2022 however, I’m also sure they will look much better than what we had in January,” said Aurora-area REALTOR® Sunny Banka.

BOULDER/BROOMFIELD

“The January stats confirm what REALTORS® have been experiencing for the last few months – a sluggish market, prices decreasing and a change in the way buyers and sellers negotiate a sale. In Boulder County, prices went up throughout the first half of 2022 and then the appreciation was quickly lost due to rising interest rates. That, coupled with a typical seasonal slowdown, held prices to what they were at the end of 2021. Officially, Boulder prices went up about 1.8% and in Broomfield, they went down 11%, the first time we’ve seen a downturn in median sales price in years.

“Days on market doubled in Boulder from 39 to 80 days and anxious sellers have started taking less than list price and offering concessions to buyers to help buy down their interest rate. Sales price to list price in January was 98%, the lowest we’ve seen in years. Broomfield County fared a bit better than its neighbor with 67 days on the market but that still is double what we saw at this time last year.

“As interest rates dip down a bit, the pent-up demand from buyers who have been waiting on the sidelines seems to have sparked more activity in the market. The lower price points are experiencing bidding wars again, but nothing compared to this time last year. We head into 2023 with a more conservative, almost sluggish start. With new listings down 12% in Boulder and a whopping 23% in Broomfield, those buyers who have been waiting don’t have much in the way of selection. February will be interesting to watch as low inventory and delayed demand may push us right back into a seller’s market this spring,” said Boulder/Broomfield-area REALTOR® Kelly Moye.

COLORADO SPRINGS

“Are we picking up, stabilizing, or pausing before more declines? The Pikes Peak region saw no change in pricing for median sales price year over year. A stark contrast to last year when the market was red hot, and prices headed north every month. The easing of the market can be attributed to higher interest rates and a 108% increase in listings which has increased the days on market 264% for single-family homes and 117% for townhomes. As spring begins, it seems likely that we will see more inventory hit as sellers realize the market of last year is not coming back.

“Nationally, we are hearing about layoffs in the high tech, banking, and financial worlds. The retail industry had a terrible fourth quarter. But then the jobs report for January hit at 517,000 jobs added and lowered the unemployment rate. The mixed reports are hard to figure out. Between high inflation, gas prices starting to move back up, and the constant talk about recessions, buyers are simply disengaged.

Most of the data shows we are far worse off as an economy goes than many would like to admit. Car delinquencies rose to levels not seen since 2009. Consumer credit debt hit an alltime high and Americans savings accounts are being depleted trying to keep up. Builder sentiment did rise in January, and that was the first time in a year, thanks to some reprieve on interest rates. But that could be dashed if rates rise again. And the National Association of Home Builders did forecast a decline for single-family starts in 2023 and KB Homes saw a 68% cancellation rate in Q4. Even during the 2008 crisis, that

number was only 47%.

“As we progress into 2023, we have a lot of mixed messaging going on, but my gut tells me the end of the year is going to be hard on the economy and housing is a lagging indicator. So, while many remain bullish, I lean bearish. The constant headlines of more layoffs, manufacturing declining, freight not being moved, new builds slowing down just tend to lead to more softening in the real estate market. While many feel that this is the bottom, past recessions have shown us that it takes years to find that point. 2006 was our last peak and we bottomed out in 2011. So, is this the bottom, or just the beginning of a long path there? Time will tell,” said Colorado Springs-area REALTOR® Patrick Muldoon.

COLORADO SPRINGS/PIKES PEAK

“The housing market in Colorado Springs is no longer the same old story, no longer stricken by an acute shortage of active listings. After a long stretch of six years, in January 2023, the monthly supply of Single-family/patio homes has finally ascended to over 2 months, looking back to any previous month of January since 2017. During January 2022 and 2021, the monthly supply was at 0.5 month.

“Last month, there were 1,639 active listings of single-family/ patio homes and 739 sales with 50 days on the market, compared to 549 active listings and 1,058 sales with 15 days on the market in January 2022. Consequently, this caused over 36% single-family/patio homes' active listings in El Paso County to have price reductions. In January 2023, the average price was $525,000, and the median price was 445,000 compared to the average price of $494,954 and the median price of $445,000 in January 2022. Year over year, there was a 26% decline in the monthly sales volume.

“Last month, 61.8% of the single-family homes sold were priced under $500,000, 29% were between $500,000 and $800,000, and 9.2% were priced over $800,000. Year-over-year in January 2023, there was a 22% drop in the sale of singlefamily homes priced under $300,000, a 44% drop in homes priced between $400,000 and $600,000, a 10% drop in homes priced between $600,000 and $1 million but a hefty over 21% increase in homes priced over $1 million.

“When looking back 5 years and comparing single-family/ patio homes sales in January 2023 with January 2022, active listings are up over 32 percent, monthly sales and sales volume are down by over 21% and 24% respectively, average sales price ascended 58 percent, and median sales price rose 51%.

“Unequivocally, confounding affordability challenges due staggering combination of high interest rates and record high home prices are the most difficult barrier for the Colorado Springs area home buyers,” said Colorado Springs-area REALTOR® Jay Gupta.

DENVER COUNTY

“The average days on market for a freestanding home in January 2023 was 48. That sets a Colorado Association of REALTORS® seven-year record high and also marks only the third month that the number has surpassed 40. While 48 might not sound like a lot, consider that last January, that same number was a stark 17 while in April of 2022, the month before we started to see a seismic market correction, that number was 7 days. The reason we care about a 'day on market' trend is its reliability of describing how in-demand a home or type of home may be. Freestanding homes almost always trend lower days on market than condos suggesting, statistically speaking, attached homes are lower in desirability. With both numbers on the rise, we can conclusively state that desirability overall has fallen in our market - condos now lingering 8 days longer than last year.

“Of further interest is our current price trend, cooling its brakes considerably over the last year. With many months in 2021 coming in north of 20% year-over-year in appreciationfurther cooling to the teens last year, we are back to the single digits ushering in 2023. At just 2.6% higher than January 2022 for a freestanding Denver home, price growth is far more palatable and clearly less panic-inducing for buyers who are now reflecting that in their need to snatch up desirable homes before the next guy does,” said Denver-area REALTOR® Matthew Leprino.

DOUGLAS COUNTY

“The Douglas County market in January continued to slow down slightly, but inventory constraints make a strong spring selling season appear imminent. Median sales price in the single-family and townhouse/condo segments decreased slightly to $680,000 and $479,000, respectively. Single-family listings are continually spending more time on the market, up to 57 days on average in January, nearly 1.3 times that in January 2022. Inventory decreased month-over-month, causing supply-side pressure which will likely keep prices elevated into the spring.

“Our strategy in this market has remained stable over the past few months and boils down to one key point: modest pricing. ‘Average’ quality homes are still relatively overpriced given current market conditions, and we’ve found that pricing at the lower bounds of a listing’s range have resulted in multiple offers and a higher contract price than pricing at the higher end of that range. As interest rates remain elevated, the population of serious buyers at any given price point is smaller, and competitive pricing is the key to attracting attention to a listing amongst a market flooded with high prices,” said Douglas County-area REALTOR® Cooper Thayer.

DURANGO/LA PLATA COUNTY

“Bitter cold and above-average snowfall put a big chill on new and sold listings in January 2023. New listings were down almost 55%, and sold listings were down more than 50% compared to January 2022. The lack of inventory continues to drive up prices. The median sales price rose 11% to $750,000 compared to $675,000 last January. The inventory of homes increased more than 40% compared to January 2022 but still hovers at just over a two-month supply, just a third of the supply of a normal market. One indicator that the market is beginning to shift a bit toward a more balanced market is the percentage of list price to sold price, which fell to 94% compared to 99% last January. This is an indication that buyers are demanding more concessions from sellers and are not willing to participate in multiple offer situations.

“It is anyone’s guess what effect thawing temperatures will have on spring inventory and prices. The demand for housing remains robust, and there is no indication that it will diminish in the coming months. Mortgage rates and inflation seem to have peaked and are predicted to stabilize in the coming months, which should fuel additional buyer demand. Inventory (or lack thereof) will be the big story for the upcoming selling season,” said Durango-area REALTOR® Jarrod Nixon.

FORT COLLINS

“The favorable winds that fueled the first half of last year’s insatiable housing market have been gusting intermittently for the new year. Lower inflation numbers, solid jobs reports and an early drop in the 30- year-fixed-rate mortgage breathed life into an otherwise hibernating real estate industry. Limited numbers of homes for sale coupled with motivated buyers willing to ride out the daily fluctuations in mortgage rates provided resuscitation to segments of the housing market which, for the previous 90 days, had remained comparatively lifeless.

“The statistics are a bit confounding and thereby divining a sense of what’s to come is a bit blurry. Days on market, a measure of how long it takes for a property to sell, has more than doubled from May 2022 where homes were selling on average in just over 30 days. In January, this average has soared to 79 days. These are homes that came on the market in late Q4 2022 and suffered the worst of the interest rate spikes and home buyers opted to settle down for a long winter’s nap. The list price to sales price ratio has also declined from a high of nearly 6% over asking in April 2022 to an average of just under asking at 99.1% of list price. Again, houses that stay on the market for a long time rarely get full price from the eventual buyers. With less competition for the homes currently for sale, many buyers are finding sellers a bit more willing to negotiate terms such as price, seller concessions in the form of interest rate buy-downs or cash contributions to closing costs (or both).

“However, beware the dropping interest rate! When the rates dipped briefly below 6%, the flurry of buyers created an instant multiple offer situation for many properties.

The following anecdotes illustrate a market emerging from doldrums: Of the first 10 January transactions in our office, 80% involved multiple offers; an open house on a high-end listing in a desirable neighborhood in west Loveland commanded nearly 40 visitors on a sunny Saturday and a competing offer situation. Median prices in Fort Collins remained in the mid$500s which has not provided any relief in the affordability category. Such divergent experiences will be the rule rather than the exception in the coming weeks – but when interest rates settle in below 6% for a sustained period, the forecast is for blustery winds that will quickly fan the spark of active demand and buyers will awaken to spring and summer like bears emerging from their winter slumber and ravenous for something – anything - to consume,” said Fort Collins-area REALTOR® Chris Hardy.

GLENWOOD SPRINGS

“January brought a plethora of snow and visitors to the Roaring Fork and Colorado River Valley. What it did not bring was new listings - the single-family market had one new listing over January of last year, multi-family was down an astonishing 55 percent. Pending sales were down 13.6 percent (6 units) and 43.8 percent for multi-family, because we can’t sell what we don’t have which continues to be inventory. This lack of inventory continues to help sellers enjoy somewhat of a seller’s market. While we have seen a slight increase in Days on Market in the single-family sector (6 days) of 11.3%, the median sale price was up over last January to come in at $557,225.

“The fear of interest rates has been calmed by the invention of the seller buydown, showing the flexibility and creativity of REALTORS® and mortgage lenders to overcome what could have caused a major stalling of the real estate market. Now, instead of seller’s reducing their sale price, they give a concession to the buyer to help make their interest rate more palatable for the first few years. The mortgage industry is on board with this solution as they see the scenario of refinances returning in the near future, said Glenwood Springs-area REALTOR® Erin Basset.

GRAND JUNCTION/MESA COUNTY

“The market is showing the effects of the slowdown since the interest rates increased. Year-over-year, solds are down more than 40% to 143, and the downward trend extends to median sold price down 2.7% to $360,000. Average sold price is down 4.7% to $378,664, and pending sales were down 27.3% to 224. New listings were also down, 23.6% to 220, but because of the lower number of contracts and sales, active inventory is at 583. Properties are staying on the market longer, which does give buyers more time to find the most suitable property for them. Meanwhile, sellers are having to realize that they are not going to list today and be under contract in three days or less. And more and more often, they are also having to make concessions to help facilitate a sale.

“Looking back over 2022, sold properties have been steadily declining since last May when there were 356 sales. The median sold price is down from a high of $408,000 in June 2022 to where it is now, $360,000 and average sold is down from a high of $446,091 in September 2022 to January's $378,664. This is likely due, in part, to the fact that when interest rates came down a little, helping more of the lower priced homes to sell, which is reflected in the greatest number of sales in January were in the $300,000-$399,000 bracket,” said Grand Junction-area REALTOR® Ann Hayes.

PAGOSA SPRINGS

“Great snowfall in December and January has kept local and out of town buyers distracted from home buying and more interested with fun such as skiing and other snow sports. Sellers also appear to be in hibernation with just 12 new listings in January compared to 32 in January 2022 and pushing days on market up to 124.

“The largest price cuts are taking place in the luxury end of the market however, Pagosa Springs home price appreciation remains positive in registered growth. Buyers may be settling with the new norm of somewhat stabilizing higher interest rates. Unfortunately, their buying decisions struggle against higher home prices and, when financing, higher mortgage payments. Those factors have not impacted pricing. In January

2022 the median sales price was $390,000. A year later, the median sales price rose more than 33% to $520,000. Average sales price in January 2022 was $542,719 and by January 2023 it escalated $705,773 (up 30%).

January sales represent mostly mid-November and December buyers dealing with higher home prices than in 2022. In 2022, there were large numbers of homes priced in the mid $300,000 and $400,000 range which were gobbled up with low interest rates and cash buyers. That segment of the market price point has not been replaced in 2023 supported by pending sales down over 58% at only 18 homes in January. Condos continue to show the least inventory. Condo price appreciation is also strong and fewer days on market due to lack of inventory. The Pagosa Springs home purchase is tracking for the new median sales price to hit closer to $600,000. Less inventory in price points under $600,000 are still prevalent. Reports show there is almost a three-month supply and twice as many homes for sale (at 103) than January 2022. The reality shows about 70% of current homes for sale are priced higher than $500,000. Of the current 103 homes for sale, 63 are priced over $600,000 and 34 homes priced $1 million and higher. Home inventory under $525,000 is sparse and does not have market longevity creating a sense of urgency for buyers in this price category.

“Land sales were also low in January due to an abundance of snow. Land inventory is climbing better than last year, but at higher prices, it is presenting the same challenges to land buyers as home buyers. New and custom construction still have the same challenges as last year with work force, materials pricing, and shorter building months (due to snow). Overall, if you can find an existing home or condo close to your needs, buy it now and make some updates. Sellers should consider the right updates before selling or aggressively pricing the home to sell and expect longer days on the market. As many buyers are out of town buyers (2nd homes), most desire a move-in ready home to avoid the hassle of making home improvements from another state. For sellers, February and March present a grand opportunity. Historically, March and April bring on more land and housing inventory with the melting snow. It will be fascinating to see the real estate market as it evolves from winter hibernation to the vibrance of Spring and meeting those expectations,” said Pagosa Springsarea REALTOR® Wen Saunders.

PUEBLO

“The market continues its trend from the past few months with new listings down 13.5% from January 2022, pending sales down 29% from last year, and solds down more than 50% from the same time last year. The combination of factors helped push the median price down 1.2% to $293,302 in January with the sale-price to list-price ration falling 2.1% to 97.2%.

“The lack of buyer activity also helped push active listings up to 556 across Pueblo County, a jump of 58% compared to January 2022, and the months supply of homes rose to 2.4 months, up 84.6% from last January. This is still considered a seller's market, but sellers are having to reduce prices to get buyer activity.

“We also experienced a big slowdown in building permits in January. With only 13 permits pulled across nine builders, we were down 79% compared to January 2022. In 2022, there were 41 builders in our market. A slow start for new homes,” said Pueblo-area REALTOR® David Anderson.

STEAMBOAT SPRINGS/ROUTT COUNTY

“While other areas of Colorado may be experiencing increased inventory, the same is not necessarily true for Routt County. The New Year started off with 17% less inventory in singlefamily homes with little assistance from new listings, down 12.5% from January 2022. Multi-family started the year with 12 more units on the market than a year prior but received four fewer new listings for the same time last year. Single-family in Steamboat realized a decrease in days on market, while the outlying communities saw an increase, creating a month’s supply of about two months for the entire county. Days on market for multi-family increased 65% resulting in a month’s supply of a month and a half. The increase in days on market may create a false impression, as some buyers felt optimistic when properties were on the market for ‘extended periods’ only to become dismayed when they still found themselves in a multiple-offer situation.

“January saw seven homes sell compared to 20 previously; condos/townhomes had 19 transactions with a narrower margin to last year’s 23. Sellers of single-family received 98.1%

of their list price, 1.2% more than the same period last year and a median sales price of $1.775 million. With fewer transactions, it is understandable that that number would be significantly higher than last years $811,250. Multi-family received 100.4% of their list price, down slightly down from 101.2%, and the median and average sales prices were up 2.3% to $753,250 and 5.5% $879,297 than last year, respectively.

“January ‘days’ may more likely be remembered for how many days it snowed as the ski resort as we surpassed the 250-inches of snow accumulation for the season. Now, with 333” of snow and counting, there is speculation that we could see some increased inventory from those that have skied their last run or heaved their last shovel,” said Steamboat Springs-area REALTOR® Marci Valicenti.

SUMMIT, PARK, AND LAKE COUNTIES

“Has 2023 started off with the sky falling? No, just a bit of a cloud deck. You know those days when the fog blocks our view of the soaring heights, but then we really notice the hills and valleys just out our windows. The soaring heights of our market in January 2022 make the 34% drop in the average single- family home price one year later seem dramatic. In Summit County, an average priced home at $1.85 million is down about $238,000 from last month. Prices dropped throughout the first half of 2022, but actually started to rise a bit after August of last year. These are signs of a market settling down.

“With buyers waiting to see what comes next in the world of prices and interest rates, Summit, Park, and Lake counties have shifted to more balanced markets. Negotiations are taking place with sellers sometimes making concessions. For wellpriced properties, there are still multiple offers. In Summit, the percent of sales price compared to list price is strong at about 98% for single family and 97% for multi-family homes.

“We’ve started the year off with the average single-family home price in Summit County dropping to $1.85 million in January, down 35% from a year prior, but up 23% from January 2021. January 2022 was a unique month where the average price jumped 65% from the month before. Total sales continue

to fall, and listings are rising compared to last year however, inventory is still tight which is why we have seen our prices and market flatten.

“Barring something unexpected, I don’t see our market dropping dramatically, more likely flattening. There are buyers waiting and when the Federal Reserve is done raising rates and they drop to 5.5%, I expect to see buyer activity pick up.

“There are 320 residential active listings in the Summit MLS that range from a low-price, single-family home in Park County for $139,900 to a single-family home in Breckenridge for $19.5 million. Out of the 64 sales in January, the lowest price was a home in Park County for $165,000 and the highest was a single-family home in Breckenridge for $3.7 million. These numbers exclude deed restricted, affordable housing,” said Summit County REALTOR® Dana Cottrell.

TELLURIDE

“It appears we’re starting the year off by returning to elements of the pre-pandemic market of January 2020, and more similar to 2018 and 2019 with one exception. Prices have not retreated that much. Generally, prices in the last quarter of 2022 and January of this year are down about 10%. We still have a few buyers for the high end, $5-$10 million range but 75% of January’s 32 transactions totaling just shy of $45 million, were at much lower price points.

“The affluent are more concerned about the volatility of the stock market than they are about interest rates. Most are playing it safe for now and not making big ticket purchases. We see no signs of seller distressed sales and, in my opinion, probably won’t. If a seller needs to sell, there still seems to be enough demand to make that sale happen quickly. It’s too soon to read anything more into what the 2023 sales season will look like. However, by the end of the first quarter we should be able to read the market tea leaves much better,” said Telluride-area REALTOR® George Harvey.

“The comparison of market performance versus same period in 2022 shows a significant downturn. However, when we look at performance from fourth quarter 2022, the trend is more stable with some ups and downs.

“Comparing closed sales January 2022 versus January 2023, we have a negative 29.4% on single family/duplex, and a negative 51.9% on townhome/condo. However, when we compare December 2022 with January 2023, single family/ duplex is negative 14.3% and townhouse/condo is negative 28.6%. The phenomenal performance of 2021, and first half 2022, is moving back to a more normal trend. We have been trending this way since the second half of 2022 and is moving toward a more predictable market.

Factors driving this trend include increasing inventories, which in aggregate are positive 53.6% year over year. The only moderating factor of the inventory is the skew in price niches. The upper niches, from $2 million-plus represent approximately 68% of the inventory, with under $2 million representing 32% of inventory which impedes the opportunity to bring the market back to historic price niches. The inventory status, albeit positive, is skewed away from opening price product. Couple the inventory structure with mortgage rates and we see pressure against this segment of the market which relies more on mortgages than some of the upper price ranges.

“Pricing seems to be holding to the 2022 appreciation levels, but we are seeing some sellers making price moves. However, many of the moves are on properties that were aggressively priced above actual market.

“Forecasting the market moving forward is more pragmatic with moderate price depreciation in certain niches. However, this movement will not be in all segments as demand is still strong and supply/demand will drive pricing. Moderation is the word that will be the catalyst for the market and the importance of a real estate advisor will be key to success in this variable marketplace,” said Vail-area REALTOR® Mike Budd.

Thank you for supporting RPAC in 2022!

We closed out the year hitting all three of our NAR goals and receiving Triple Crown Status – all thanks to you, our members for investing in our industry.

1. Total Raised: $ 1,059,060 (Goal: $820,000)

2.Participation: 39.6% (Goal: 37%)

3.Major Investors: 308 (Goal: 296)

A HUGE congratulations to the 15 local associations on hitting all 3 RPAC goals for the year (Amount Raised, Participation, and Major Investors). Your dedication and support help shape the political future for the real estate industry, and we couldn’t do it without each and every one of you. Aspen

Montrose

Mountain Metro

Estes Valley

Four Corners

Glenwood Springs

Gunnison-Crested Butte

Pikes Peak Pueblo

Royal Gorge

Steamboat Springs

Telluride

Vail

Photos from RPAC Reception 2023

MEDIAN SALES PRICE

Colorado

JAN 2023 ~ $520,000

JAN 2022 ~ $520,000

YTD 2023 ~ $520,000

Colorado Townhomes/Condos

JAN 2023 ~ $400,000

JAN 2022 ~ $400,000

YTD 2023 ~ $400,000

MORE COLORADO DATA

REAL ESTATE SNAPSHOT

STATE OF COLORADO

JANUARY 2023

INVENTORY OF ACTIVE LISTINGS

LEADERSHIP ACADEMY

Congratulations

2023 CAR Leadership Academy

The 2023 Leadership Academy is made up of 14 CAR REALTORS® representing 11 local associations across Colorado. This cohort has started a four-month series of classes to sharpen their leadership and presentation skills, including in-depth knowledge of association governance and real estate industry advocacy.

2023 LEADERSHIP ACADEMY MEMBERS:

•Carrie Soto, Delta County Board of REALTORS®

•Aline Pitney, Denver Metro Association of REALTORS®

•Malisa Eakins, Denver Metro Association of REALTORS®

•Sally Kate Tinch, Denver Metro Association of REALTORS®

•Deven Meininger, Durango Area Association of REALTORS®

•Breeyan Edwards, Estes Valley Board of REALTORS®

•Rich Coccaro, Fort Collins Board of REALTORS®

•Thomas Barkoczy II, Grand Junction Area REALTOR® Association

•Jamie Goodvin, Greeley Area REALTOR® Association

•Stephen Foster, Loveland-Berthoud Association of REALTORS®

•Delphine Jadot, Montrose Association of REALTORS®

•Liz Bowen, Pikes Peak Association of REALTORS®

•Michaela Petti, Pikes Peak Association of REALTORS®

•Angela Mokate, REALTORS® of Central Colorado

Learn More About CAR’s Leadership Academy, https://coloradorealtors.com/education-events/leadership-academy/

Photos from the Leadership Academy Dinner

D.Jonathan Griggs CAR VP of Internal Operations

Tech Corner

PHISHING ATTACKS DON’T HAPPEN ON A POND OR LAKE

Phishing attacks are a common and growing problem that can put your personal and financial information at risk. These attacks often come in the form of fake emails that appear to be from legitimate companies or individuals and are designed to trick you into giving away sensitive information or downloading malware onto your computer. Here are some tips to help you protect yourself from email phishing attacks:

1Be wary of unexpected emails, especially those that ask you to click on a link or download an attachment. If you receive an email from a company or individual you are not expecting, wait to click on any links or download any attachments until you have verified the email's authenticity.

2 Look for signs of a phishing email. Some common symptoms include poor grammar and spelling, a sense of urgency or threat, and requests for personal information. If an email seems suspicious, do not respond to it.

3 Use caution when entering personal information online. If you receive an email asking you to enter personal information, such as your login credentials or financial information, be sure to verify the authenticity of the request before doing so. You can often do this by contacting the company or visiting their website rather than clicking on a link in the email.

4 Use strong passwords and enable two-factor authentication. Strong passwords can help prevent unauthorized access to your accounts. Twofactor authentication provides an extra layer of security by requiring you to enter a code in addition to your password when logging in.

5 Keep your security software up to date. Make sure you have the latest versions of antivirus and antimalware software installed on your computer and keep them up to date to ensure that you are protected against the latest threats.

These tips can help protect yourself against email phishing attacks and protect your personal and financial information. Stay vigilant and always be on the lookout for suspicious activity to keep yourself and your accounts secure.

What tech topics would you like to learn about? Let us know at Communications@coloradorealtors.com

ARTIFICIAL INTELLIGENCE: REVOLUTIONIZING THE REAL ESTATE INDUSTRY

Artificial intelligence (AI) has changed how we live and work, and this change will be no different for REALTORS® and the real estate industry. One of the most significant advancements in AI is the development of language models like ChatGPT. This article will explain ChatGPT and how REALTORS® can use it in their business to enhance customer service and streamline processes.

WHAT IS CHATGPT?

ChatGPT is a language model developed by OpenAI that uses deep learning algorithms to generate human-like responses to text inputs. It is a conversational AI model that can understand natural language and respond appropriately. ChatGPT has been trained on massive data and can answer questions, complete sentences, and even write articles.

BENEFITS OF USING CHATGPT AS A REALTOR®

Enhanced Customer Service: ChatGPT can help you provide quick and accurate answers to your customers' questions. It can assist with property inquiries, schedule viewings, and provide information on the local area. This level of automation can improve your customer service and help you handle a larger volume of inquiries.

Increased Efficiency: Using ChatGPT, you can automate repetitive tasks, freeing time for you and your team to focus on more important tasks. It can handle tasks like answering frequently asked questions, providing property information, and booking appointments, allowing you to focus on more complex tasks like negotiating deals and closing sales. For Example: you can ask ChatGPT to “write me a property description for… [Insert address of the property you are listing].

Data Collection and Analysis: ChatGPT can collect data from your interactions with customers and analyze it to provide

insights into their preferences and needs. This information can be used to improve your marketing strategies and tailor your offerings to meet the needs of your customers better.

24/7 Availability: ChatGPT can answer customer inquiries 24/7, even when your office is closed. This level of availability can help you close more deals and provide a better customer experience.

HOW TO IMPLEMENT CHATGPT IN YOUR REAL ESTATE BUSINESS

Implementing ChatGPT in your real estate business is straightforward and can be done in a few steps:

1. Choose a ChatGPT platform: There are several AI platforms that offer ChatGPT, and you need to choose one that fits your needs and budget.

2. Integrate with your website: Once you have chosen a platform, integrate ChatGPT into your website so customers can easily access it.

3. Train the model: Train the model to respond to specific real estate-related questions and provide relevant information.

4. Monitor and refine: Continuously monitor the model's performance and refine it as needed to improve its accuracy and efficiency.

ChatGPT is a powerful tool that can revolutionize your business in the real estate industry. It can help you provide enhanced customer service, increase efficiency, collect and analyze data, and be available 24/7. By implementing ChatGPT in your real estate business, you can stay ahead of the competition and provide a better customer experience.

Watch a clip from the CAR Fireside Chat about A.I. in Real Estate.

WHEN IN DOUBT, REFER IT OUT

CCIM Advises Residential REALTORS® to Listen Carefully

CAR’s residential REALTORS® are sometimes confronted with a tough question from clients, “You’ve been so helpful with the sale/purchase of my home. Can you help me with a commercial property deal?”

According to Certified Commercial Investment Member Institude (CCIM), the answer is that usually, you should refer it out to a commercial REALTOR®. If you are hoping to be helpful to your client and just make the initial call, there are a few terms that you can use to make sure you get a call back for your client.

Letter of Intent (LOI): The LOI is used before a fullblown offer is made and outlines the terms: price, timeline, disclosure, and buyer's agent name. It will also state who and when a seller will get paid, such as on execution of the sale or commencement. Using a template from a legal document template with only one signature line (the buyer or seller) is the best practice. Writing this LOI will help you flesh out the terms of the deal so that the other party’s lawyer doesn’t have to (Hint* This is part of a REALTOR’S® unique selling proposition).

TYPES OF LEASES:

1)Net Lease determines how much the lease owner pays

-NNN (Property tax) Net costs. Also known as Tripe Net.

-NN (Property Insurance) Must have insurance.

-N (Operating Expenses) Such as maintenance, this should be itemized.

If your client is asking you to look at a lease that is not NNN, ask a lot of questions as to why.

2)Gross Lease is common for landlords and lessors.

3)Land leases are uncommon in Colorado and are more prominent on the East coast.

PARTS OF A LEASE

Common Area Management (CAM) rate. This part of the lease determines the charges and costs dedicated to the common areas and is not specific to one tenant. This part of the lease should be scrutinized. Tenant improvement is listed separately from this.

CAP Rate. Another good place to ask lots of questions is when you see the CAP rate, which is the rate of return on a property based on income. It is either built on pro

forma or actuals. It is a shortcut to calculating value. Investors use the CAP rate to determine the value of their investments, while lenders use it to help underwrite loans.

Estoppel. A signed statement by a party certifying for another's benefit that certain facts are correct, such as that a lease

exists, that there are no defaults, and that rent is paid on a certain date. It’s given to a tenant to prove there is no issue with the property, such as a bad roof. This protects your client from having a dispute with a tenant. Commercial REALTORS® typically use Colorado’s form for this.

Abstract. Use this for a purchase agreement or a lease. Both sellers and buyer’s agents can write an abstract, which is a summary of the very long lease document that provides the lease term, legal issues, duration, deposit, tenant, unusual lease provisions, financial obligations, or other important issues. (Hint* it’s a time saver for you!)

Useable vs. Rentable square feet. One of these terms is usually listed on a retail lease as the amount of space a renter is paying for. Rentable space is usually the larger number on the lease. This can confuse the price for square footage on the deal.

the cannabis industry is impacting sales because of the zoning differences for growing marijuana versus distributing it.

Multi-family commercial sales are booming, however, in metro areas around Colorado, construction defect law remains a problem in sourcing affordable housing. Developers wanting to price homes at lower price points are facing these defect laws, which make condos and townhomes much more expensive to build.

Land commercial sales are the hardest to complete in terms of time spent, zoning designations, and capital costs. These deals can take years to close. REALTORS® must consult and process through different government agencies for utilities, and zoning. Agriculture is a subset of this category where local politics can play into negotiations.

THINK YOU WANT TO GET INTO COMMERCIAL SALES?

TRENDS IN DIFFERENT COMMERCIAL SALE SPECIALTIES

Commercial real estate is tribal, and many professionals deal in one of these areas: office, retail, industrial, multifamily, and land. Each area comes with some unique traits, which is why many larger commercial real estate firms will not allow a REALTOR® to work in more than one area.

Office, retail, and industrial are separate commercial sales specialty areas, however, with post-pandemic issues such as decreased consumer traffic, home officing, and supply chain issues, these specialty areas are blending. Companies like Amazon with more than one need are blending sales for offices, warehousing, and distribution. Previously, these would have been traditionally served by an agent who specialized within Industrial sales: warehouse, distribution, or manufacturing. For example, now some REALTORS® must combine specialties to flex between industrial and office space, buying and selling property to accommodate the smaller companies that distribute to Amazon. In Colorado,

Commercial realty might be a good fit for you if you are good at research, numbers, and analytics. As with most anything, patience is a virtue, but it is put to the test when some deals can take years to close. That said, those looking to put a foot into both residential and commercial real estate might find it challenging. For REALTORS® in smaller communities, your only option may be to do both.

Becoming a Certified Commercial Investment Member will provide you with expertise in financial, market, user, and investment analysis, as well as negotiations. For less than $1,000 a year, a CCIM membership can bring a practitioner the training, tools, resources, and a network that is the gold standard in commercial real estate. Contact Lousie Bowen for more information at 303-748-2231 or louise.richardson@ comcast.net.

AE SPOTLIGHT KEVAN LYONS

AE for REALTORS® of Central Colorado

How long have you been an AE? According to some folks, too long. In dog years, 189 years in June of this year (for nonmath experts, that’s 27 human years).

How did you get your start as an AE? It is rare to find a REALTOR® association executive that plans to do this job. Being an AE wasn’t on my radar either. I had a career in banking that had transitioned into management consulting services that included financial, tax, technology, and start-ups. One of my clients was the Town of Poncha Springs, which had a woefully inadequate manual accounting system at the time.

Tom Massey, a REALTOR® was a Poncha Springs town trustee at the time, came to me to see if I would be the AE for the local board of REALTORS®. So I added the association to my client list, went full-time a couple of years later, and I built it into the behemoth it is today. Okay, I did have lots of help along the way. Tom served at CAR as the Government Affairs VP, our state representative for eight years, and is still a good friend.

What do you love most about the job? The entrepreneurial aspect of it. We approach our organization with as much flexibility as possible. We look to the future and keep the past at bay (except as a historical reference, of course). We don’t battle a lot of egos and personal notions because all voices are heard and respected. Two decades ago, we eliminated all barriers to service on the board of directors, committees, and workgroups. As a result, we adapt quickly when we need to and take our time when prudent.

What is your biggest success as an AE? How we operate. We cover the largest geographical area in Colorado; we have meaningful presence and service at NAR and CAR and think of ourselves as a significant association in a small association’s body. I’m particularly proud of my workgroup and committee service at NAR/CAR, notably serving as the NAR 2012 RCE Certification Advisory Board chairperson.

What would your members be most surprised by about your job? It’s how much an AE/CEO has to know and do each day, month, and year. More personally, many of our members

are surprised to learn I’m older than they thought. That’s good news, I guess. On that note, I’m no longer in the parking lot of the retirement stadium; I am inside the building, choosing my season ticket seating! A writing and speaking “career” is in my retirement future.

CAR benefits you and or your members use most: Hands down, the Legal Hotline. It allows me to provide direct and tangible benefits to our members. In addition, I can confer with the legal staff on broader member issues as needed.

Which talent would you most like to have? To be able to dance. It is a social interaction that you can’t enjoy in any other way. It makes a person feel sophisticated, liberated, creative, and trendy. Sadly, on the other hand, I dance as if one leg is a pogo stick and the other a wooden spoon, and that’s when I’m in a groove.

What is your most treasured possession? An American Flag. My dad was in the US army in World War II. So, when he died from cancer a week after my twin sister and I graduated high school, the honor guard presented that flag to me. I should unfold it and fly it sometime; however, I can’t bring myself to do so.

Which historical figure or literary hero do you most identify with and why? I have chosen two, Yoda and Kermit.

Yoda “Do or do not, there is no try.”

Kermit the Frog: "Always be yourself. Never take yourself too seriously. And beware of advice from experts, pigs, and members of Parliament,” and "It isn't easy being green."

Motto or piece of advice you live by: Never leave a mess for someone else to clean up.

Kevan and his wife Laurel

AE SPOTLIGHT CHERYL BURNS

AE for Glenwood Springs Association of REALTORS®

How long have you been an AE? As of Feb. 12th, it will be 22 amazing years. Cheryl will be retiring in the Spring of 2023. We wish her the best in her future endeavors.

How did you get your start as an AE? I answered a Help Wanted ad in the local paper! I was offered the job but had to turn it down because the board wanted me to start in two weeks but my then-employer required a 30-day notice and there was no way I was going to burn bridges, tarnish the family name, etc. A few months later I contacted the board president to let her know I was still very interested in the position should it open up again, she said she would get back to me right away. It turned out the new AE was going to leave, I gave my 30-day notice, spent a week “training” with the outgoing AE, and the rest is history.

What do you love most about the job? Contrary to what some may think, the never-ending change! Be it membership, leadership, programs, policies, etc., there is rarely a dull moment. In addition, the ability to be involved at the local, state, and national level has been a privilege and an honor.

What is your biggest success as an AE? The merger of the Aspen and Glenwood Springs MLS’s and the creation of the Aspen/Glenwood MLS Corporation during 2004-2005. It was quite the process, and had been attempted before, but this time the right leaders were in place, the spirit of cooperation was alive and well, the stars were aligned, and everything fell into place.

What would your members be most surprised by about your job? Like another AE has said, I spend a lot of time by myself in the office. Being somewhat of an introvert, this actually works really well!

CAR benefits you and or your members use most: CAR’s advocacy programs - and staff - are so beneficial. Over the years, they have helped our Association become more involved in government affairs, which spills over to consistently meeting our RPAC goals thanks to the local culture that has been developed. In addition, I truly appreciate the support CAR provides to the AE’s.

Which talent would you most like to have? I would love to be able to draw freehand.

What is your most treasured possession? What I treasure most is my husband, Rich, our strong partnership, and the home we built together.

Motto or piece of advice you live by: Not All Who Wander Are Lost – J.R.R. Tolkien

Cheryl and her husband Rich

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Fair Housing Month

JOIN

US FOR THREE ENGAGING SESSIONS!

The People Behind Diversity

April 18, 2023, 10am – Noon

BEZEL Restaurant Lounge | Fee: $25

CAR will be hosting a panel of real estate professionals who represents a community that is often associated as diverse – they will share the beauty of their community and what REALTORS® should be mindful of when working with individuals from this community.

International Food Tour Virtual Reception

April 20, 2023, 1:00pm – 2:30pm

Virtual | Fee: $25

To celebrate Fair Housing Month, the Colorado Association of REALTORS® will be hosting a virtual reception honoring the individuals behind the word diversity and learning more about the various cultures across the globe.

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NAR’s Fairhaven Challenge

All of April

Fairhaven is a town every REALTOR® should visit. Online, that is! Complete the online challenge in the month of April to show your commitment to Fair Housing. The course takes 60 to 100 minutes to complete and can be paused or retaken as necessary.

https://fairhaven.realtor/

RPAC’s Major Investors are an elite and passionate group of REALTORS® whose investments shape the political future of the real estate industry. Major Investors are eligible to participate in the RPAC Recognition Program, with speci c bene ts and accolades that acknowledge their support.

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