Thursday, July 26, 2012

Regional Snapshot: Colorado Springs area, mid-year 2012

Mid-year 2012 regional update on Colorado Springs:

Employment in the Colorado Springs area has become sluggish in recent months and the unemployment rate has inched up toward ten percent. During June 2012, there were 2,759 fewer employed persons in Colorado Springs than was the case during June 2011. The unemployment rate climbed to 9.8 percent during June, and the region experienced 6 months in a row of year-over-year losses in employed persons.

The first graph shows the unemployment rate. Colorado Springs has the highest unemployment rate among all metro areas except Pueblo.

The second graph is total employment in Colorado Springs versus total employment statewide. The two have been indexed so they can be compared. We see that the gap between statewide employment and Colorado Springs employment has begun to widen in recent months. As of June 2012, statewide employment is now 3.7 percent below peak levels while the Colorado Springs employment is 7.3 percent below peak levels.

The third graph shows year-over-year growth in recent months. Colorado Springs is compared to employment statewide. Note that Colorado Springs has run opposite to the statewide trend since January, with multiple year-over-year losses while employment increases, year over year, statewide.

Apartment rents and vacancies 

Demand for rental housing continues to grow in the region at a moderate rate. During the second quarter (data as of June 10, 2012), the vacancy rate in Colorado Springs fell to 6 percent from the second quarter of 2011 when the vacancy rate was 6.4 percent. 6.0 percent is one of the lowest vacancy rates reported in the region since 2002. Vacancy rate have not returned to the very low rates we saw during the late 1990s, however.

Rent growth has also continued in the region as a result of declining vacancies. As of the second quarter, the average rent in the Colorado Springs area has increased year over year for the past ten quarters, which is some of the most sustained growth reported since 2001. See here for full info on apartments.

Home prices and Home Sales

The graph below shows both a moving average for home sales closings in Colorado Springs and the year-over-year change in the number of closings. As of April 2012, home sales have inched up slowly over the past six months, moving upward from a ten-year low in the number of home sales that occurred during 2011. April's home sales were up 5.6 percent over April of 2011. We find that this growth rate is not as strong as what we've recently seen in metro Denver, although it does show an established growth trend at this point. See here for more.

The next two graphs show home price indices developed from two difference sources. The first graph shows the Federal Housing and Finance Agency home price index, while the second graph is developed from the Metrolist data posted by the Colorado Association of Realtors. Looking at both graphs we find that Colorado Springs prices increased more 2003 to 2006 than was the case in metro Denver. The subsequent decline in home prices was larger in Colorado Springs than in metro Denver also. According to the CAR numbers, the home price in Colorado Springs, as of April, was down  22 percent from peak levels while the metro Denver index was down about 9.6 percent. In the FHFA index as well, Colorado Springs prices are down by twice as much from peak levels as the metro Denver prices. Home prices inched up in April in Colorado Springs, but have inched downward for much of 2012. Overall, home prices are weaker in Colorado Springs than in the Denver area and in the northern Front Range. See here for more.


Multifamily permits in the Colorado Springs metro area are on track to end 2012 up by about 25 percent compared to 2011. The graph shows permit activity since 1995, and we can see that overall multifamily permit activity was very week over the past decade compared to 1995-2002. Multifamily permit activity, if it tops last year's total of 657 permits, will be the most active year for multifamily permits since 2002, when there were 1,696 permits issued. There have already been 337 multifamily permits issued in the Colorado Springs are through May of this year. Single-family permits, on the other hand are likely to be similar in 2012 compared to 2011. Growth for single-family construction has been growing but at a slow pace. There have been 894 single-family permits issued through May of this year compared to 1,617 permits issued for all of last year. Full permit data here

Foreclosure activity has been declining along the Front Range in Colorado and El Paso County does not appear to be an exception. The graph below shows that since 2008, statewide foreclosure activity and El Paso county foreclosure activity have tracked very closely together. During June 2012, completed foreclosures (foreclosure sales at auction) were down 42 percent from June 2011. In all metros combined, foreclosure sales in June were down 35 percent from June 2011. The overall trend is downward. In foreclosure filings, the event that begins the foreclosure process (not pictured), El Paso county's June total was up 40 percent from June 2011 while the combined metro total was up 13 percent over the same period. Both areas show a declining trend overall, however. Compared to the elevated totals seen during 2009, both measures are down considerably.

The graph shows completed foreclosures: