Tuesday, October 23, 2012

Regional Snapshot: Pueblo home sales, home prices, and foreclosures

Foreclosure activity has been flat in the Pueblo area, and home sales have slowly begun to move upward in the region. Meanwhile, median home prices in Pueblo are lagging behind the metro Denver area. A theme we find in the graphs below is that home prices dropped off  significantly during the first half of 2012, and that foreclosures are not improving at the same rate as the metro areas overall. This may be due to a dropoff in employment that has occurred during the first half of 2012 as the unemployment rate headed back up to 11 percent. See here for Pueblo employment data.

The first graph shows single-family home sales transactions. Clearly, home sales activity in 2012 is up from 2011. 2011 was a very bad year for home sales, and was the most inactive year for sales in at least a decade. In Pueblo, 2012 is shaping up to be the most active year since 2009, although that means home sales are at level experienced during the 2009 recession. There is clearly growth, but numbers are low. Low numbers are a result of not just diminished demand, but possibly of lack of inventory as well. I don't have inventory data specific to Pueblo, but we do know that compared to to years leading up to 2008, it remains more difficult  now to obtain a home loan. Over the past four years, home sales have ranged between 100 and 150 each month in the Pueblo area. 

The second graph also shows home sales activity, but in this case, I've used a 12-month moving average to remove seasonal variations. The graph shows that home sales bottomed out at the end of 2011, and have been slowly moving up since. The blue bars show the year-over-year change in sales, and the current trend is clearly upward. Home sales have increased year over year for four months in a row between May and August 2012.   

The third graph shows the median home prices in the Pueblo area and the metro Denver area. Not surprisingly, the median home price in the metro Denver area is well above the median home price in the Pueblo area. During August 2012, the median home price in the metro Denver area was 264,000 and it was 115,000 in the Pueblo area. During August 2011, the metro Denver median home price was 109,000 and it was 223,000 in metro Denver. Year over year, the price was up 6 percent in the Pueblo area and 10 percent in the metro Denver area. 

The fourth graph shows the median home prices in both area after being indexed for comparison purposes. Since 2006, the median home price index was more resilient in the Pueblo area than the metro Denver are up until 2010. Since 2010, the index in the Pueblo area has generally fallen below the metro Denver. There was a significant decline during the first part of 2012 when the median home price fell to 90,000 in both January and February of 2012. The limited size of the data pool here probably overstates the decline in the median price during the period, but we can guess that declining employment in Pueblo during the early months of 2012 contributed to the decline. 

To provide an additional check on the Realtor data I use above, we can consult the Federal Housing and Finance Agency data. The fifth graph shows the indices for both the Denver-Aurora area and the Pueblo area. Again, we see that the prices in Pueblo were a bit more resilient in the Pueblo area during 2006 and 2007, and that they have weakened compared to the Denver area during 2012. 

Finally, looking at the foreclosure data, we see that foreclosures are slowly declining in the Pueblo area, but not as much as among all metro areas combined. The foreclosure filings index, which tracks changes in the number of foreclosure filings (the first event of the foreclosure process), dropped off significantly in the combined metro-area total during 2011, and has remained significantly lower than filings totals from 2007 to 2010. While Pueblo saw a small decline also, the drop-off was not nearly as large. As with all metros combined, Pueblo's totals are below 2007-2010 totals, but have not fallen off as much since 2011. 

Foreclosure auction sales activity has been generally flat since 2011 in the Pueblo area, while sales totals have been falling in the combined metro total since 2011. The last graph shows that foreclosure auction sales (completed foreclosures) have dropped off significantly since fall of 2010, but they've been more flat in Pueblo county. In fact, foreclosure auction sales have been flat, with the exception of some spikes, since mid 2010. 

Taken together all of these indicators suggest the following:
1. Demand for single-family purchase housing is increasing, but declining employment during the first half of 2012 complicated the situation. Demand has been growing more solidly since mid 2012. The growth in demand we are seeing is lagging the growth in demand for homes in metro Denver. This is not surprising given that the employment situation in metro Denver is better. 
2. Foreclosures in Pueblo county, while slowly declining, are not declining as quickly as they are among metro counties in general. If we dug deeper into the data, we would see that foreclosures are declining quite a bit in metro Denver and northern Colorado. Pueblo, however, appears to be declining at a slower rate. 

Overall, the higher unemployment rate in Pueblo is contributing to slowing demand for housing and the slower decline in foreclosure activity.