Thursday, December 20, 2012

Colorado Springs employment and rental housing

Here's a snapshot of employment and rental housing.

The unemployment rate in Colorado Springs has been stubbornly high this year. During October 2012, the unemployment rate was 8.8 percent in Colorado Springs, which was up from the rate of 8.6 percent reported during October 2011. The first graph shows the unemployment rate in various metro areas in recent years:

Colorado Springs had the second-highest unemployment rate of any Colorado metro area, second only to Pueblo. 

The second graph shows the index for total payroll employment in Colorado Springs and Metro Denver. Since 2008, we can see that employment in metro Denver is heading back up to peak levels, but in Colorado Springs, payroll employment has gone flat, and in fact has been down a little bit this year compared to last year. 

The third graph shows the year-over-year change in total employment for each month. While most metros in Colorado have been adding jobs this year, the Colorado Springs area has been showing year-over-year declines in total payroll employment for the past four months. Payroll employment fell 1.6 percent from October 2011 to October 2012. 

In spite of the fact that the region is struggling a bit with employment, the vacancy rate in multifamily housing continues to fall in Colorado Springs. Usually, vacancies increase in times of weak job markets, but as we shall see below, a small amount of multifamily inventory has helped push the vacancy rate down. The vacancy rate during the third quarter was 6.1 percent, which was near an 11-year low. 6.1 is still not a terribly low vacancy rate, but it is quite low compared to the sorts of vacancy rates that have been common in the Colorado Springs area over the past decade. The vacancy rate was 6.2 percent during the third quarter of last year. 

The fifth graph shows that since 2010, rents have been continued to move upward and hit an all-time high during the third quarter of this year. We can see that from 2002 to 2009 rent growth was very mild, and in fact did not keep up with inflation. The average rent hit 787 during the third quarter of this year. It was 778 during the third quarter of last year. 

The sixth graph shows the year-over-year change in the average rent. The average rent increased 1.15 percent from the third quarter of last year to the third quarter of this year. The third quarter was the eleventh quarter in a  row showing a year-over-year increase. Overall, the region is experiencing the most solid growth it has experienced since the dot-com boom before the 2002 recession in Colorado. 

Finally, the last two graphs show multifamily permits in the Colorado Springs area. It is clear that in general, the region has seen far fewer multifamily permits in recent years than was the case during the 1990s. Permits were especially scarce from 2004 through 2010, which helps explain why vacancies remain low in spite of weak job growth. The lack of new construction over the past decade has helped push down the vacancy rate. New permit activity has been building over the past year, but we are still in the early stages of that. Permitting was especially robust during the Spring and summer of this year with 60-80 permits each month. Activity dropped off after August 2012, however. 

The final graph shows just how little new multifamily permitting occurred after 2003. For the first ten months of 2012, 597 multifamily permits were issued. There wee 657 during the same period of last year. But, there were only 8 permits issued from January-Oct  of 2009 and 7 during the same period of 2010. In fact, there were more permits issued from Jan-Oct of 2002 than during the next eight years combined.