Monday, December 31, 2012

Mass layoffs in Colorado down for third year in a row during November

Mass layoff events fell 8.9 percent to 92 events during the first eleven months of 2012 in Colorado. There were 101 mass layoff events during the same period last year. According to the November report released last week by the U.S. Bureau of Labor Statistics, there were 10 mass layoff events during November 2012 alone, which was down 37.5 percent from the 16 events reported during November of last year. Comparing the first eleven months of each year, both total mass layoffs and first time unemployment have decreased each year since 2009.

The first graph shows that monthly mass layoff events grew rapidly after November 2008 in Colorado, and have gradually declined since.

Nationally, mass layoff events increased 67.9 percent from 1,393 during November 2011 to 2,339 during November of this year.

In the year-to-date total for November in Colorado, mass layoffs have now fallen three years in a row after peaking at 164 mass layoffs during the first eleven months of 2009. The second graph shows year-to-date totals for November since 2002:

Mass layoffs were rare from 2004 through most of 2008.

Overall, the most recent mass layoffs data suggests that the employment situation continues to stabilize. New layoffs continue to lessen, but as we've seen in the most recent employment data for Colorado, job growth continues to disappoint and total employment totals remain well below 2008's peak totals.

New jobless claims

New claims for unemployment insurance in Colorado fell year over year by 26.9 percent to 992 during November 2012. There were 1358 new claims during November of last year. Nationally, new claims for unemployment insurance were up year over year, rising by 95.6 percent from November 2011 to November 2012. The third graph shows no obvious trend in recent months, however.

In year-to-date totals for new unemployment claims through November, totals are down 9.8 percent year over year in Colorado. There were 9,857 new claims during the first eleven months of 2012, compared to 8,885 new claims during the same period last year. In the year-to-date total for November, new claims for unemployment insurance have now fallen three years in a row after peaking at 14,483 claims during the first eleven months of 2009. The last graph shows year-to-date totals for November since 2002:

Initial claimant. A person who files any notice of unemployment to initiate a request either for a determination of entitlement to and eligibility for compensation, or for a  subsequent period of unemployment within a benefit year or  period of eligibility. 
Mass layoff event. Fifty or more initial claims for unemployment insurance benefits filed against an employer during a 5-week period, regardless of duration.

Colorado umemployment rate equal to national rate during November

Colorado now has essentially the same unemployment rate as the nation overall, and this has been the case for the past eight months.

The seasonally-adjusted unemployment rate for Colorado during November was 7.7 percent, and it was also 7.7 percent for the nation.

According to the most recent BLS press release on state unemployment:

Nevada continued to record the highest unemployment rate among the states, 10.8 percent in November,  followed by Rhode Island at 10.4 percent. North Dakota again registered the lowest jobless rate, 3.1  percent. In total, 25 states reported jobless rates significantly lower than the U.S. figure of 7.7 percent, 9  states had measurably higher rates, and 16 states and the District of Columbia had rates that were not  appreciably different from that of the nation. (See tables A and 3 and chart 1.)
Colorado's seasonally-adjusted unemployment rate was down slightly in November, dropping year over year from 8.0 percent during November 2011 to 7.0 percent during November 2012. The Colorado rate fell from October to November this year, dropping from 7.9 to 7.7 percent.

The national unemployment rate fell by much more than it did in Colorado, falling from 8.7 percent to 7.7 percent from November 2011 to November 2012. The rate fell from October to November, falling from 7.9  to 7.7 percent.

The graph shows a comparison between the two rates since 2006:

See here for metro area unemployment info in Colorado.

Philly Fed: Coincident index growth in Colorado outpaces nation in November

The Coincident Index for Colorado rose 1.3 percent over three months from August to November this year, which was above the national index's increase of 0.6 percent. November's index, which was released last week by the Philadelphia Federal Reserve Bank, is an index calculated from nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average).

The three-month change in the index, shown in the map here, was larger in Colorado (1.3%) than in most states. 

According to the November 2012 report:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for November 2012.  In the  past month, the indexes increased in 45 states and decreased in five states, for a one-month diffusion index of 80. Over the  past three months, the indexes increased in 45 states, decreased in three, and remained stable in two, for a three-month  diffusion index of 84. For comparison purposes, the Philadelphia Fed has also developed a similar coincident index for the 
entire United States. The Philadelphia Fed’s U.S. index rose 0.2 percent in November and 0.6 percent over the past three months.
The graph below compares the 3-month change in both the Colorado Index and the US index. After five months of lagging the nation in the 3-month change, Colorado moved above the national growth rate in September 2012 and remained above the national rate through November. 

The second graph shows year-over-year changes in the index, and an upward trend was evident through most of 2011. The Colorado index now appears to be outpacing the national index. 

The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

Housing News Digest, December 31

Modular homes offer answer to land-use problem in Colorado Springs COLORADO SPRINGS —It's taken a decade for Martin Newton of Pax Development to develop his tiny parcel on downtown Colorado Springs' east edge, but he's done so by effectively putting a series of square pegs into a rectangular hole. Five factory-built, modular homes were recently lifted by crane onto Newton's almost half-acre, rectangular parcel near Kiowa and El Paso streets; a sixth modular home is scheduled for delivery soon.

  Smokers need not apply at affordable housing complex Smokers looking for affordable housing in Colorado Springs can write the Uintah Park Apartments off their list. Greccio Housing bought the 21-unit complex at 2525 E. Uintah Street earlier this year, and in the process of renovating it, decided it was a good opportunity to make it the first non-smoking property in its inventory of housing for low- to middle-income people.

  Thornton considers mother-in-law houses Thornton may be the newest city in Adams County to offer residents the option to build an additional housing unit on their existing homes. City Council discussed allowing home owners to build accessory dwelling units, sometimes referred to as mother-in-law houses, during its Dec. 11 planning session. Current city building codes define accessory dwelling units as a single, yet separate dwelling unit that provides “complete independent living facilities for one or more persons, including permanent provisions for living, sleeping, eating, cooking and sanitation.”

  Mixed Signals in Colorado's Economy The most recent economic data from the U.S. Bureau of Labor Statistics show a decrease in the state unemployment rate from 7.9 percent in October to 7.7 percent in November, reaching a 44-month low. However, it appears the most recent decline in the unemployment rate is for the wrong reasons. During the month of November workers exited the labor force and, by one measure, employment in Colorado decreased. The national unemployment rate also fell 0.2 percentage points from 7.9 percent to 7.7 percent. The change in the national rate was largely due to an increase in employment, not the decrease in the size of the labor force. Also, enrollment in public assistance programs was mixed during November as Medicaid and CHP+ saw increases but enrollment declined in the SNAP program.

  Colo. gets $400M in military construction deals DENVER — The military awarded more than $400 million worth of construction contracts in Colorado in 2012, roughly in line with other years but especially significant as the state slowly emerges from the recession. The projects include facilities for a new helicopter unit at Fort Carson, a new operations center for top-secret defense intelligence agencies at Buckley Air Force Base, National Guard and reserve centers in Colorado Springs and Loveland, and renovations at the Air Force Academy.

Friday, December 28, 2012

NAR: Pending home sales down in West region, up elsewhere

Pending home sales were up nationwide by 8.9 percent year over year nationwide during November, but were down by 1.8 percent in the West region of the US. According to the National Association of Realtors' pending home sales report released today, the West region was the only region to report declining year-over-year pending home sales. Pending home sales were up year over year by 14.5 percent, 15.5 percent and 12.6 percent in the Northeast, Midwest and South, respectively.

See here for NAR's report.

According to NAR's press release:

Yun noted there are clear regional patterns. "Contract activity surged in the Midwest and is showing very healthy gains in the South, but was down slightly in both the Northeast and West," he said.
"The Northeast saw some impact from Hurricane Sandy, but limited inventory in the West is keeping a lid on the market. All regions are up from a year ago, with double-digit gains in every region but the West," Yun said.

Buildfax: Remodeling activity in West region up slightly

According to Buildfax, remodeling activity during October 2012 was up 3 percent from October 2011 in the U.S. West region. Data is based on counts of remodels authorized by building permits in the U.S. This was the smallest year-over-year increase among all regions.

According to the press release:
Seasonally-adjusted annual rates of remodeling across the country in October 2012 are estimated as follows: Northeast, 512,000 (up 9% from September and up 17% from October 2011); South, 1,396,000 (up 30% from September and up 46% from October 2011); Midwest, 508,000 (up 11% from September and down 12% from October 2011); West, 739,000 (up 15% from September and up 3% from October 2011).

Click for more. 

Thursday, December 27, 2012

LPS: Colorado reports 6th-largest home price increase among 20 largest states

According to the LPS Home Price Index for October, released last week, the LPS Home Price Index for the Denver area was up 6.8 percent from October 2011 to October 2012. According to the report, the estimated home price in the Denver area was $246,000 during October 2012, up from $231,000 during October 2011.  The Denver price was the 14th-highest average price among the 25 cities surveyed. In Denver, the HPI price peaked during Jun of 2006.

Nationally, the HPI rose 4.3 percent from October 2011 to October 2012, rising to $206,000. Nationally, the HPI peaked during June of 2006.

Denver also reported the 11th largest percentage increase over the year of the 25 metros. The largest increases were found in Phoenix and Las Vegas where the HPI increased 18.3 percent and 13.9 percent, respectively.

The report also provided home price estimates for the largest 20 states. Colorado's HPI increased 5.7 percent from October 2011 to October 2012. The average home price as of October 2012 was estimated at $243,000 in Colorado.   Colorado reported the sixth-largest increase in the HPI among the 20 largest states. The largest increases were found in Arizona and California where the HPI increased 14.9 percent and 9.1 percent, respectively. Colorado had the 9th-highest estimated home price among the 20 states.

This report shows few surprises when compared to other home price indices for Denver and Colorado. (See recent analyses of home prices here.) The Denver area has consistently shown larger increases in home prices compared to numerous other metros throughout the nation, and home price growth has accelerated in metro Denver and in Colorado statewide over the past 6 to 9 months.

See here for the home price archives.

Case-Shiller: Denver home prices up 6.9 percent

Case-Shiller released its home price index for October 2012 yesterday. The home price index for the Denver area rose 0.01 percent percent from September to October, and rose 6.9 percent, year over year, from October 2011 to October 2012.  The year-over-year increase in October was the tenth year-over-year increase in a row for Denver, and was the largest increase since November 2001, when the year-over-year growth rate was 7.6 percent.  The first graph shows the index values since 2001. The index value is at the highest value seen since October 2007.

 According to S and P's press release, home prices nationwide continued to show some signs of growth:

“Looking over this report, and considering other data on housing starts and sales, it is clear that the housing  recovery is gathering strength. Higher year-over-year price gains plus strong performances in the southwest and  California, regions that suffered during the housing bust, confirm that housing is now contributing to the economy.  Last week’s final revision to third quarter GDP growth showed that housing represented 10% of the growth while accounting for less than 3% of GDP.
In year-over-year comparisons for October, two out of 20 cities showed year-over-year declines in the home price index.  Chicago showed the largest drop, with a decline of 1.3 percent, while the index for New York fell 1.2 percent. Denver was among the eighteen cities reporting increases, and had the seventh-largest increase of the twenty cities. Only Detroit, Las Vegas, Phoenix, Miami, San Francisco and Minneapolis reported larger year-over-year increases in the home price index than Denver.

The second chart shows trends in the Case-Shiller index for the Denver area and for the 20-city composite index. It is clear that Denver did not experience the kind of price bubble that occurred in many other metropolitan areas, and consequently, the index has not fallen nearly as far in Denver compared to the larger composite.

The 20-city composite is down 29 percent since it peaked in July 2006, but the Denver index is down only 4.4 percent from its August 2006 peak.

The third chart compares year-over-year changes in the Denver area index and in the 20-city composite. Overall, the index has been less volatile in Denver than has been the case for the 20-city composite. The year-over-year change in the 20-city composite during October was positive for the fifth month in a row.

In short: Denver metro home prices have shown a stronger growth trend in recent months than the 20-city composite.

The last chart provides a closer look at year-over-year changes in the Denver index. The index went negative as the economy began to slow in 2007 and remained negative until this year with the exception of the period in which the homebuyer tax credit pushed up prices temporarily. Recent home price growth is accelerating as inventory declines, household formation continues, and rental housing continues to become more expensive. We must go back to November 2001 to find a larger year-over-year growth rate.

New home sales in West flat in November, but 2012 has shown growth

New single-family home sales in the U.S. West were flat from November 2011 to November 2012, following nine months in a row of year-over-year increases in new home sales. 2012 showed sustained growth in new home sales over 2011, but November new home sales have moved little since 2008, and are generally hovering around 5,000.  According to today's New Home Sales report, released by the Census Bureau,there were 5,000 new home sales in the Western U.S. during November 2012. 

The report, which monitors sales activity for newly constructed houses, reported that in the West, new home sales were back to the lowest total recorded since January 2012, and this reflects seasonal patterns. We will have to wait until Spring 2013 to get a sense of how 2013 will shape up for new home sales. 

The first graph shows monthly new home sales totals for each month since 2003. New home sales have generally been flat since 2008 during November, although this year's summer months showed some significant growth. 

For the West region: 

New home sales peaked during the spring and summer of 2005 and have generally trended downward since. As of November 2012, the number of new houses sold in the United States is down 78 percent since the peak of March 2005, and new home sales in the West have fallen 86 percent since sales peaked in the region during March 2004.

The third graph shows the declines in both US and regional totals in new homes for sale.

The number of new homes for sale has also fallen off considerably. As of November 2012, the number of new houses for sale in the West has fallen 68 percent since the total peaked during June 2007, and the same total has fallen 73 percent in the US since the number of new homes for sale peaked in the US during August 2006. 

As we see signs of growth in new home sales, the number of new homes being offered for sale was flat in the West but showed numbers inching up a bit for the first time since 2006. This slight increase in new homes for sale suggests some optimism among builders, but this is not yet showing up in the West region's stats.  For a longer historical perspective, see here

As a final note, we can also look to the new home inventory. In this case, we calculate inventory by subtracting the number of new home sales in a given month from the number of new homes for sale at the end of the previous month. In the final graph, we see that the inventory in recent months has been near a ten-year low, and was at the lowest point reached since the early 1990s.  During the past two months, however, the inventory has inched up as builders have been responding to very low inventories in existing homes for sale. 

Housing News Digest, December 27

Home sales up heading into slow, winter season Rising sales and an available-home-supply decline caused U.S. home prices to rise in most major cities during October compared to a year ago Higher prices show the housing market is improving even as it moves into the slow winter-sales period.

  Local family at odds with Housing Authority over smoking COLORADO SPRINGS - Outside of the Colorado Springs Housing Authority board meeting Thursday, 79-year-old Rose Reed and her daughter Elizabeth wear signs of protest and wave to cars passing by on S. Nevada Avenue. Rose says the smoke from her neighbors apartments at the Senior Heritage Plaza are damaging her health. Senior Heritage is a rent controlled housing unit subsided with federal funds from the Housing and Urban Development Department and managed by CSHA. The Reeds would like the Housing Authority to completely ban smoking in the building, or at least move the smokers to another room.

  Mountain Law: Commission on real estate deals not always clear cut When is a real estate broker entitled to a commission? The traditional rule and Colorado's version: The traditional rule is that brokers earn a commission when they bring to the seller a buyer who is ready, willing and able to buy the property on the terms set out in a listing agreement. Most states require the seller to pay a commission even if the closing does not occur through no fault of the seller (such as the buyer being unable to obtain financing or the title being defective). However, Colorado law excuses a seller from paying a commission so long as the failure of closing is not the seller's fault.

  ‘More of the same’ in commercial real estate The excitement and hope commercial real estate brokers put on display at the start of 2012 was mostly gone by the time they started trying to predict what will happen in 2013. “I think we all just wanted it to be behind us,” said Greg Phaneuf, a principal at Cushman & Wakefield Colorado Springs Commercial. “We still want it to be behind us.”

  Loveland developer McWhinney's latest apartment complex under way in Fort Collins FORT COLLINS -- Loveland-based developer McWhinney, demonstrating its faith in the multifamily housing market, has broken ground on a 314-unit apartment complex in Fort Collins. The Trails at Timberline, an upscale "lifestyle community," will feature 12 three-story apartment buildings and a welcome center/clubhouse at the northwest corner of Drake and Timberline roads in east-central Fort Collins.

  Del Mar Firm Buys Colorado Apartment Complex for $36M The community, known as Prana, was built in 2010 in Lafayette, Colo., according to a statement from the privately held company. Stratford Partners, founded in 2011 by Andy Crews and Jesse Wilson, acquires and develops multifamily properties primarily in the western United States. The company has acquired nearly $100 million in assets, with another $350 million in investments planned over the next two years.

Unemployment increases in Colorado Springs and Pueblo, flat or falling elsewhere

Total employment growth in Colorado in November was flat according to the Household Survey and showed some growth in the payroll totals. In Colorado, total employment in Colorado was down 123,000 from the July 2008 peak. Employment trends in various regions of the state differ, however, so this article looks at which regions of the state have the highest unemployment rates, and which regions have recovered the most in their labor markets. 

Regional employment trends can also provide us with some insights into local housing demand since, all things being equal, those areas with the most robust labor demand will also have the strongest demand for housing. This would be reflected in apartment vacancy rates and in median home price and home sales transactions, among other indicators. 

The first graph compares unemployment rates in Colorado's metro areas.

The regional unemployment rates (not seasonally adjusted) for November 2012 are:
Colorado Springs, 8.8%
Denver-Aurora, 7.4%
Fort Collins-Loveland, 6.0%
Grand Junction, 8.4%
Greeley, 8.2%
Pueblo, 10.1%
Statewide, 7.5%

Since mid-2009, The Fort Collins-Loveland area has consistently shown one of the lowest unemployment rates while Grand Junction and Pueblo have generally shown the highest rates. During recent months, however, The Colorado Springs are has moved into second place behind Pueblo for the highest unemployment rate while Grand Junction has fallen again.  

The unemployment rate was flat or decreased in all metro areas except Colorado Springs and Pueblo from November 2011 to November 2012.  In Colorado Springs, the unemployment rates increased from 8.6 percent to 8.8 percent over the period, and in Pueblo, the rate increased from 9.6 percent to 10.1 percent in Pueblo. The unemployment rate was flat, year over year, in Denver-Aurora and Grand Junction. 

To provide some additional context, we can look to see how far below total employment levels are below the most recent peak in employment in each region. The peak time differs in each region. For example, the labor market peaked in mid-2007 in the Colorado Springs area, but it did not peak until late 2008 in the Grand Junction area. 

The following numbers reflect how far below the most recent peak are the November 2012 employment totals: 

Colorado Springs MSA, 8.6%
Denver-Aurora MSA, 3.5%
Fort Collins-Loveland MSA, 2.3%
Grand Junction MSA, 9.1%
Greeley MSA 4.1%
Pueblo MSA, 2.1%
Statewide, 4.6%

All things being equal, the areas further below the peak have recovered the least from initial job losses. The noticeable exception is Pueblo where total employment is nearly back to peak levels, but the unemployment rate is being kept up by a growing labor force that is unable to find employment. Most other regions are experiencing very little growth in labor force, or even declines. See here for more on Pueblo. 

Grand Junction is further below peak levels than all other metros, including Colorado Springs, although both those metros have consistently well below peak levels in recent months. We see here also that the Ft. Collins-Loveland area has one of the strongest markets, with Greeley also moving toward peak levels. Northern Colorado continues to show signs of significant job growth. 

(Note: If we include the Boulder-Longmont MSA, we find that the Boulder area has consistently been among the areas with the lowest unemployment rate. In November 2012, the rate in the Boulder-Longmont area was 5.7%.)

Friday, December 21, 2012

Payroll employment increases in Colorado, unemployment rate falls

The non-seasonally-adjusted unemployment rate fell from 7.6 percent during November 2011 to 7.5 percent during November 2012. According to the most recent employment data, collected through the Household Survey and released last week by the Colorado Department of Labor and Employment and the BLS, both the labor force and the employment total were essentially flat from November 2011 to November 2012, with the labor force falling 0.7 percent, and total employment falling 0.5 percent, year over year.

With the labor force shrinking slightly more than total employment, the unemployment rate dropped.

During November 2012, the labor force consisted of 2.13 million workers, while total employment was at 2.51 million employed persons.

According to the Household Survey employment totals, total employment remains approximately 123,000 employed persons below the employment peak reached during July 2008.

The first graph shows the unemployment rate (not seasonally adjusted):

The second graph shows total employment is up from levels seen during 2009 and 2010, but so far this year has grown only slightly over 2011 levels. Total labor force, on the other hand, is now back up near peak levels.

Total employment, according to the Household Survey, is now back at levels reported during early 2007.

The third graph shows payroll employment collected through the Establishment Survey of employment, and shows the year-over-year change in payroll employment in Colorado. While the Household Survey showed employment remaining flat year over year, the Establishment Survey showed gains in payroll employment, with year-over-year gains reaching the highest level seen since January 2008.

Year-over-year growth in the Establishment Survey has usually been under 2 percent since the last recession, and this is generally a smaller growth rate than what was common during the last expansion from 2003-2008. Year over year growth in payroll employment climbed to 2.2 percent from November 2011 to November 2012.

The very large losses that occurred during 2009 and 2010 were the largest losses, by percentage, in at least 30 years. Job gains in recent years don't compare with the robust job gains seen during the boom years of the 1990s.

The weak jobs report form the Household Survey contrasts with the more robust report from the Establishment Survey. Theoretically, this could be due to a situation in which small employers shed jobs while larger employers added workers. Or, it could be a data-collection problem with one or other of the surveys. Given that the Establishment Survey is much larger in sample size than the Household Survey, it is likely that there was indeed payroll growth over the period, although it may well be that smaller employers have been shedding jobs also.

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.

NAR: November home sales, median price up again

The National Association of Realtors released new existing home sales data and median home price data today.

According to NAR's numbers, existing home sales in the US West region, which includes Colorado, were up 5.3 percent form November 2011 to November 2012. This is the smallest increase of the four regions measured. For example, home sales in the Midwest were up 25 percent during the same period.

Overall, there was slight growth in the region  in home sales compared to last year, as can be seen in the first graph. Most of the sales growth appears to be  in the midwest and south.

NAR also released median home prices for each region. In the West region, the median home price increased 18.1 percent from November 2011 to November 2012. The median home price was $295,900 in the West region. High prices in California keep the regional median home price well above the Colorado median home price which is well below $295,000.  In the metro Denver area, which has the highest metro-wide median home price, the median home price right now is in the $250,000-$260,000 range.

Wednesday, December 19, 2012

Monthly Update from the Realtors: Median price up in all metros but Pueblo

The monthly housing summary from the National Association of Realtors for October 2012 is now available. Metro Denver and northern Colorado show price increases and sizable inventory declines. Pueblo, on the other hand, showed a decline in the median price, year over year, while the Colorado Springs median price was flat over the same period.

MSA_City MedianPrice MedianPrice_YY  Listings Listings_YY
Denver  CO $265 000 6.00%  7 317 -22.90%
Colorado Springs  CO $225 000 0.04%  3 961 -7.66%
Boulder-Longmont  CO $380 000 2.95%    1 983 -28.29%
Fort Collins-Loveland  CO $272 000 2.64%    2 380 -8.27%
Pueblo  CO $140 000 -3.38%  1 089 -14.03%

There are few surprises here. As I mentioned yesterday, the Colorado Springs purchase housing market has shown some weakness compared to metro Denver. Much of this is driven by the employment situation in each metro area, which is strongest in Ft. Collins-Loveland and Boulder, and weaker in Colorado Springs and Pueblo.

Multifamily housing starts down in November, but single-family starts up 34.9 percent

Housing starts in the West Census region of the US, which includes Colorado, were down 2.3 percent from November 2011 to November 2012, counting both single-family and multi-family units. According to new housing construction and housing starts data released today by the US Census Bureau, single-family housing starts were at a five-year high for November totals, but multi-family housing starts in the West were down from November 2011 to November 2012, dropping by 39 percent. Multifamily starts were down primarily due to a very large amount of multifamily starts that occurred during November of last year. 

Single-family starts, on the other hand, were up yet again, and reached the highest level recorded during any November since 2007. Single-family starts increased 34.9 percent from November 2011 to November 2012 in the Weest region. 

Nationally, housing starts, including both single-family and multi-family, rose 21 percent during the same period.

Total housing starts remain well below peak levels both nationally and in the West. November 2012 housing starts in the West were 77 percent below the peak reached during May 2004. Nationally, November 2012 was 67 percent below peak levels. The national peak in housing starts was reached during May 2005. 

Multifamily starts have rebounded more than single-family starts. In the West, single-family starts were 82 percent below peak levels while multifamily starts were only 62 percent below peak levels. 

The West census region includes states on the west coast and within the Rocky Mountain region.

The first graph shows that when taking 2012 as a whole, compared to 2011, housing starts were at a four-year high. Starts have declined due to seasonal factors, but have generally shown growth this year over last year. 

The second graph shows November's multifamily starts total compared to all other November since 2004. November's multifamily total was down from November 2011, but was up from 2008, 2009, and 2010 levels. 

The third graph shows all starts in the region, and these were also slightly down from November 2011 due to the decline in multifamily starts. If we were to look at single-family starts separately, we would see that November 2012 single-family starts were at the highest level for any November since 2007.

Tuesday, December 18, 2012

Colorado Springs Snapshot: Home prices, foreclosures, and permits

The Colorado Springs area has shown a slightly less robust market in homeownership and home sales than the metro Denver area in recent years. Home prices, foreclosures, and releases of deeds of trust, while suggesting increases in demand for purchase housing, also show that the region is behind the metro Denver area in home price growth and other variables.

Colo Springs home prices inched up during the third quarter of 2012, rising year over year for the first time, year over year, since the third quarter of 2010.

The first graph shows the FHFA's home price  index for both Colorado Springs and the metro Denver area. According to the index, home prices in the Colorado Springs metro area have not established an upward trend, and have been largely flat since early 2011.

The second graph shows the year-over-year change in the index. While the home price index has increased year over year for the past three quarters in metro Denver, they have just moved up slightly in Colorado Springs during the third quarter. The index increased 0.9 percent, year over year, in the Colorado Springs area during the third quarter. The index increased year over year during the third quarter of 2010, but since 2007, almost all quarters have shown year over year declines in the home price index for Colorado Springs. We can also note that the year over year declines have been larger in the Colorado Springs area than in the Metro Denver area since 2007. The year-over-year increase in the index for the metro Denver area was 2.8 percent, for the 3rd quarter. 

The third graph shows foreclosure auction sales in El Paso County and in all metro counties combined. Auction sales are the step inthe foreclosure process when the home is sold off to investors or back to the bank. Since 2010, the combined total and the El Paso total have both generally fallen, but the El Paso County total has not fallen as much as the combined total, and shows that foreclosure activity is not falling off as quickly in El Paso county. For January-November of this year, foreclosure auction sales were down year over year by 19.9 percent in  the combined metro total, compared to the same period last year. Sales were down by 12.1 percent over the same period in El Paso County. 

The fourth graph shows new foreclosure filings for both the combined metro total and El Paso County. Foreclosure filings are the first step of the foreclosure process and are an indicator of future foreclosure auction sales activity. Since 2009, foreclosure filings have declined in both the combined total and in El Paso County, but they have not fallen as much in El Paso County as in the combined metro total.  For January-November of this year, foreclosure filings were down year over year by 6.5 percent in  the combined metro total, compared to the same period last year. Filings were down by 0.5 percent over the same period in El Paso County. 

The fifth graph shows new releases of deeds of trust in Colorado and in El Paso County. Since 2000, El Paso County has shown more release activity than the state overall. (Releases occur when a mortgage loan is paid off, and is an indicator of refi and home sales activity.) We can see in the graph that although release activity in El Paso County has held up compared to the state since the year 2000, El Paso did not see the bump that the state received in release activity from 2008 to 2009. 

And if we look at release activity since 2008, We find that El Paso County has not experienced as much release activity as the state overall. In other words, since 2008, El Paso County has not seen as much refi and home sales activity as the state overall. Release activity fell off farther than the state did during 2008, and while the state index is back to 2008 levels as of the 3rd Q 2012, El Paso County is still below those levels. 

Although the Colorado Springs area is seeing relatively less improvement in several home-sales related indicators, the general trend is still one of improvement. Developers of single-family homes have apparently concluded that the prospects are good for single-family home sales, as single-family permit activity began to accelerate in the Colorado Springs area during 2012. Year over year single-family permitting increased 43 percent in the Colorado Springs area from the first ten months of 2011 to the same period this year. From January through October of this year, there have been 1852 single-family permits issued in the region. During the same period of last year, only 1290 single-family permits were issued. As the last graph shows, permit activity fell off substantially after 2006 in the Colorado Springs area, but 2012 has shown significant increases in permitting over 2011. This may also be influenced by expectations of continued household formation. As I show here, El Paso County has been one of the strongest counties for household formation in recent years. El Paso County has also been one of the most active counties for single-family permits statewide. 

Household formation in metro counties

Yesterday, I posted updated into on growth in household formation in Colorado. Below, I examine the trends by metropolitan county.

This is based on data from the State Demographer. For comparison purposes, I've indexed the number of households  in each county to the base year of 1985.

The first graph shows us that Douglas County is not really in the same ballpark at the other metro counties. Since 1985, the number of households in Douglas County has increased by more than 700 percent. To be exact, the number of households in Douglas County increased 783 percent from 1985 to 2011.

This is a problem for the scale of our graph:

Obviously, Douglas County has seen more growth in households than any other metro county in Colorado. This is not surprising given that during the 1990s, Douglas County was one of the top ten fastest growing counties in the United States for multiple years.

In the second graph, I have removed Douglas County from the analysis to allow us to look at the other counties:

A few things stand out: Denver County has seen the smallest amount of growth, which is not surprising given that Denver has the least amount of room to grow. Significant growth did begin again back in 2006 as we started to see the effects of new development in Stapleton and the DIA area.

The areas with the largest growth (outside Douglas County) were in Larimer County and Weld County and El Paso County. The statewide curve is followed closely by Adams County and Arapahoe County, so those two counties appear to generally reflect the statewide trend. Mesa County saw some big growth from 2003-2008, but has flattened out quite a bit since 2008.

News Digest, December 18

AGC Colorado projections for 2013 AGC Colorado expects conservative growth for the 2013 construction industry - Colorado's sixth-largest industry - related to job growth and economic impact, according to a recent forecast event presented by AGC/C and McGraw-Hill Construction. The forecast included an overview of the national economy, historical trends and expected activity for 12 different market sectors for Colorado.

  Students Build A Gorgeous One-Room House In The Navajo Nation DesignBuildBLUFF, a nonprofit in the tiny town of Bluff, Utah, is taking things one house at a time. The group invites architecture students to design and build homes for needy families in the Navajo Nation, a few miles south of Bluff. “[Native Americans] face some of the worst housing conditions in our country,” explain DDB’s founders. “Over 40% live in overcrowded or dilapidated housing.”

  REAL ESTATE: Priority of Liens Why and when should you know about the priority of liens on Colorado real estate? Some reasons may surprise you but you really need to know if you are: buying a house out of foreclosure; obtaining a judgment against a debtor; dealing with a worker who has added something to your home but, for whatever reason, has not been paid; looking to foreclose on a second mortgage (or deed of trust) on a rental property that you own.

  Local commercial real estate recovery still uncertain in 2013, forecasts suggest Some segments of local commercial real estate will make strides in 2013, but a full recovery will hinge on improvement of the national economy, job creation and whether looming Department of Defense cuts become a reality, a pair of reports suggests. Forecasts by Sierra Commercial Real Estate and Quantum Commercial Group, two Colorado Springs brokerages, hedged their bets because nobody knows for sure how outside factors will affect office and industrial vacancies, shopping center construction and commercial rents.

  Colorado college towns a relative real estate safe haven during turbulent times Colorado's college towns braved the nation's real estate collapse relatively well. Home values hung tough and didn't experience the dramatic drops that many of the nation's other locales did. It was the number of home sales that took a dive. But now even that's beginning to improve.

Monday, December 17, 2012

Re/Max: November Home Sales and Prices Higher than Expected

Latest press release from Re/Max:

November home sales saw the second-highest year-over-year increase in 2012, with a 15.7% rise from last November.  October had a 17.8% increase, making sales this fall season unusually high.  The November RE/MAX National Housing Report, a survey of MLS data in 52 metropolitan areas, also shows that home prices rose 6.9% higher than the prices seen in November 2011.  The Median Price for homes sold this November was $163,750.  Rising prices are due mostly to a dwindling inventory, which continued to drop across the country.  The average number of homes for sale is now 29.1% lower than last year.  Low inventory levels are having a negative impact on home sales in many markets, where there are more buyers than homes for sale.

Household formation by county in Colorado

Household formation over time 

An article on DS News today pointed to recent data showing that as household formation increases in the United States, rental housing is likely to get the biggest boost from the new demand. “Nearly all newly forming households in the past five years have been renters,” said economist Paul Diggle. 

While purchase homes are in demand here in Colorado, rental housing is certainly seeing a surge in demand with rent growth in metro Denver and northern Colorado hitting 12-year highs. See the rental housing data archive more more. 

Below I have looked at household fomation over time and have included a county-by-county analysis. 

The first graph shows the number of new households formed in each year. This is household data from the State Demographer's office.

The late eighties were a time of slow growth, and the nineties were a time of robust growth. Household formation was slow following the dot-com bust, but has reached moderately high levels since 2006. 

This is the first time I've spent some serious time looking at the recently-released household data for 2011. I had used a very conservative estimate of 20,000 new households for 2011 before the new data became available, and it looks like that estimate was a little low. According to the Demographer's data, there were  25,182 new households for during 2011 for a total of 1.9 million households in Colorado. 

Given current economic conditions, it is a bit surprising that household formation would be so solid in the face of lackluster job growth, but household formation does appear to be holding up. 

given that local economic conditions tend to match the nation overall, and in some cases are better than the nation overall, household formation in Colorado is likely to accelerate a bit in the coming years as young households continue to recover a bit from the unpleasant years following the financial crisis. 

The second graph shows new building permits for housing compared to new households formed. I have revised this graph to reflect the new 2011 estimates. New permits continue to come in below the number of new households formed. For 2011, there were 15,000 fewer new units built than there were new households formed. From 2007 to 2009, new households formed remained rather steady, but new building permits fell off 75 percent. 

I have provided estimates for 2012, which is not yet over, but based on this year's performance so far, permits will still not have increased enough to 2012 to match the number of new households formed. Assuming a conservative household formation number of 25,000 for 2012, there looks to be more than 10,000 more new households than new housing units during 2012. 

The third graph compared the number of new households and new housing units back to 1998. From 2002 to 2005, there were more housing units than there were new households. Since 2007, the situation has been reversed with more new households formed than there have been new units built. 

Indeed, 2012 will be the sixth year in a row during which fewer new units were built than there were new households formed. 

In total, from 2002 to 2005, there were 72,100 more units built than households formed. Since 2007, there have been 100,600 more households formed than units built. 

Household Formation by County 

Not surprisingly, household formation varies widely from county to county in Colorado. The map shows which counties have seen the most growth in household formation from 2008-2011. The idea here is to get a sense of house household formation has looked in each county since the 2008-2009 recession. 

The counties are broken out into four quartiles. The highest quartile has the most growth in household formation.  Brown= highest quartile. Green= Second highest. Orange= Second lowest. Yellow= Lowest quartile. 

Statewide, new households increased 4.8 percent from 2008 to 2011, rising from 1.76 million to 1.85 million households . Compare each county: