Thursday, March 28, 2013

Almost all new multifam permit activity this year in Broomfield, Denver, El Paso and Larimer counties

According to the Census Bureau, new county-by-county permit data through February shows that 93 percent of multifmaily permit activity this year has taken place in only four counties: Broomfield, Denver, El Paso and Larimer counties. 

This article is about multifamily permits only. 

In the county-level permit data, there was a total of 1,598 multifamily permits through February of this year, and 1,490 of these were issued in Broomfield, Denver, El Paso and Larimer counties. 

So far this year, there has been very little activity outside of these core areas with zero permits issued so far in Adams, Araphoe, Douglas, Mesa or Pueblo counties.

Multifamily permit totals for metropolitan counties in Colorado were (Jan-Feb 2013):

Adams 0
Arapahoe 0
Boulder 76
Broomfield 244
Denver 836
Douglas 0
El Paso 260
Jefferson 8
Larimer 150
Mesa 0
Pueblo 0
Weld 24

Year-to-year growth: 

Total permits were up 279 percent statewide from Jan-Feb 2012 to Jan-Feb 2013. 

Through February, multifamily permits grew 271 percent year over year in Denver County, while Broomfield permits increased from zero to 244 over the same period. 

Multifamily permits grew 2,400 percent in Larimer county from 6 to 150 over the period. 

Some analysts have expressed concerns that industry developers may cut back on new development in 2013 in order to avoid declines in rent levels for new units. So, far there is little indication that builders are cutting back. 

See here for full data. 

Note: This county-by-county data will not match up with statewide data shown here, due to differences in methods. 

Almost half of single-family permits this year issued in Douglas, El Paso and Larimer counties

According to the Census Bureau's year-to-date total through February 2013, the most active counties for single-family permits in Colorado, when adjusted for each County's total household numbers, were Douglas, Weld, El Paso, and Larimer counties.

These four counties have reported the highest single-family permitting rate for several months.

All counties, when adjusted for the existing number households in each county: (New single-family permits per household (x1,000)):

Douglas 2.07
Weld 2.06
Larimer 1.8
El Paso 1.7
Mesa 1.1
Broomfield 0.8
Adams 0.7
Arapahoe 0.8
Denver 0.6
Jefferson 0.6
Pueblo 0.4
Boulder 0.2

Of the 1,847 new single-family permits issued through February 2013, almost half of them (47 percent) were issued in El Paso, Larimer and Douglas counties alone.

See here for recent posts about building permits.

New single-family permits during January-February 2013:
El Paso 435
Douglas 217
Larimer 225

Adams 109
Arapahoe 199
Boulder 30
Broomfield 18
Denver 171
Jefferson 139
Mesa 65
Pueblo 28
Weld 189

(Note: All permits discussed in this article are single-family permits.)

The largest year-over-year (Jan-Feb 2012 to Jan-Feb 2013) increases in single-family permit activity were found in Larimer (110 percent), Arapahoe (103 percent), El Paso (79 percent) and Jeffesron (78 percent.)

See here for full data.

Building permits start off strong in 2013

Through February of 2013, multifamily building permits were up 246 percent when compared to the same period of 2012. The two month total for 2013 in multifamily permits was 1,407 compared to 406 during 2012. 

In single-family permits, through February, there have been 2,222 permits this year, compared to 1,406 during the first two months of 2012. That's an increase of 58 percent. 

During the month of February alone, there were 1,191 single family permits and 598 multifamily permits issued. during February of 2012, there were 710 and 119 single-family and multifamily units, respectively. 

The first graph shows cumulative totals from January through February of each year:

The second graph shows month to month totals in permits. Note the upward drift in both single-family and multifamily permits.  Totals, of course, remain well down from peak levels.

During February 2013, the number of new multifamily permits were at a five year high for February, and still below February 2008's total reported near the end of the last expansion. 

Single-family permits for February were at a six-year high and were inching back toward the levels seen during 2007.  

In this report, single-family permitting has behaved as expected, showing slow ongoing growth. Multifamily has more than doubled over 2012, suggesting that for now, multifamily growth continues at very strong levels. 

Total personal income in Colorado increases during 2012's fourth quarter

The yesterday released the latest quarterly personal income information. This does not include per capita personal income like the annual data does. It only includes total personal income which is the total of all income sources for all Coloradans during a given period.

In this case, we're looking at the fourth quarter of 2012, which shows that total personal income in Colorado was up 5.1 percent over the fourth quarter of

The first graph shows the year over year change in total personal income for Colorado and the US. By this measure, growth in Colorado is outpacing that of the nation overall. Colorado was up 5.1 percent year over year for the fourth quarter, and the US was up 4.9 percent.

We know, however, that some of the growth in total personal income in Colorado is being spurred by an increasing population. We know that during 2012, at least, according to the BEA, that population growth in Colorado outpaced that of the nation. Since this measure of personal income is a total of all income, an increase in population will generally lead to an increase in income measured.

The second graph shows that total personal income is above the old peak levels - indeed the Colorado level is now up 9.6 percent above peak levels and the US is now above 8.7 percent above peak levels. The peak occurred during the second quarter of 2008.

Historically, the year over year growth was very moderate when compared to the past two decades.

Since 1980, the average growth rate in Colorado is 6.8 percent. Clearly, the growth rates over the past year (ranging from 3.2 percent to 5.1 percent) have been well below that, and compared to other non-recessionary periods, the growth rate is quite moderate right now.

This was the ninth quarter in a row in which in which there was a year-over-year increase. The last time there was  a year-over-year decline in either the US or Colo was the 4th Q of 2009

Colorado per capita personal income up 2.5 percent in 2012

Per capita personal income increased from 2011 to 2012 both nationwide and in Colorado. According to new data form the Bureau of Economic Analysis, released yesterday, per capita personal income increased 2.7 percent form 2011 to 2012, while it increased 2.4 percent in Colorado. 

The first graph shows year over year changes since 1991 in Colorado and nationwide. We can see that during the 1990s, Colorado frequently outpaced the nation, but that Colorado has outpaced the nation only once during the last seven years. 

Since the peak period of 2008, per capita personal income is up 4.2 percent nationwide and 2.2 percent in Colorado. 

Over the past decade, from 2003-2012, the national per capita personal income is up 32 percent, and it is up 27.8 percent in Colorado. 

Why is this? Well, some of this is due to the fact that income growth in Colorado has indeed been sluggish since the 1990s dotcome boom.  But, being a percapita measure, Colorado's penchant to lag the nation is also due to the fact that many young workers (who, being young, have lower incomes) are moving to Colorado is fairly high numbers. Colorado is also experiencing more population growth overall than the nation.

The second graph shows population growth according to the BEA's measure used in the per capita calculations.

Year-over-year, the US population was up 0.7 percent and Colorado was up by much more: 1.3 percent.

Indeed, in every period going back to 1991 -except the post-recessionary year of 2003- Colorado population growth has outpaced national population growth.

This doesn't mean that income growth in Colorado is secretly robust however. There is reason to believe that income growth is still not performing as well as we'd like. Several metro areas still report high unemployment rates (such as Pueblo and Grand Junction). Nevertheless, the robust population growth helps to keep down per capita numbers. 

FHFA: Fourth quarter home prices up in all metros except Pueblo and Grand Junction

The House Price Index (HPI) rose from the fourth quarter of 2011 to the same period of 2012 in every Colorado metro area except Pueblo and Grand Junction. The areas showing increases in the HPI included Boulder, Denver-Aurora, Colorado Springs, Greeley, and the Ft. Collins-Loveland area.

The fourth-quarter HPI data, released last month by the Federal Housing Finance Agency for hundreds of metropolitan areas nationwide, showed the largest year-over-year decline in the home price index for Pueblo since 2011. The areas with the largest increases in home prices, according to the index, were the Boulder area, the Greeley area, and the Denver area.

Statewide, the Colorado home price index was up year over year. (See the analysis here.)

Year over year, the 1-year changes in each metro area were:
Boulder +2.1%
Colo Springs +0.5%
Denver-Aurora +3.7%
Fort Coll-Loveland +1.6%
Grand Junction -0.2%
Greeley +2.4%
Pueblo -2.8%

The first graph shows the year-over-year change in each region for each quarter. For the sake of visual clarity, the graph only shows data back only to 2006.

Over the past four quarters, growth in the home price index have become increasingly common, with southern and western Colorado lagging other areas. For metro areas overall, there is now a trend of growth in the home price index, however, Grand Junction and Pueblo have consistently shown some decreases in the index recent quarters.

The second graph shows the actual HPI values for each quarter going back to 2000. In general, the HPI began to plateau during 2007 and was declining in most areas by 2008. A big exception in the Grand Junction area which continued to increase rapidly well into 2008.

Since the peak period of the first quarter of 2007, the HPI has fallen in all regions. The following shows the change in the HPI compared to the peak period, as of the fourth quarter of 2012.

Boulder -0.9%
Colo Springs -9.4%
Denver-Aurora -2.6%
Fort Coll-Loveland -1.2%
Grand Junction -24.3%
Greeley -12.8%
Pueblo -9.9%

This latest report overall shows a continuation of earlier trends shows in this report. The most rapidly recovering markets are those markets with the strongest job growth: Metro Denver and Northern Colorado.   Colorado Springs, Pueblo, and Grand Junction are facing some of the highest unemployment rates in Colorado, and now surprisingly show some of the weakest growth (or they show declines) in the home price index.

See here for other home price indices.

The index values presented and analyzed in this article are not seasonally adjusted. The data in this article is taken from the FHFA "all-transactions" data. The index is based on home price data obtained through the GSEs such as Fannie Mae and Freddie Mac

New addition to the Homeless Prevention Team at the Division of Housing

The Division of Housing is pleased to announce that we have added a new member to our Homeless Prevention Team: Liesl Begnaud. Liesl comes to us with a strong background in homeless prevention- including leading a prevention assistance coalition across several communities in the Denver Metropolitan area as well as playing a leadership role on the Metropolitan Homeless Initiative Board and it's funding allocation process for permanent supportive housing.

U.S. GDP up 0.4 percent in 4th quarter

The latest revised data from the BEA: Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 0.4 percent in the fourth quarter of 2012 (that is, from the third quarter to the fourth quarter), according to the "third" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.1 percent.

Wednesday, March 27, 2013

February employment in Colorado remains below national rate, falls to 7.2 percent

Colorado 's unemployment rate dipped further below the national unemployment rate in February, dropping to 7.2 percent in Colorado compared to 7.7 percent for the nation overall. (These are seasonally adjusted numbers.)

The seasonally-adjusted unemployment rate for Colorado during January was 7.3 percent, and it was 7.9 percent for the nation.

Colorado's seasonally-adjusted unemployment rate was down year over year in February, dropping year over year from 8.2 percent during February 2012 to 7.2 percent during February 2013.

The national unemployment rate also fell at the national level, year over year, with a drop from 8.3 percent during February 2012 to 7.7 percent during February 2013.

The graph shows a comparison between the two rates since 2006 through FEbruary 2013:

See here for the employment article archive. 

Tuesday, March 26, 2013

New home sales in US West rise to nearly 5-year high

New single-family home sales in the U.S. West were up 505 percent from February 2012 to February 2013, coming in at 12,000 new homes for February 2013, which was the largest number of new home sales in any month since April 2008.  According to a new report released today by the census bureau, 2012 showed growth in new home sales over 2011 overall, and in February new home sales have moved have continued to move up significantly. 

The report, which monitors sales activity for newly constructed houses, showed that new home sales remain down 74 percent from peak levels. 

The first graph shows monthly new home sales totals for each month since 2003. 2012 was clearly the most active year since 2009, and February's total reinforces predictions that 2013 will be another growth year for new home sales. This prediction would rely on continued low interest rates and avoidance of a recession. We can also see that February's new home sales total was the highest number reported for the region since 2008. 

For the West region: 

Comparing monthly totals, February stats show that little happened during January from 2009 to 2012, but that activity increased quite a bit from 2012 to 2013 when looking at January and February. New home sales in February 2013 were tied at 12,000 with February 2008.

The number of new homes for sale at the end of the reporting period was down 9.6 percent from February 2012 to February 2013. There were 28,000 new homes for sale in the West region during February, compared to 31,000 for sale during February of 2012. Nationally, new homes for sale were more flat, being up only 4.1 percent. 

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. It appears that new homes for sale are selling quickly, and that the new construction is not enough to drive up inventory at this time. 

For a longer historical perspective, see here

Quits and layoffs outnumber new hires in January

The number of new hires in the U.S. West, which includes Colorado, rose 2.1 percent year over year from January 2012 to January 2013. Layoffs also rose, rising 18.6 percent during the same period.

According to the latest Job Openings and Labor Turnover report (JOLTS) for January 2013, released last week by the U.S. Bureau of Labor Statistics, the West's increase in new hires of 2.1 percent percent was larger than the nation overall which showed a smaller increase of  1.5 percent, when compared year over year. During the same period, layoffs fell 6.6 percent in the nation overall, compared to the West's increase of 18.6 percent.

January's year-over-year increase in new hires was the fourth year-over-year increase in a row for new hires in the West region. 

The first graph shows the year-over-year change in new hires and in layoffs in the U.S. West region. There is no solid trend in either layoffs or new hires. 

In the second graph, we see the total number of new hires compared with the total number of separations, including quits, layoffs and other separations.

Note that when total hires (the blue line) are above separations (the purple bar) then a positive net number of jobs have been added to the economy. January 2012 was the second month in a row in which new hires have been smaller than separations in the West region. This typically happens during December and January in the West region in recent years. Over the past two years, though, the general trend has been one in which new hires outnumber separations and layoffs. 

Overall, 2012 was rather similar to 2011 in this measure. The number of new separations in January, however, was the highest number seen since 2009. The number of new hires in January was pretty typical for what we've seen in recent years. The larger trend suggests that net jobs are in fact being added to the economy (the blue line is over the purple bar most months lately) but little change in the rate of improvement has been seen since 2011. 

Note: The JOLTS employment data is tied to the Establishment Survey which does not cover small business hiring and self-employed persons.The BLS recent made some significant revisions to employment data at year-end 2011. This analysis reflects the new revised data

Housing starts in US West up 57 percent in February

Housing starts in the West Census region of the US, which includes Colorado, were up 57.1 percent percent from February 2012 to February 2013, counting both single-family and multi-family units combined. According to new housing construction and housing starts data released last week by the US Census Bureau, housing starts were at the highest total recorded in any February since 2008  (Graph units in 1,000s.)

But multi-family housing starts in the West were at a seven-year high for February, rising to the highest February total since 2006.  

The second graph shows multifamily housing starts for the West region (units in 1,000s): 

Multifamily housing starts increased in the region by 58 percent from February 2012 to February 2013. As the graph shows, overall multifamily activity has increased substantially since the trough of 2009, and is now at the highest level of activity since 2006. In the West region during February, there were 6,200 new multifamily units started, compared to 3,900 units during the same period of 2012. 

Single-family starts, on the other hand, showed growth that was much more restrained than multifamily growth. Nevertheless, the growth from 2012 to 2013 was substantial with single-family starts increasing 55 percent from February 2012 to February 2013. There were 9,200 new single-family starts during February 2013, compared to 5,900 single-family starts during February of 2012. (Graph units in 1,000s.)

This report signals continued optimism among both home builders and apartment builders. Year-over-year changes are large when compared with last year, showing that there is much improvement from the builders' perspective over the past year. Over a 5-year period, though, starts totals remain well down from peak levels. 

Case-Shiller: Home price index way up in Denver, increases 9.2 percent

Case-Shiller released its home price index for January 2012 today. The home price index for the Denver area fell 0.0 percent percent from December to January, and rose 9.2  percent, year over year, from January 2012 to January 2013.  The year-over-year increase in January was the thirteenth year-over-year increase in a row for Denver, and was the largest increase since 2001.

 According to S & P's press release, home prices nationwide continued to show some signs of growth:
“Economic data continues to support the housing recovery. Single-family home building permits and housing  starts posted double-digit year-over-year increases in February 2013. Despite a slight uptick in foreclosure  filings, numbers are still down 25% year-over-year. Steady employment and low borrowing rates pushed  inventories down to their lowest post-recession levels.” 
In year-over-year comparisons for January, all of the twenty cities measured reported increases.  The largest increases were in Phoenix and San Francisco with year over year increases of 23.2 percent and 17.5 percent, respectively.

The first 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 metro Denver index value is at the highest value seen since 2007.

The 20-city composite is down 29 percent since it peaked in July 2006, but the Denver index is down only 4.3 percent from its August 2006 peak.

The second 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 December was positive for the seventh month in a row.

In short: Denver metro home prices have shown a stronger growth trend in recent months than the 20-city composite, but the composite index is catching up.

The last graph 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.

Monday, March 25, 2013

Two models for predicting multifamily permitting in 2013

With multifamily units now such a large proportion of all new units, can that number go even higher? Will we be seeing a case in which more than 50 percent of all units are multifamily units in 2013? That appears unlikely at this time. As we note above, that proportion was at nearly a 30-year high during 2012, but as the single-family industry spends 2013 trying to catch up with demand for single-family homes, the proportion of all units that are MF will decline.

To explore this some more, I've created a rather crude multiple regression model to help us guess about how much of 2013 permit activity will be multifamily activity.

The graph is explained by this equation spelled out without the Greek letters for non-economists:

Multifam ratio = -2.8 - 0.03(unemployment rate) - 0.27(home price index) +0.28(residents age 20-35)

The first thing that strikes us about this model is that it has become less predictive over the past decade. We see that during the 1990's the models' predicted values were very close to the actual values. Since then, the model, while getting the general trends right, has tended to miss the big swings that have actually occurred. Some of this is likely due to the fact that employment has become less predictive of multifamily demand in recent years.  Other possible problems stem from the fact that the condo/apartment mix changes over time. 

Nevertheless, this model tells us, more or less, that home prices, the unemployment rate, and the number of people in the 20-35 age range are important factors in determining what proportion of new housing permits will be multifamily permits. 

As home prices increase, builders respond with new single-family construction, so that pushes down the proportion of total units that are multifamily. As unemployment declines, the demand for apartments (and rental rates) goes up, pushing up the proportion of units that are multifamily. And not surprisingly, an increase in the number of younger people (age 20-35) produces more demand for building multifamily units as well.) 

Using this model, if we assume that the unemployment rate comes down a little more while the home prices increase by 5 percent or so, and the number of people age 20-35 increases by another 1 percent, then the proportion of units that are multifamily will remain more or less the same at around 35 percent. Various scenarios involving a continuation of current economic trends (with some moderating of 2012 trends, which we expect) points toward little change (or a decline) in the proportion of units. 

This is not surprising, since single-family home producers have just recently started to really ramp up home production, and as that occurs more in 2013, multifamily is likely to decline as a share of total permit activity. 

Total Units Permitted 

The second model, also a fairly simplistic multiple-regression model,  is supposed to help us predict how many how many multifamily units will be permitted in each year. This is a better model than the first one we looked at. And here's the equation:

Total units permitted =  -28.7 - 0.6(Unemployment rate) + 8.6(occupancy rate) + 62.6(rent per square foot) – 40.5(total units rented)

As you can see, the model does a pretty good job of predicting how many units will be permitted in a given year, and that this has held over time better than the first model. It did under-predict the number of multifamily units permitted in 2012, although the general trend was correct. If we experiment with a variety of variables for 2013 in an attempt to get a prediction, we find that in most economic cases that seem plausible, the number of new multifamily units permitted comes down a little bit in the predicted value.

For example, if I assume that the unemployment rate drops to 7.5 percent for the year (2013), and that the vacancy rate holds steady (it's unlikely to fall much below 4.3 percent), and we factor in the new units that have been produced, the model predicts a decline in total units, year over year.

The industry is moving fast to add a lot of units in 2013, but as this model shows, it's going to be difficult to produce economic conditions that can tolerate a large amount of growth in units -above 2012's growth rate- while still allowing for ongoing increases in rents and stable vacancies. There are a historically large number of units set for delivery in 2013, and many of those were permitted in 2012.  2,000 new units were actually completed and opened to the marketplace in metro Denver alone during 2012. With another 6,000 or so planned for the region in 2013.  That's going to put some downward pressure on rents and upward pressure on vacancies. The model predicts 6,400 new MF permits for 2013, which is a decline from 2012, but still a sizable number.The actual number will likely be higher than the predicted number, but the actual number will also likely be down from 2012's actual total.

9,800 multifamily units were permitted statewide in 2012 (a 150 percent increase over 2011). If total permits in 2013 were 6,400, that would still be an almost 50 percent above 2011's total.

Disclaimer: This article is for research and discussion purposes only. These models and this article are not intended as, and should not be treated as, investment advice. 

Multifam permits vs. singlefam permits: Multifam at 30-year high

The amount of new permit activity that is devoted to multifamily permits reached a 30-year high during 2012. The first graph shows the total number of permits issued in each year. 

Obviously, there are far more singlefamily permits than multifamily permits in almost every year, and since the 1990s, we see that when big growth occurs in the total number of permits issued, single-family permits tend to dominate. 

In some periods, however, multifamily permits become a sizable portion of the total number of permits being issued. Back in 1984, the proportion of all units that were multifamily units hit a very-high 44 percent. Back then, it wasn't just apartments, though, as there was a lot of condo activity going on during the early 80s boom in Colorado. That all came to an end soon after, though, and the number of multifamily units crashed along with the economy. 

During 2012, the proportion of permit activity that was multifamily surged to 43 percent. It seems that anything around 40 percent or above is a very high number for multifamily activity, and 2012 was certainly one of the biggest years for multifamily as it eclipsed singlefamily permit activity. Indeed, multifamily permit activity grew 125 percent from 2011 to 2012 and singlefam activity rose only 50 percent. 

Also, it's probably not too big a stretch to say that if we're looking at just apartments here, and excluding condos, 2012 was probably the biggest year ever for the total amount of permit activity that was devoted to multifamily. There's very little condo activity right now, so apartment activity in 2012 was almost certainly a bigger factor that was the case during the multifamily boom of 1984. 

Friday, March 22, 2013

FHFA: Colorado home price index up for fourth quarter in a row

Colorado's House Price (Expanded-Data) Index (HPI), measured by the Federal Housing and Finance Agency (FHFA), rose 3.1 percent from the fourth quarter of 2011 to the fourth quarter of 2012. According to the fourth-quarter 2012 HPI, released last week by FHFA, the home price index for Colorado, in year-over-year comparisons, has risen for the fourth time in a row, and has shown the strongest year over year growth in a decade.

The Colorado HPI is now down 6.8 percent from the peak in the state's HPI which was reached during the third quarter of 2006. The national index is down 21.5 percent from its peak, which it also reached during the third quarter of 2006.

The HPI for the United States rose 5.4 percent from the fourth quarter of 2011 to the fourth quarter of 2012, and until the second quarter of 2012, the national HPI had not shown a year-over-year increase since the first quarter of 2007.

The first graph shows the Colorado HPI compared to the US HPI since 2000. Since the peak period, the US HPI has fallen farther than the Colorado index. The Colorado index turned up significantly during the second quarter of 2012.

In the second graph is shown the year-over-year change in the HPI for both Colorado and the US. This more fully shows to what degree the HPI has fallen in recent years for both Colorado and the US. The national HPI has fallen farther -or increased less- than the Colorado HPI in every quarter since the second quarter of 2007. The home price index in Colorado has been increasing longer than the US as a whole, although Colorado showed less growth than the nation in the index from 2001-2007.

Overall, this index suggests that, since 2007, overall home prices in Colorado have been more resilient than has been the case nationally, and this matches up with several other indices such as those put out by Case-Shiller and CoreLogic.

The index values presented and analyzed in this article are not seasonally adjusted.

Note: During the second quarter of 2011, the Federal Housing and Finance Agency released, for the first time, its Expanded-Data House Price Index. The new index is "Estimated using Enterprise, FHA, and Real Property County Recorder Data Licensed from DataQuick[.]"

In other words, the data source is much more broad than the old index which relied only on GSE information.

However, at the metro-area level, we'll still need to rely on the older GSE-data index until FHFA expands its new index into the metro areas.

The final graph adds in the Denver-Aurora index, which is also calculated using the Expanded Index formula.  As can be seen in teh graph, the Denver-Aurora area's index is very similar to that of the state overall. This is not surprising, given that so many of the home sales that do take place in the state happen in the metro Denver area.

Single-family permitting in Douglas, Jefferson and Larimer counties outpaces state growth

According to the Census Bureau's year-to-date total through December 2012, the most active counties for single-family permits in Colorado, when adjusted for each County's total household numbers, were Douglas, El Paso, Larimer and Weld Counties.

These four counties have reported the highest single-family permitting rate for several months.

All counties, when adjusted for the existing number households in each county: (New single-family permits per household (x1,000)):

Douglas 15.9
Weld 11.3
Chaffee 10.1
Park 9.8
El Paso 9.8
Larimer 9.2
Broomfield 7.2
Mesa 6.1
Routt 5.5
Elbert 5.3
Adams 4.6
Arapahoe 4.1
Denver 3.8
Teller 3.7
Jefferson 3.7
Pueblo 2.7
Boulder 2.2

Of the 11,029 new single-family permits issued through December 2012, more than one-third of them (36 percent) were issued in El Paso and Douglas counties alone.

See here for recent posts about building permits.

New single-family permits during January-December 2012:
El Paso 2,373
Douglas 1,667

Adams 727
Arapahoe 945
Boulder 269
Broomfield 160
Chaffee 77
Denver 1056
Elbert 0
Jefferson 814
Larimer 1135
Mesa 358
Park 70
Pueblo 172
Routt 54
Teller 37
Weld 1033

(Note: All permits discussed in this article are single-family permits.)

Statewide, single-family permits increased in 2012 by about 50 percent. Most of the metro counties' year-over-year increases were similar to this. In Douglas County, however, the year over year increase was 73 percent, and it was 86 percent in Jefferson County. In Larimer County, the increase was 62 percent.

See here for full data.

State’s Top-Two Affordable Housing Agencies Join Forces to Support Western Slope

The Colorado Department of Local Affairs, Division of Housing (DOH) and CHFA are pleased to announce that they are joining forces and hiring a regional representative to provide information and technical support about the affordable housing and economic development programs available through each entity, with the goal of supporting communities in understanding how the programs can be combined and leveraged to support the Western Slope. “By sharing this position we will learn how to create greater efficiency in our funding and technical assistance services. This is critical to meeting the growing need for affordable housing on the Western slope,” said Pat Coyle, Director of DOH.

The new Development Specialist/Liaison position will be held by Jennifer Lopez, who was formerly the Executive Director of the Regional Housing Alliance of La Plata County in Durango. In that capacity, she created a five-point action plan, launched four new programs, successfully negotiated $30 million in affordable housing agreements with developers, launched the first Down Payment Program in the four corners (90 loans/ $2.7 million portfolio), and created a nonprofit sister agency that is designated as a community development finance institution (CDFI) and a HOME community housing development organization (CHDO).

Cris White, executive director and CEO for CHFA said, “Over the past year, CHFA held community discussions in both Durango and Grand Junction. Throughout, we heard a strong desire for technical staff that could support community leaders and local industry as they work to advance the region’s housing and economic success. By working together, CHFA and DOH can give our customers and partners better information about our resources in a more streamlined and efficient way.”

Ms. Lopez brings more than 12 years of experience in community development and affordable housing. Before joining the RHA, Ms. Lopez served one of the country’s most successful affordable housing programs in Santa Fe, New Mexico, where she was exposed to both policy and delivery systems that, to date, have created more than 2,500 affordable homes. She is a graduate of Fort Lewis College and the University of New Mexico. Additionally, Ms. Lopez is a past participant of the Achieving Excellence Program, an 18-month leadership program for housing professionals sponsored by Fannie Mae, NeighborWorks America and Harvard University.

Ms. Lopez’s community service includes a partnership with the Governor’s Office and 100,000 homes campaign, where she spearheaded the “Vulnerability Index” in Southwest Colorado. This initiative identified over 330 homeless individuals over a week-long campaign. As a result of this effort the community formed a new task force, raised $95,000; successfully acquired a parcel for development of supportive housing and will hire a new regional housing coordinator in partnership with the Southwest Council of Governments.

Ms.Lopez will office from Durango and can be contacted at 970.903.6809.

Two-thirds of multifamily permits in Denver and Broomfield during 2012

According to the Census Bureau, through December of 2012, there were 1,848 multifamily permits in Broomfield County and 4,356 in Denver County.

This article is about multifamily permits only. 

In the county-level permit data, there was a total of 9,807 multifamily permits through December, and almost two-thirds of these were issued in Denver County and Broomfield County, where, combined, 6,204 permits were issued for the year.

This matches up with the anecdotal evidence in which brokers were tellin gus that the hot spots were downtown Denver and the Boulder Turnpike corridor, this year.  These December year-to-date totals appear to back up those assertions.

The other counties that were very active for the year in multifamily permitting were Arapahoe, Douglas, El Paso and Larimer Counties. No other counties reported what might be called large amounts of new multifamily permitting.

some populous counties that reported very little multifamily permitting at all for the year were Weld County, with only 34 permits, and Mesa County with only 19 permits. Pueblo reported 92 permits for the year, all from one project due to be delivered late this year or early next year.

Multifamily permit totals for metropolitan counties in Colorado were (Jan-December 2012):

Adams 220
Arapahoe 746
Boulder 464
Broomfield 1,848
Denver 4,356
Douglas 590
El Paso 597
Jefferson 150
Larimer 691
Mesa 19
Pueblo 92
Weld 34

Year-to-year growth: 

Total permits were up 150 percent statewide from 2011 through 2012, although the change in specific counties varied considerably. 

Multifamily permits grew 156 percent in Denver County, while Broomfield permits increased from zero to 1,848 over the same period. 

In Douglas County, permits grew 131 percent, year over year, and they grew 47 percent in Larimer County. 

Permits in Mesa County actually fell from 64 to 19, dropping 70 percent during the period, and Weld County permits grew only slightly from zero to 34.  Permits also fell in El Paso County, dropping 9 percent. 

Boulder permits grew 350 percent from 2011 to 2012. 

See here for full data. 

Thursday, March 21, 2013

2012 building permits up for third year in a row in Colorado

At year-end 2012, there were 13,110 single-family permits issued for the year in Colorado, and 9,880 multifamily permits (5 units or more). Year over year, single-family units grew 50 percent, and multifamily permits grew 125 percent. Taken together, building permits were up 75 percent from 2011 to 2012. Combined, there were 22,990 units issued in Colorado during 2012.

The first graph shows total permits broken out into single-family and multifamily permits. From 2009 through 2011, permits were at some of the lowest levels experience since the early 1990s. The large amount of growth since  move permit activity closer toward the average number of annual permits issued since 1990, which is 30,700 units. 2012's total remained well below the average.

The second graph shows total permits in each year compared to the number of new households formed. When the blue line is above the brown bars, then there are more households being formed than there are new units permitted. 

Not surprisingly, during the peak housing bubble years from 2002-2006, there were more units permitted than there were households formed. Since 2007, however, the situation has reversed. Indeed, the excess in units from 2002-2006 (83,200 permitted units) are similar to the number of the shortfall in units since 2007 (83,500 permitted units).  The third graph shows the excess or shortfall for each year: 

In the final two graphs, I've calculated the number of units permitted each year as a proportion of the total number of households in Colorado at that time. Going back to 1985, I've looked at total permits for each year. The fourth graph shows multifamily permits for each year as a percentage of the total number of households in that year. (2012 household data is not yet available, so I've estimated the number for 2012 at 30,000 more households than was the case in 2012. This is a high number and designed to avoid over estimating the impact of new multifamily units.) The red line shows the average since 1985. 

The fourth graph shows that multifamily activity was slightly above average during 2012 following three years of activity that was well below average.  2012 levels were above what was common during the late 80-s and early 90s when the economy was very weak in Colorado.  We also see that 2012 may have been the most active year, by this measure, in a decade. 

The final graph shows single-family permits activity a s a proportion of existing households. The red line shows the average since 1985. In this case, we see that single-family permit activity remains well below the average during 2012. 

At year-end 2012, the state is looking at, more or less, three years of growth in permits, and this is especially being driven by growth in multifamily permits right now. Single-family permits activity was restrained during 2012, although the industry has indicated it plant to increase production significantly in 2013. Multifamily permit activity is likely to grow again in 2013, although not at the same pace as was seen form 2011 to 2012. 

Housing News Digest, March 21

With meth-contaminated homes, it's buyer beware No one knows how many homes in the United States are contaminated by meth, and there is no national requirement to test for it. But state and industry officials say, as more testing is done, they are discovering more meth-contaminated properties, particularly among foreclosed or rental homes that are coming back on the market amid a housing recovery.

  As Economy Improves, Colorado's Housing Market Starts To Heat Up What is surprising to some in the business community is how quickly the real estate market is heating up. Northern Colorado Business Report publisher Jeff Nuttall says low interest rates, limited rental vacancies and a short supply of homes are all combining to fuel the demand.

 Foreclosures fall to new statewide low (Greeley Trib) It’s starting to sound like a broken record, but it’s music to the ears of those in the real estate and homebuilding industries: Foreclosure filings and sales have again shrunk in northern Colorado and statewide — hitting a new low, the Colorado Division of Housing reported Wednesday. The state measures foreclosures by filings, when a homeowner is in default and has a set time to cure it; and by foreclosure sales, when homes are sold at auction. February foreclosure filings in Weld County were down 27.5 percent to 79 compared to the same time last year; and sales were down …

 Foreclosure filings, sales down in Colorado's metro countiesForeclosure filings last month in El Paso County fell to 180, a 40.2 percent year-over-year drop. Arapahoe County reported the biggest drop at 53.9 percent; Pueblo had the smallest decline at 21.1 percent. El Paso County’s foreclosure sales in February totaled 131, a 20.1 percent drop from a year earlier. Douglas County posted the biggest decline, 64 percent. articles/foreclosure-152496-filings-metro.html#ixzz2OCSvrQKf

  Boulder County has lowest foreclosure rate Boulder County had 19 foreclosure sales, or one for every 6,283 households, the report said. Broomfield County had the second-lowest rate of foreclosure sales in February: four sales, or one for every 5,490 households. Mesa County had the highest rate of foreclosure sales during February with one for every 1,022 households per foreclosure sale.

  Behringer Harvard Commences Construction on Luxury Multifamily Community in Denver Behringer Harvard announced today that construction has begun on a luxury multifamily community on the north side of downtown Denver. The 1.15-acre construction site is near the northwest corner of the intersection of 21st Street and Lawrence Street , in the Arapahoe Square/Ballpark area.

Colorado unemployment rate continues to fall below national rate

Colorado 's unemployment rate dipped further below the national unemployment rate in January, dropping to 7.3 percent in Colorado compared to 7.7 percent for the nation overall. (These are seasonally adjusted numbers.)

The seasonally-adjusted unemployment rate for Colorado during December was 7.5 percent, and it was 7.8 percent for the nation.

According to the most recent BLS press release on state unemployment:
California and Rhode Island recorded the highest unemployment rates among the states in January, 9.8 percent each. North Dakota again registered the lowest jobless rate, 3.3 percent. In total, 24 states reported jobless rates significantly lower than the U.S. figure of 7.9 percent, 9states had measurably higher rates, and 17 states and the District of Columbia had rates that were not appreciably different from that of the nation. 
Colorado's seasonally-adjusted unemployment rate was down year over year in January, dropping year over year from 8.3 percent during January 2012 to 7.3 percent during January 2013.

The national unemployment rate fell fell slightly at the national level, year over year, with a drop from 8.3 percent during January 2012 to 7.9 percent during January 2013.

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

See here for metro area unemployment info in Colorado.

Unemployment falls year over year in all metros, but some areas head back above 9 percent

Total employment growth in Colorado in January continued at a solid pace during January according to the most recent emploment data 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 January 2013 are:
Colorado Springs, 8.8%
Denver-Aurora, 8.8%
Fort Collins-Loveland, 6.1%
Grand Junction, 9.2%
Greeley, 8.4%
Pueblo, 10.7%
Statewide, 7.5%

Since mid-2009, The Fort Collins-Loveland area has consistently shown one of the lowest unemployment rates while Pueblo's unemployment rate has been above ten percent for over a year now. Over the past year, however, The Colorado Springs unemployment rate has stalled above 8 percent, and the Grand Junction unemployment rate has been heading up since fall 2012.  

All areas have shown declines from January 2012 to January 2013, though. Recent revisions to the employment data also pushed up the January 2012 unemployment rate in most metros from what had been previously reported. 

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 January 2013 employment totals: 

Colorado Springs MSA, 6.4%
Denver-Aurora MSA, 2.9%
Fort Collins-Loveland MSA, 2.8%
Grand Junction MSA, 12.4%
Greeley MSA 3.2%
Pueblo MSA, 3.7%
Statewide, 3.7%

All things being equal, the areas further below the peak have recovered the least from initial job losses.  Grand Junction's total employment has recently dropped further from peak levels, although most other areas, except Pueblo, have shown gains toward peak levels. 

(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 January 2013, the rate in the Boulder-Longmont area was 5.5%.)