Friday, May 31, 2013

How Colorado compares in the National Financial Capability Study

The FINRA foundation recently released its 2012 report on Financial Capability.

The report also broke out each state for several metrics. here are some:


The first box shows the number of Colorado individuals who are saving money, versus those who are spending more than their income. Note that Colorado's rate of individuals running a deficit is pretty much equal to the national rate:

 The percentage of Coloradans with a rainy day fund is slightly above the national rate:

 When it comes to home equity, 16 percent of Coloradan surveyed reporting having a home that was underwater, while the rate was 14 percent nationwide. A rate of 16% is in the middle between the high of 35 percent underwater found in Nevada, and the low of 6 percent underwater found in Oklahoma.

 

 See the complete graphic profile here.

 If we delve into the more detailed data, we find some other points of interest:

 5 percent of Coloradans surveyed were "involved in a foreclosure process on your home in the last 2 years" compared to 4 percent nationwide.

 16 percent of Coloradans have been late on a mortgage payment in the last two years, compared to 21 percent nationwide.

 The number of Coloradans with a mortgage on the home was significantly higher than was the case nationwide. In Colorado, the rate was 73 percent, and it was 60 percent nationwide.

 21 percent of Coloradans surveyed purchased the house some time from 2008 to 2012, versus 20 percent nationwide. 40 percent of Colorado homeowners purchased the home before 2000, compared to 44 percent nationwide.

 There's more data at the site.

 Colorado is similar to the nation overall in a variety of ways, although, as we see, there are some areas of divergence, as in teh number of self-employed. 12% of Coloradans are self-employed, compared to 8 percent nationwide.

RPX: 'A look under the hood raises doubts about whether the gains are sustainable'

RPX has consistently been one of the more cautious home-price research groups in recent years and has been reluctant to declare a solid market in housing. 

The most recent press release for their housing market report contains several interesting points about what is affecting home prices right now, and what may happen in the future:


 The press is buzzing with news of year-on-year gains in housing prices, but a look under the hood raises doubts about whether the gains are sustainable. On the surface, the state of housing markets looks good: the 25-MSA RPX Composite price increased 13.1 percent year over year as of March 21, with all but one of the constituent metropolitan statistical areas posting gains. However, when one digs a little deeper one finds that the conditions that have given rise to these gains differ from those that underpinned past housing recoveries, and are not adequate to drive a lasting appreciation in housing values.
Limited Supply  
Tight inventory is perhaps the most significant driver of year-on-year gains in the 25-MSA composite. At the height of the housing boom, in July 2007, 3.4 million single family homes were for sale, according to the National Association of Realtors (NAR). In April 2013, just 1.9 million single-family homes were on the market. According to the NAR, the inventory of existing single-family homes for sale was down 11.9 percent year over year in April. More recent figures are available from Housing Tracker at Department of Numbers, which reports a 15.5 percent year-on-year decline in the inventory of single family and condo homes listed for sale as of May 27. Inventory estimates by the NAR are nationwide, while estimates by Housing Tracker cover 54 major metropolitan areas.
Looking forward, however, inventories are likely to increase. Current constraints on supply - negative and low equity, seller psychology, and low builder activity - will have less of an effect as home prices rise. As inventories rise, price trends will likely weaken.


Corelogic: Colorado posts fifth-lowest foreclosure inventory among states

According to Corelogic's national foreclosure report, released earlier this week, Colorado's foreclosure inventory rate  was 0.9 percent, which makes it tied for fifth-lowest foreclosure inventory rate among the fifty states. The highest rate was found in Florida where it was 9.5 percent. The lowest was in Wyoming where it was 0.5 percent. 

Also according to the report, Colorado's foreclosure rate, based on the number of completed foreclosures, was 58 mortgages per completed foreclosures. In a measurement like this, the higher the number, the "better" the foreclosure rate. (This was for the 12-month period ending April 2013.) 

Colorado's rate of 57, made it somewhat similar to Texas, where the rate was 54, and to Minnesota, where the rate was 61. 

Using this metric, Colorado had the 16th-highest foreclosure rate in the nation.  In other words, over the past year, looking at the number of completed foreclosures, Colorado was in the top one-third of states for newly completed foreclosures. 

So, we see a bit of a difference in Colorado when looking at foreclosure inventory or at new foreclosure transactions. When it comes to foreclosure inventory, Colorado is near the bottom, but if we look at new foreclosures completed, the state is in the top third.  

If we compare this Corelogic report to the MBA's first quarter 2013 report, we see that in the MBA report, Colorado has the seventh-lowest foreclosure inventory rate, which is similar to the Corelogic report. 

As noted in our earlier article on the delinquency report, Colorado had the ninth-lowest rate for 90-day delinquencies. So, Colorado is also near the bottom in the number of seriously-delinquent loans. 

Although completed foreclosures continue at a significant pace in the state, according to our statewide report, the number is nevertheless way down from peak years and 2012, dropping 30 percent, year over year, during the first quarter.  

Also released this week was the first quarter Realtytrac report. In the RT report, they reported a smaller decline in foreclosure activity than what we see in the Colorado state report. For example,  according to our first quarter numbers, the YOY change in Colorado for the first quarter was 30 percent down in completed foreclosures and 41 percent down in filings. But Realtytrac's numbers from this week show a smaller decline of 24.4 percent in completed foreclosures. The reasons for the difference remain unclear, as Realtytrac's methods are not made public. 

Housing News Digest, May 31

Vouchers are approved to aid cost of vet housing After years of research and work, a voucher program to help local homeless veterans find permanent housing has been approved to the tune of almost $95,000.

  Aspen wants to ease housing for seasonal workers ASPEN, Colo. (AP) - A proposal aimed at freeing up space in Aspen and Pitkin County's affordable-housing program for seasonal workers is making progress.

  Bent County to take responsibility for new homeless rehab center at Fort Lyon Gov. John Hickenlooper plans to be in rural Bent County on Friday to sign a bill that will reopen the shuttered Fort Lyon Correctional Facility as a homeless rehabilitation center.

  Fort Collins rental market eases, but not enough for many home seekers Finding an apartment in Fort Collins is almost a contact sport these days. Hesitate even slightly with that deposit or lease and someone will elbow you out of the way.

  Young professionals say downtown Colorado Springs is lacking shopping and housing A market research study conducted for the Colorado Springs Downtown Business Improvement District has reaffirmed how many local residents and businesses view downtown. The area gets high marks for its locally owned restaurants, specialty stores, museums and history, but is dogged by concerns about parking, panhandlers, crime and a lack of housing.

Brahos: 'Avoid euphoria'

A good summary of the real estate buzz in several cities including Denver and Boulder. Some relevant passages: 

John E. Starke, a veteran real estate investment strategist in Denver, said that foreign and domestic investors were active in Denver’s commercial real estate last year. Colorado’s economy expanded by about 3.9% in 2012, according to Starke. That’s good, but not great for a recovery, he says. And, Starke doesn’t expect that rate to increase in the next several years. Commercial real estate activity around Denver jumped in 2012, but is now flattening a bit. Office vacancy rates declined by about 12.2% last year.
The darling sector in each of our cities, as it is nationwide, is multifamily rental housing, according to panelists at the various forums. They feel this largely reflects a major decline in homeownership caused by collapse of the housing bubble, the recession and tighter lending standards. It may also reflect disillusionment about homeownership among younger “Generation-Y” families. Regardless of the reason, rents are climbing and apartment vacancy rates have slipped to about 5 percent nationwide. In Denver, the vacancy rate is down to 4.9% 
But multifamily housing is an exception to the general picture. Demand for rental apartments surged in part because the housing bust and recession turned millions of homeowners and would-be homebuyers into renters. By contrast, demand for office and retail space ultimately depends on increases in employment and personal income. 
Our takeaway: avoid euphoria. 

Thursday, May 30, 2013

Latest Realtyrac numbers on Colorado

The Denver Business Journal reports that Realtytrac reports 5,142 foreclosure sales during the first quarter of 2013.

Realtytrac also reports a year-over-year decline of 24.5 percent for the first quarter.

We can contrast this with the Division of Housing's first quarter report, which showed only 2,935 foreclosure sales for the first quarter.

The State's report also showed a 30.5 percent decline, year over year.

See here for more.


Tuesday, May 28, 2013

Colorado unemployment rate drops to 6.9 percent; national rate at 7.5 percent


Colorado 's unemployment rate dipped further below the national unemployment rate in April, dropping to 6.9 percent in Colorado compared to 7.5 percent for the nation overall. (These are seasonally adjusted numbers.)

Colorado's seasonally-adjusted unemployment rate was down year over year in April, dropping from 8.2 percent during April 2012 to 6.9 percent during April 2013.

The national unemployment rate also fell at the national level, year over year, with a drop from 8.1 percent during April 2012 to 7.5 percent during April 2013.

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



See here for the employment article archive. 

Wednesday, May 22, 2013

Payroll employment hits new high for April, labor force size returns to peak levels

Total non-farm employment in Colorado, measured by the Establishment Survey, reached the highest level yet recorded for April. During April, total employment hit 2.3 million jobs, which was the highest level recorded during any April. This follows numerous months in which the monthly total reached a five-year high but did not return to peak levels.

Peak levels were reached during late 2007 and early 2008 in most cases.

The first graph shows Establishment Survey employment totals for each month since 2003. Note that for April the yellow column (2013) is slightly higher than the red column (2008) and all other April columns.  Comparing April 2012 to April 2013, total employment grew 61,000 jobs.

 The year-over-year percent change in employment was also positive, and in April, grew at a rate similar to what was common during the last recovery (2003-2008). The second graph shows the year-over-year change in employment of 2.6 percent (Establishment Survey):


When viewing the other measure of employment, the Household Survey, we find that employment hit a five-year high for April, rising to 2.55 million jobs in April.  However, this was still 49,000 jobs below the April 2008 peak of 2.6 million jobs. Overall, according to the Household Survey, the state remains 73,900 jobs below the peak reached during July 2008. Comparing April 2012 to April 2013, we find that the state added 54,000 jobs. The next graph shows Household Survey total for employment and labor force over time: 



The unemployment rate hit a four-year low during April, however, dropping to 6.8 percent (not seasonally adjusted):
This decline reflects the job gains made in the Household Survey, but the decline is also helped along by the fact that the labor force in Colorado is not growing very much. In April 2013, the labor force size did reach a new high, coming in at  2.74 million jobs. This was the highest point reached in any April, with the state adding 26,000 people to the labor force from April 2012 to April 2013.  However, the labor force in April was up only 8,500 jobs from the April 2009 peak level for the labor force. This is really a tiny number compared to what is usually added to the Colorado economy during recent expansion periods, and is being held down by worker reluctance to enter the work force in a lackluster employment market. 

The last graph shows monthly labor force totals.  Compare recent growth from year to year for April totals compared to the growth seen from 2003 to 2007. 



Colorado 41st in nation for 90-day delinquencies

30-day delinquencies during the first quarter of 2013 were even with the fourth quarter of 2012, remaining flat at 2.18 percent of all loans surveyed in Colorado. According to the National Delinquency Survey, released by the Mortgage Bankers Association, the national 30-day delinquency rate was 2.86 percent during the first quarter, down from 3.21 percent reported during the fourth quarter of 2012.

The first graph shows 30-day delinquencies by quarter in Colorado since 2006. The 30-day delinquency rate for the first quarter was up compared to the first quarter of 2012, which was 2.03 percent.


The number of loans that were 90 days delinquent of more were down in Colorado, falling to 1.67 percent of all loans surveyed during the first quarter of 2013. The 90-day delinquency rate during the first quarter of 2012 was 1.96 percent, and it was 1.73 percent during the fourth quarter of 2012. The second graph shows the percentage of mortgage loans that were at least 90 days delinquent in recent years. The 90-day delinquency rate has been falling consistently in Colorado since the fourth quarter of 2009.


The foreclosure inventory also fell during the first quarter of 2013 and has fallen for the past nine quarters in a row. Colorado's foreclosure inventory dropped to 1.38 percent during the first quarter of 2013, falling from 2012's first quarter rate of 1.95 percent. The inventory was also down from 2012's fourth-quarter rate of 1.41 percent. The third graph shows the foreclosure inventory in Colorado:



National Comparisons:

As can be seen in the second and third graphs, Colorado's foreclosure inventory and 90-day delinquency rates are well below the national rates. The U.S. 90-day delinquency rate during the first quarter of 2013 was 2.84 percent.

The U.S. foreclosure inventory rate was 3.55 percent during the first quarter of 2013.

Using the 90-day delinquency rate to compare Colorado to all other states, we find that Colorado had the ninth-lowest delinquency rate in the nation during the first quarter of 2013. The only states with lower 90-day delinquency rates were Vermont, Iowa, Minnesota, North Dakota, South Dakota, Montana, Wyoming and Alaska. The lowest 90-day delinquency rate in the nation was found in North Dakota where it was 0.58 percent, and the highest rate was found in Nevada where it was 5.19 percent.

Delinquencies are measured by the MBA via surveys sent to major loans servicers. The MBA estimates it covers 88 percent of all first-lien residential mortgage loans outstanding in the US with the survey.

BLS: Extended mass layoffs down during the first quarter of 2013

Last week, the Bureau of Labor Statistics released quarterly data on extended mass layoffs and initial unemployment claims for the first quarter of 2013.

In Colorado, the trend in extended mass layoffs has been generally downward since 2009, with some ups and downs. The downward trend of 2011 appears to have stalled somewhat since mid 2012, with quarterly totals heading back near 2010 totals. Nevertheless, the totals for the first quarter of 2013 were quite low, and among some of the lowest totals recorded since 2008. There were only 5 extended mass layoff events during the first quarter of this year, compared to 8 during the first quarter of last year. There were 569 initial unemployment claims associated with the extended mass layoffs, during the first quarter of 2013. This is compared to 1,158 reported during the first quarter of last year.


In the second graph, we see the year-over-year changes in initial unemployment claims for both the US and Colorado. During 2010 and most of 2011, the year-over-year change in new claims had consistently been down-year-over-year. This mirrors the recovery period of 2003 and 2004. Over the past year, however, initial claims have been more volatile and have lacked a clear short-term downward trend. In the multi-year trend however,  totals remain well down from 2009's highs. During the first quarter, claims fell, year over year, in both Colorado and in the US overall.



Historically speaking, the first quarter tends to be a quarter with few claims and mass layoff events, although there was a year over year decline. The overall trend is not as strong downward now as it was during 2010 and 2011, suggesting that the rate of improvement has slowed.

"Extended mass layoffs" are a little different from the mass layoffs that are reported on monthly by the BLS. Specifically, an extended mass layoff is "defined by the filing of 50 or more initial claims for unemployment insurance benefits from an employer during a 5-week period, with at least 50 workers separated for more than 30 days. Such layoffs involve both persons subject to recall and those who are terminated."

This quarterly report focuses a little bit more on permanent and longer-term separations while the monthly statistics track all separations regardless of duration.

The report also tracks initial claims for unemployment insurance associated with the extended mass layoffs.

New unemployment claims down slightly in 2013

New mass layoff and unemployment claim data was released today by the BLS. First-time unemployment claims in the United States were down 18.5 percent, year over year, during April, while claims were down 1.5 percent during the same period. From April 2012 to April 2013, first time unemployment claims in Colorado fell from 1,401 to 1,379. April's decline in claims marked the third year-over-year decline in a row during 2013.

The first graph shows year over year change for each month since 2009. There's not much of a pattern here, although there are more declines that increases over the past year or so for Colorado.

The second graph shows the number of first time unemployment claims for each month. Over the past two years, totals have fallen below the 2009 highs, but some months continue to see spikes, as was the case during January 2013 when first time claims reached the highest point seen since 2009. Claims totals remain well above what they were during the last recovery. 

The third and fourth graphs show mass layoff events and first-time claims for the first four months of each year (YTD through April). From January through April, there were 3,464 first time claims in Colorado this year, compared to 3,600 during 2012. From 2012 to 2013, the four-month total for first-time claims was down 3.7 percent in April. This is the smallest year-over-year decline since the recession, and suggests that the pace of improvement in the job market in Colorado may be slowing. 

 Mass layoffs continued to decline when measured year over year for the first four months of the year. Through April of 2013, there were 27 mass layoff events, and there were 32 events during the same period of 2012. 2013's total was the smallest total in mass layoff events reported since 2008.
Definitions:
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.

Friday, May 17, 2013

Some details on Grand Junction vacancies

Grand Junction's first-quarter vacancy rate of 11.8 percent is being driven by vacancies in 2bd/2ba apartments and 3bd apartments. In the first graph, we see that the first quarter's high vacancy rates in those units continues a trend that has been forming since 2010. On the other hand, vacancies  in 1 bedroom and 2bd/1ba apartments have been rather low.

Higher vacancy rates in the larger units during times of economic distress are common due to economizing on the part of renters. Also, in smaller, less urbanized markets such as Grand Junction, the larger units compete with single-family rental homes. What we find in Grand Junction is that as the labor force shrinks (as it has been doing) and employment growth his limited, renters seek smaller apartments. It is especially easy to cut one's rent by downgrading slightly from a 2bd/2ba to a 2bd/1ba, and we see that vacancies in 2bd/1ba have actually been declining in recent years. 

The big swing in vacancies down during 2011 (and then up again in 2012) was mirrored in other smaller markets as well, such as Greeley, and corresponds to the very low number of home sales that took place during 2011, among other factors. 

Not surprisingly, we see in the next graph, that recent declines in average rents in the area are being driven by declines in average rents in the 2bd/2ba and the 3 bedroom units. Average rents in the smaller units have held up well, but we see some big declines in rents in the larger units. 

One interesting aspect of the Grand Junction market is that the larger apartment buildings appear to be less popular. With the exception of the boom period, larger buildings in Grand Junction are consistently less popular than medium-sized and small buildings in the region. This is not the case in all similarly-sized markets. In Greeley, for example, larger building are more popular than smaller ones, historically speaking. In the next graph we do see that the first quarter's numbers in large buildings simply continue a trend that has been building since 2009. 


So, recent high vacancy rates in the region are certainly not the result of uniformly increasing vacancies across the region. Instead, we find that high vacancy rates are driven by larger units in larger building. Some of this is a result of renters attempting to economize, and some of it is due to the fact that larger units compete with single-family rentals that can provide more space at comparable prices.

Additional notes:

According to the Census Bureau, the maximum number of apartments in Mesa county is about 8,100. This includes condos as well, so the number of apartments is somewhere below 8,000, and is likely around 6,000. The sample size form the vacancy survey then is about 20 percent of total units.

There are about 62,000 total housing units in Mesa County.

Thursday, May 16, 2013

Buildfax: Home remodeling activity in US West down 21 percent in March

According to Buildfax's residential remodeling index for March, activity was down 4 percent nationwide form March 2012 to March 2013. In the U.S. West region, activity was down 21 percent over the same period.

According to the press release:

National Residential Remodeling

Residential remodels authorized by building permits in the United States in March were at a seasonally-adjusted annual rate of 2,731,000. This is 10 percent below the revised February rate of 3,026,000 and is 4 percent below the March 2012 estimate of 2,831,000.

Regional Residential Remodeling

Seasonally-adjusted annual rates of remodeling across the country in March 2013 are estimated as follows: Northeast, 577,000 (down 13% from February and down 25% from March 2012); South, 1,718,000 (up 51% from February and up 60% from March 2012); Midwest, 552,000 (down 21% from February and down 17% from March 2012); West, 532,000 (down 34% from February and down 21% from March 2012).

Viewing the Economic Recovery Through Remodeling

"Residential remodeling in March dropped significantly from February--except in the South, where it dramatically increased--indicating that we will likely continue to see a higher-than-normal amount of volatility around the number of permitted remodeling projects," said Joe Emison, Chief Technology Officer at BuildFax.

Trulia: Rents and home prices up in Colorado Springs and metro Denver

According to a report released today by Trulia, the asking rent in Denver during April 2013 was up 4.3 percent from April 2012. Colorado Springs was also included in the report and, according to Trulia, year-over-year asking rents were up 2.9 percent in Colorado Springs, year-over-year during April 2013.

The Division of Housing's own survey shows increases in rent also, although our data, which is based on actual rents collected via survey, shows 4.2 percent growth in metro Denver and 4.4 percent growth in Colorado springs, for the first quarter of 2013.  Overall, we think the Trulia report understates rent growth in Colorado Springs in recent months.

Trulia also reported that asking prices for homes were also up in Colorado Springs and Denver metro, with asking prices up year over year during April by 1.8 percent in Colorado Springs and 12.1 percent in metro Denver.

The Colorado Springs market has been weaker in home price growth than the Denver area in recent years, due in part to the relatively weaker job market in Colorado Springs.

See our home price archive for more complete info. The continued trend here is upward, which reflects a variety of other measures of rents and home prices.

Colorado foreclosure filings plummet 41 percent during first quarter


New foreclosure filings were down 41.3 percent in Colorado during the first quarter of 2013 compared to the same period of 2012. According to a report released today by the Colorado Division of Housing, there were 4,571 foreclosure filings reported during the first quarter of 2013, compared to 7,785 reported during the first quarter of last year.

Foreclosure auction sales, or completed foreclosures, also fell significantly, dropping 30.5 percent from 2012’s first-quarter total of 4,221 to this year’s first-quarter total of 2,935.

Both foreclosure filings totals and foreclosure auction sales totals were the lowest quarterly totals collected in any quarter since the Division of Housing began tracking quarterly totals in 2007.

“This is a large decline in foreclosure activity,” said Ryan McMaken, economist for the Colorado Division of Housing. “The trend downward is accelerating, helped along by low mortgage rates, rising home prices, and a stabilizing employment situation.”

All of the state’s twelve metropolitan counties reported year-over-year declines in both foreclosure filings totals and foreclosure auction sales totals for the first quarter of 2013. The counties with the largest declines in new foreclosure filigns were Douglas County and Mesa County with drops of 49.3 percent and 47.1 percent, respectively.

Only ten of the state’s 64 counties reported year-over-year increases in foreclosure filings, and they were smaller counties with fewer than 40 total foreclosure filings in each county.

When adjusted for population size, the counties with the highest foreclosure rates were all found outside the metropolitan areas. The top five counties for the proportion of homes that were in foreclosure were Gilpin, Custer, Archuleta, Grand and Park counties.

“40 percent drops in foreclosure filings were typical all along the Front Range this past quarter,” McMaken said. “The decline in foreclosures has been a statewide phenomenon so far this year.”

Foreclosure sales are opened foreclosures that have proceeded through the full foreclosure process to final sale at public auction. Filings denote the beginning of the foreclosure process, and once a foreclosure is filed, the borrower has at least 110-120 days to work with the lender to avoid a completed foreclosure. It is during this period that borrowers work with lenders and housing counselors to work out loan modifications, short sales, or other ways of withdrawing the foreclosure. 

News Digest, May 16

Fort Collins rental market eases, but not enough for many home seekers McGinnis and others face an unbearably tight rental market with few available units, pricier rents and more stringent qualifications. A new quarterly survey on multifamily housing vacancies and rents shows Fort Collins’ vacancy rate loosened from 2.5 percent for the fourth quarter last year to 5.5 percent while the average rent climbed to $1,037. The increased vacancy rate, caused by new units coming on line, belies the reality of higher rents and fewer units. The difficulty compounds itself the closer you get to the Colorado State University campus, where vacancy rates are at 0.3 percent in the northwest part of town and 0.7 percent in the northeast, both areas around CSU.

  Colorado foreclosure filings plummet 41 percent in the first quarter Foreclosure filings plummeted 41.3 percent during the first quarter of 2013 compared to the same period of 2012, the Colorado Division of Housing said Thursday. There were 4,571 foreclosure filings reported during the first quarter of 2013, compared to 7,785 reported during the first quarter of 2012. Foreclosure auction sales, or completed foreclosures, also fell significantly, dropping 30.5 percent from the 2012's first-quarter total of 4,221 to this year's first-quarter total of 2,935, according to the report.

  192 acres purchased at I-25 and Prospect Road FORT COLLINS - A Colorado Springs investment group has purchased 192 acres of undeveloped land at the northwest corner of the intersection of Interstate 25 and Prospect Road. The owner, a limited liability company called Fort Collins/I-25 Interchange Corner, plans to develop the property in accordance with its current zoning. Twenty-one acres are zoned for urban estate, 68.6 acres are zoned for low-density mixed-use, 60.9 acres for employment and 26.9 acres for commercial uses.

 Luxury home sales soar Luxury home sales skyrocketed in April, with sales of homes priced at $1 million or more rising almost 142 percent from April 2012, according to a report released today by independent broker Gary Bauer. “It was a record for luxury sales in April,” Bauer said. This 5,311-square-foot home in Cherry Hills Village sold for $2.78 million in April. Bauer also released two other reports for higher-end homes priced below $1 million, and found strong sales from homes priced from $500,000.

  More stores coming to First & Main Town Center in Colorado Springs Colorado Springs' biggest retail complex is getting even bigger. A nearly 12,000-square-foot, single-story retail building is under construction at the First & Main Town Center on the city's east side, with completion expected by Thanksgiving, said Fred Veitch, a vice president with Nor'wood Development Group of Colorado Springs, the center's developer.

Wednesday, May 15, 2013

Recent Grand Junction news

The Sentinel reports that:
Home sales in Mesa County plateaued in the first quarter of 2013, but a bump in the median sales price and a drop in foreclosure filings and sales suggest the real estate market is continuing…

Note the number of home sales in the county actually fell slightly year over year for the first quarter, dropping from 580 to 577.


Also,

Apartment vacancy rate up; rent payments down
The percent of vacant apartments in Grand Junction hit a more than three-year high in the first quarter of 2013, according to the Colorado Division of Housing.

New Development:

Golf villas capitalize on desire to live near Redlands Mesa course
There’s fresh activity and excitement at Redlands Mesa Golf Course community, where Zag Built recently completed a new sales office near the clubhouse. Zag Built also purchased seven lots from Brightstar Development, the owner of the golf course community, and is currently putting in the infrastructure for golf villas. “We’ve had tremendous interest,” said Mike Zagrzebski with Zag Built. “We expect to have them pre-sold prior to starting.” The infrastructure construction will be done in June, but the sales office has drawings and plans for the villas and is currently talking to prospective customers. All of the homes have three bedrooms and at least two baths and a three-car garage is an option for the lots that can accommodate them.

KRDO story on apartment vacancies in Pueblo

The most recent vacancy and rent survey for Pueblo shows a vacancy rate of 14.9 percent. This high rate appears to be driven by larger buildings in the northwest part of town. Other areas show lower vacancy rates.

KRDO TV recently produced a story on the topic:


PUEBLO, Colo. -Pueblo has one of the highest apartment vacancy rates in the state. According to the Colorado Division of Housing, in the first quarter of 2013, there was a 14.9 percent vacancy rate compared to 5.9 percent in the first quarter of 2012. 
Skyview Condominiums sits in northeast Pueblo. It's the area with the highest vacancy rate in the city. When Mickel Robinson and her husband took over the apartment complex two years ago, it was half full. Soon after, they evicted dozens of people who were causing trouble, which led to an increase in vacancies. 
"We tried to change the area around a little bit and the reputation that we had over here, so we had to actually clean house a little bit," Robinson said.
The apartment is making a comeback, but the complex is still 50 percent vacant. Robinson said she's offering incentives that include rent discounts to tenants who refer a friend to the apartment.

Tuesday, May 14, 2013

Student debt load in Colorado

As you might expect, a household's student debt load will impact the availability of funds for rent or mortgage payments. It can also impact credit scores.

The NY Fed recently broke down student debt load info by state.

Perhaps due to the fact that Colorado has a rather high proportion of college-educated residents, and is attractive to recent students from other states, Colorado is well above average for its share of consumers with student debt:

However, when it comes to average student debt per borrower, Colorado is below average:

When it comes to the percent of student loans that are 90-days delinquent, Colorado is about average: 


Here is the report. 

Friday, May 10, 2013

Grand Junction Housing Snapshot, 1st Q 2013

The demand for real estate continues to be soft in Grand Junction. From employment to foreclosures, and from home prices to apartment vacancies, the region appears to be facing some downward pressure on demand right now.

Employment is one of the biggest factors in driving demand for real estate, and we find that Grand Junction continues to face some headwinds. According to the Household Survey, the labor force size in March fell to a six-year low for March. That is, compared to previous years, the month of March in Grand Junction showed the smallest labor force in any March since 2007. This means fewer people are looking for jobs in the area, and this will have an impact on overall household income.

The unemployment rate is calculated using the labor force totals, and we find that the decline in the labor force is helping the unemployment rate move down in Grand Junction in spite of lackluster job growth. The labor force size as of March 2013 was down 7.3 percent, or 6,100 people from the March 2009 peak. We might compare this to metro Denver, where the job force hit an all-time high for March during 2013. We could also compare to the Greeley area where the labor force is near an all-time, after peaking for March (so far) last year. The first graph shows total labor force for each month:


The next graph shows total employment in the area. We can see here that employment growth has been  small, and that total employment is up only about 800 jobs (1.1 percent) from the 2010 trough over the past three years.  


According to this measure, total employment in Grand Junction is down 8.7 percent, or 6,700 jobs from the March peak in 2008 to March 2013. 

The Household survey has its limitations due to small sample size, so I've compared against the Establishment survey of payroll employees to check. The Establishment survey shows that Grand Junction employment in March was down 7.4 percent, or 4,700 jobs from the 2008 March peak.

The next graph shows the payroll employment, and here we find that the year-over-year growth rate in total employment has been declining since January. By contrast, statewide total year-over-year employment growth has been trending upward, with recent growth rates over 2.5 percent. In Grand Junction, growth rates have been below 2 percent in recent years. We could also note that the year-over-year growth in GJ has been smaller in recent years than during the recessionary period of 2002.


The next graph shows the House Price Index for GJ from the Federal Housing and Finance Agency. We can see that (through the end of 2012) the index has basically flatlined since 2011, and is way down from the bubble-like peak levels reached during 2007 and 2008. 

When compared year over year, as I've done in the next graph, we see that growth has been hard to find in the Grand Junction HPI. There has been only one quarter of YOY growth since 2008. I compare that in the graph to the metro Denver HPI which has shown four quarters in a row of growth. Indeed, during the fourth quarter of 2012, the HPI in GJ was down slightly (0.2 percent) from 2011's fourth quarter. 

Another indicator we can note is the index of completed foreclosures.  In the next graph, I've indexed the number of completed foreclosures in Mesa County next to the number of completed foreclosures in all metro counties combined. Here, we see that the combined metro total (the green line) shows a slow and steady decrease in completed foreclosures since 2008, while Mesa County completed foreclosures (the blue line) is way up from 2008 levels.  In fact, in all metros combined, the number of completed foreclosures is down more than 70 percent since 2008 (as of March 2013). In Mesa County, on the other hand, the number of completed foreclosures (as of March 2013) was up 350 percent since 2008, rising from 12 in January 2008 to 54 in March 2013. Compared year over year, the March total for completed foreclosures in Mesa County was down 27 percent, but that's not enough to bring totals down much from the highs at which they presently remain. 

 The next graph shows new housing permit activity in Mesa county. In this case, we find that total permits (both multifam and singlefam combined) at year-end 2012 were at the lowest rate seen since 1991, which is a 21-year low. There was a total of 323 singlfam permits and 12 multifam permits during 2012 in Mesa County. This is the lowest total yet since permits activity started moving down in 2007.

We can compare this to Colorado statewide, in which building permits hit a 5-year high during 2012, growing about 75 percent from 2011 to 2012. This is statewide: 

If we look just as the first three month of this year (in the next graph), compared to the first three months of previous years, we do find a small increase of 25 percent in Mesa County, and a rise to a five-year high. Of course, these totals remain well below even the relatively weak years of 2003 and 2004. If we compare to the same time period statewide, we find that statewide, singlefam permits were up 54 percent, and multifam permits were up 147 percent for the three-month period, when compared to 2012's first three months.


Finally, we look at the vacancy and rent data from the first quarter's vacancy and rent survey. Here we find that the vacancy rate hit 11.8 percent during the first quarter of 2013, rising from 10.4 percent during the first quarter of 2012. It was also way up from the fourth quarter's vacancy rate of 9.7 percent. The next graph shows vacancy rates since 1995: 


The softness in the rental market seems to reflect the overall softness we're finding in the region. As a result of the higher vacancies, rents headed down sharply during the first quarter of year, returning to levels not seen since 2006. We'll likely see the average rent number head back up again somewhat in the second quarter, but we should note that even at the first quarter average rent of $554 in the region (which was down 11.4 percent from last year's first quarter avg rent of $625), the average rent is still above what was common for the region prior to the oil and gas boom. Indeed, in spite of a relatively weak employment situation after 2009, the average rent in the region never fell very much from the elevated post-2006 levels. 



 The final graph shows the average rents in various regions adjusted for inflation. Rents tend to be fairly flat when adjusted for inflation over the long term. As we can see in the graph, however, real rent growth in Grand Junction from 2006 to early 2009 was really quite large, rising 12.3 percent in real terms from the third quarter of 2006 to the third quarter of 2009. Even after the unemployment rate in GJ rose above ten percent for most of 2010, the drop in the average rent was quite moderate. The drop during the first quarter of this year may signal a correction to that. It's too early to tell, however.


Referring back to the home price and foreclosure data, one might argue that the substitution effect should be pushing down vacancies, even in the face of a stagnant employment situation. That is, a lack of demand for purchase housing related to foreclosures and falling prices should be driving people into rental housing as a substitute. This is no doubt a factor, but in some recent regression analyses (discussed in part here), we found that the substitution effect was weak compared to the effects of employment. That is, when employment drove a rise in the demand for multifamily housing, it also drove a rise in the demand for singlefamily housing. So, employment is the dominant factor, and when it's weak, both multifamily and singlefamily experience soft demand. 



Housing News Digest, May 10

Greeley area’s rental market now tightest in the state It’s a good thing help is just around the corner. Greeley’s rental market area has become the tightest in the state, according to numbers released Thursday by the state Division of Housing. The Greeley market’s vacancy rate for the first three months of the year sank to 1.4 percent — from 5.8 percent at the same time the year before — reversing a trend that had for years kept Fort Collins’ market one of the tightest in the states, the state survey reported. New rentals having been constructed in recent months put Fort Collins at a rate of 5.5 percent, …

  Colorado apartment vacancy rate drops for 14th consecutive quarter Apartment vacancy rates statewide continue to slide, especially in the northern part of the state, where oil and gas development has driven rents higher and vacancy rates lower, according to a report released Thursday by the Colorado Division of Housing.

  Apartment vacancies rise in Fort Collins-Loveland The vacancy rate in the Fort Collins-Loveland area rose to 5.1 percent during 2013's first quarter, rising from 2012's first-quarter rate of 3.0 percent, according to the Colorado Division of Housing. In Greeley over the same period, the vacancy rate dropped to 1.4 percent from 5.8 percent.

  Colorado Springs apartments in high demand A strong demand for Colorado Springs apartments pushed the area's multi-family vacancy rate to its lowest level in almost 12 years during the first quarter, a report by the Colorado Division of Housing and the Apartment Association of Southern Colorado shows.

  Report: Springs apartment market strong The current Colorado Springs apartment market is healthy — maybe the healthiest it has ever been. That’s the conclusion by area experts after reviewing the most recent vacancy and rent survey results from the Colorado Division of Housing. Vacancy, at 5.6 percent, is the lowest locally in more than a decade. But it’s not so low that renters are crunched, said Ryan McMaken, an economist with the division of housing. “Healthy” should not be confused with normal, said Kevin McKenna, a Colorado Springs-based broker with the Denver office of Apartment Realty Advisors. “There’s no such thing as a typical apartment market in Colorado Springs,” McKenna said. “It’s always kind of all over the place.”

Thursday, May 9, 2013

Apartment market tightens statewide as demand stalls in southern and western Colorado


The vacancy rate in Colorado apartments was down during the first quarter of 2013, with the statewide composite vacancy rate falling year over year to 4.9 percent from 2012’s first-quarter vacancy rate of 5.2 percent. According to a report released todayby the Colorado Division of Housing, the statewide vacancy rate during the first quarter also fell from 2012’s fourth-quarter rate of 5.2 percent. During the first quarter, the vacancy rate was down, year over year, for the fourteenth quarter in a row.

Vacancy rates varied considerably in different metros of the state, however, with northern Colorado and metro Denver showing some of the state’s lowest rates, while vacancy rates increased in southern Colorado and western Colorado.

The vacancy rate in the Fort Collins-Loveland area rose to 5.1 percent during 2013’s first quarter, rising from 2012’s first-quarter rate of 3.0 percent. In Greeley over the same period, the vacancy rate dropped to 1.4 percent from 5.8 percent. Colorado Springs also showed a declining vacancy rate with a first-quarter rate of 5.6 percent, which was the lowest vacancy rate reported in that region since 2001.  The metro Denver vacancy rate, measured last month in a separate survey, fell year over year from 4.9 percent to 4.6 percent

A different trend appeared in southern and western Colorado where vacancy rates increased. In Pueblo, the vacancy rate rose to 14.9 percent during 2013’s first quarter from 2012’s first-quarter rate of 5.9 percent. Over the same period, the vacancy rate in Grand Junction vacancy rate increased from 10.4 percent to 11.8 percent.

“So much of this is driven by employment right now. Vacancy tends to increase with joblessness, and we see this in Grand Junction and Pueblo” said Ryan McMaken, an economist with the Colorado Division of Housing. “The Pueblo unemployment rate has been over ten percent for more than a year, while the labor force in Grand Junction just hit a six-year low for March, with total employment moving sideways.”

The situation in northern Colorado, McMaken noted, is quite different.

“Oil and gas growth has pushed the vacancy rate down to very low levels in Greeley, while the Ft. Colliins and Loveland areas continue to see low vacancies,” McMaken said. “Rates in Larimer County are only as high as they are because the county has seen a fair amount of new multifamily development in recent years.”

The average rent increased in all metros except Grand Junction from the first quarter of 2012 to the first quarter of 2013. The statewide composite average rent increased 4.1 percent from $952 during 2012’s first quarter to $992 during the first quarter of 2013. The largest increase was found in Colorado Springs where the average rent rose 4.2 percent, year over year. The average rent fell 11.4 percent in Grand Junction, year over year.

Average rents in all metropolitan areas measured for the first quarter of 2013 were Colorado Springs; $787, Ft. Collins/Loveland, $1036; Grand Junction, $554; Greeley, $704; Pueblo, $594. The average rent in metro Denver, measured last month in a separate survey, was $992. 

A vacancy rate of 5 percent or below suggests a tight market. The statewide composite vacancy rate and average rent includes metro Denver.

New Private Activity Bond Workshops


DOLA/Division of Housing (DOH) and the Colorado Housing and Finance Authority (CHFA) are partnering again this year to bring you workshops on Private Activity Bonds. The State of Colorado has over $492 million of Private Activity Bond (PAB) tax-exempt bonding authority annually. Make sure that your community is taking full advantage of this valuable resource to provide rental housing, home ownership and small manufacturing opportunities. Walk out knowing where to get it, what to use it for and how to use it!

We will offer the same workshop content in two locations plus a webinar:
  • Wednesday, June 12 in Colorado Springs
  • Tuesday, June 25 in Brighton
  • Wednesday, July 10 as a webinar
For more details, please see the brochure.

Tuesday, May 7, 2013

CoreLogic: Colorado home price index up 10.4 percent in March

CoreLogic today released its March home price index (HPI) numbers. There were few surprises as the HPI continued to show strong growth of around 10 percent for the third month in a row. National growth and Colorado growth rates were similar. Nationally, the index grew 10.5 percent from March 2012 to March 2013, and it grew 10.4 percent in Colorado. Housing prices continue to increase at some of the largest rates seen since before the financial crisis. 



Nine states had larger growth rates in the HPI than Colorado, with the highest growth rates being in Nevada, California, and Arizona. Nevada's HPI grew 22.2 percent year over year, and California's and Arizona 'a HPIs grew 17.2 percent and 16.8 percent respectively. Only five states showed declines in their HPIs over the same period with the largest declines being in delaware and Alabama where the HPI declined 3.7 percent and 3.1 percent respectively.

Propelled by record-low mortgage rates, home sales continue to head up with home prices following suit.

DSNews: Homeownership Rate Drops to 18-Year Low

As noted in our recent post on homeownership rates, homeownership has been declining in recent years for a variety of reasons. According to DSNews the national rate has fallen off considerably:

The number of households owning homes fell 698,000 to 74,511,000 in the first quarter, the first decline in almost two years, according to a Census Bureau report Tuesday. At the same time, the nation’s homeownership rate fell to 65 percent (seasonally adjusted), the lowest level since the fourth quarter of 1995.
See also: Tight Lending, Foreclosures to Prompt Homeownership Declines:
With the homeownership rate already at its lowest point since 1995, Capital Economics predicts further decline before a rebound occurs.

Colorado Springs rents grow as vacancy rates fall to 11-year low


The average rent in the Colorado Springs metro area rose year over year for the thirteenth quarter in a row during the first quarter of 2013, climbing 4.4 percent to $787. According to a report released today by the Colorado Division of Housing and the Apartment Association of Southern Colorado, the average rent for the region during the first quarter this year was up from $754 reported during the first quarter of 2012, and was down slightly from 2012’s fourth-quarter average rent of $790.

The median rent rose year over year to $760 during the first quarter, rising 4.4 percent from 2012’s first-quarter median rent of $728.

The average rent increased the most in the Northwest and Southeast regions, compared year over year for the first quarter, growing 8.6 percent in the Southeast region, and 17.9 percent in the Northwest region. The largest drop in average rent was found in the Security/Widefield/Fountain region where the average rent dropped 2.3 percent. The Northwest was the submarket with the highest average rent at $927 during the first quarter of 2013. During the same period, the lowest average rent was found in the Security/Widefield/Fountain submarket where the average rent was $601.

Average rents for all market areas were: Northwest, $927; Northeast, $731; Far Northeast, $860, Southeast, $701; Security/Widefield/Fountain, $601; Southwest, $802; Central, $746.

“The market has firmed up since the fourth quarter, with the rent level stable and the vacancy rate dropping to one of the lowest rates we’ve seen since the dot-com boom,” said Ryan McMaken, economist for the Colorado Division of Housing. “Year-over-year rent growth outpaced inflation during the first quarter, but a lot continues to depend on the employment situation in the region.”

The apartment vacancy rate in the Colorado Springs metro area fell year over year to 5.6 percent during the first quarter of 2013, rising from last year’s first-quarter vacancy rate of 6.4 percent. This year’s first-quarter rate also fell from last year’s fourth-quarter rate of 7.1 percent.

From the first quarter of 2012 to the first quarter of 2013, the vacancy rate fell in the Northwest, Southeast, Southwest and Central submarkets. During the same period, the vacancy rate rose in the Northeast, Far Northeast and Security/Widefield/Fountain submarkets.

Vacancy rates for all market areas were: Northwest, 3.7 percent; Northeast, 5.6 percent; Far Northeast, 6.5 percent, Southeast, 7.3 percent; Security/Widefield/Fountain, 5.9 percent; Southwest, 4.5 percent; Central, 4.7 percent.

Homeownership rates in Colorado decline in 2012, early 2013

New data released late last month:

The homeownership rate declined during 2012 to a 14-year low, dropping to 65.3 percent. In 2011, the homeownership rate in Colorado was 65.9 percent. The last time it was lower than 2012's rate was during 1998 when the homeownership rate was 65.2 percent.  For the second year in a row, the Colorado homeownership rate fell below the national homeownership rate. The national homeownership rate was 65.4 percent during 2012 and 66.1 percent during 2011. The first graph shows national and Colorado homeownership rates since 1984:


Quarterly rates have been published since 2005. As of the first quarter of 2013, the homeownership rate in Colorado and in metro Denver fell on a quarterly basis to 63.7 percent in Colorado and 61.0 percent to metro Denver. During the first quarter of 2012, the Colorado rate was 64.5 percent and the metro Denver rate was 61.9 percent. The homeownership rates were also down when compared to the fourth quarter of 2012, with Colorado down from the fourth-quarter 2012 rate of 64.9 percent, and metro Denver down from the fourth-quarter 2012 rate of 61.7 percent. Both Colorado and metro Denver homeownership rates were below the national rate of 65 percent during the first quarter of 2013. The second graph shows the homeownership rate for each quarter since 2005. 


Clearly, the homeownership rate has been decreasing an all areas shown since at least 2005. The annual data suggests that the homeownership rate in Colorado peaked some time during 2003 and has been declining since.

Homeownership has declined partly due to foreclosures.  From 2007, through 2012, there were more than 125,000 completed foreclosures. Out of approximately 1.2 million owner households, that's a substantial number. On the other hand, we've seen the homeownership continue to decline even as foreclosures taper off. This is due to the fact that Colorado continues to see pretty sizable numbers in household formation (more than 20,000 households per year). A lot of those new households are renter households since, even in the low-mortgage-rate environment we're in right now, it can still be a challenge to afford a home and get a mortgage.

Consequently, Colorado and metro Denver show lower homeownership rates than the nation precisely because we continue to see in-migration and steady population growth while much of the nation is seeing less growth right now. Those areas with less growth may show a higher homeownership rate because they're attracting fewer young new residents who are not homeowners.


Friday, May 3, 2013

Nat'l personal income growth drops to 3-year low

Colorado's economy appears to be outpacing the national economy in a variety of indicators right now. Let's have a look at national personal income growth to check in on the nat'l scene. The BEA released some new numbers on personal income on Monday. The numbers show that year-over-year growth in personal income dropped to the smallest growth rate (2.5 percent) seen since the first quarter of 2010:


Measured quarter-to-quarter, the growth rate turned negative for the first time since the third quarter of 2009. The growth rate was neg 0.7 percent.

The overall personal income total measures income of all types. If we isolate the income the comes from compensation to employees, we find that compensation also dropped to an almost 3-year low (the lowest since the 2nd Q of 2010):

The growth in compensation was 2.8 percent , year over year. 

These are seasonally-adjusted annualized numbers.

National April employment situation


THE EMPLOYMENT SITUATION -- APRIL 2013


Total nonfarm payroll employment rose by 165,000 in April, and the unemployment 
rate was little changed at 7.5 percent, the U.S. Bureau of Labor Statistics 
reported today. Employment increased in professional and business services, 
food services and drinking places, retail trade, and health care.

Household Survey Data

The unemployment rate, at 7.5 percent, changed little in April but has 
declined by 0.4 percentage point since January. The number of unemployed 
persons, at 11.7 million, was also little changed over the month; however, 
unemployment has decreased by 673,000 since January. (See table A-1.)

Among the major worker groups, the unemployment rate for adult women
(6.7 percent) declined in April, while the rates for adult men (7.1
percent), teenagers (24.1 percent), whites (6.7 percent), blacks (13.2
percent), and Hispanics (9.0 percent) showed little or no change. The
jobless rate for Asians was 5.1 percent (not seasonally adjusted),
little changed from a year earlier. (See tables A-1, A-2, and A-3.)

In April, the number of long-term unemployed (those jobless for 27
weeks or more) declined by 258,000 to 4.4 million; their share of the
unemployed declined by 2.2 percentage points to 37.4 percent. Over the
past 12 months, the number of long-term unemployed has decreased by
687,000, and their share has declined by 3.1 percentage points. (See
table A-12.)

Dianne Ray Named Board Chair for Colorado Housing and Finance Authority

Press release from CHFA: 

Dianne Ray Named Board Chair for Colorado Housing and Finance Authority

(DENVER) – Colorado Housing and Finance Authority (CHFA) is pleased to announce that Colorado State Auditor Dianne Ray has been named CHFA’s board chair for the 2013-2014 board term. CHFA’s 11-member board serves as the governing body of the organization and establishes policies to further its mission of affordable housing and small business finance. Ms. Ray began serving on CHFA’s board of directors in 2011. She also serves as chair of CHFA’s Audit Committee.

As the Colorado State Auditor, Ms. Ray is responsible for overseeing independent state audits and reviews that hold government agencies accountable and promote positive change in government. Ms. Ray has more than 23 years of specialization in governmental and nonprofit accounting and auditing. Ms. Ray previously served as the Deputy State Auditor and the Director of the Local Government Audit Division for the Colorado Office of the State Auditor (OSA). Prior to joining the OSA, she worked in local governments for 15 years, most recently as the Director of Finance and Administration for the City of Louisville, Colorado.

Ms. Ray participates in various professional organizations, including the American Institute of Certified Public Accountants (AICPA), the Colorado Society of Public Accountants, the Government Finance Officers Association and the National State Auditors Association. She was named one of three 2012 Women to Watch in the experienced category by the AICPA and the Colorado Society of Public Accountants.