Saturday, March 15, 2014

Friday, March 14, 2014

February foreclosure filings Fall 21 percent in Colorado metros

The foreclosure data for Colorado's 12 metropolitan counties is now available. Foreclosure filings and foreclosure auction sales were at a eight-year low during February 2014. filings remained up slightly from the all-time lows reached late last year, and auction sales remain near all-time lows. The first graph shows  filings and sales for each month since 2007.  There were 914 foreclosure filings and 401 foreclosure sales during February: 
A six-month moving average gives us a clearer look at the overall trend. Not surprisingly, the trend has been a downward one for some time:

The third graph shows the foreclosure filings total for each month.  We see that February's total was the lowest total ever recorded in February since the survey was begun in 2007. It is not an all-time low, however. 

The next graph shows the foreclosure auction sales totals for each month. We see here that February's total of 401 sales is just slightly above the all-time recorded low of 386, recorded during November 2013. 

Both foreclosure filings and sales are down year over year in February, which means that both filings and sales have been down YOY every month for the past 16 months. 

Here are charts showing the breakouts by metropolitan counties.

This chart shows foreclosure filings for February 2013 and February 2014.  Total filings were down 21.1 percent over the year.

This chart shows foreclosure auction sales comparing February 2013 and February 2014. The overall total was down 44.7 percent. 

This graph shows the month over month change in foreclosure filings. From January 2014 to February 2014, total foreclosure filings fell 4.5 percent. 

From January 2014 to February 2014, total foreclosure sales at auction fell 31.5 percent. 

The final graph shows the foreclosure rate, based on total occupied households for each county divided by the number of foreclosure auction sales. February 2013 stats on left, and February 2014 stats on right. The lower the number, the worse the foreclosure rate: 

Thursday, March 13, 2014

Presentation materials from today's multifamily conference

Below is my presentation from today's Colorado Real Estate Journal Multifamily Conference and Expo:

Tuesday, March 11, 2014

Apartment rents climb in Greeley area, statewide as vacancy rates hold steady

 Rents in Colorado rose statewide during the fourth quarter of 2013, with the statewide average rent hitting a new fourth-quarter high of $992. According to a report released today by the Colorado Division of Housing, the average rent during the fourth quarter was up 5.2 percent from last year’s fourth-quarter average rent of $944, and it was down from this year’s third quarter rent of $1,000.

Rent growth was not uniform statewide. While average rents fell in Pueblo and Grand Junction, the Greeley area reported a record-large increase of 9.2 percent, or 64 dollars, in the average rent from the fourth quarter of 2012 to the fourth quarter of 2013. Average rents also rose in Loveland and Colorado Springs, while the average rent in Ft. Collins fell slightly following numerous quarters of substantial increases in rents.

“Where there’s been some new construction, such as metro Denver and Colorado Springs, rent growth has moderated a little, but rent is still clearly growing for now,” said Ryan McMaken an economist with the Colorado Division of Housing. “In Greeley, where there’s been little new construction in recent years, we’re looking at the largest annual increase in rents we’ve seen in more than a decade.”

Average rents in all metropolitan areas measured for the fourth quarter of 2013 were Colorado Springs; $799, Ft. Collins/Loveland, $995; Grand Junction, $561; Greeley, $756; Pueblo, $594. The average rent in metro Denver, measured last month in a separate survey, was $1041. 

The vacancy rate in Colorado apartments during the fourth quarter of 2013 rose across the state with the statewide composite vacancy rate rising year over year to 5.4 percent from 2012’s fourth-quarter vacancy rate of 5.2 percent. The fourth quarter’s rate was also up from 2013’s third-quarter rate of 4.5 percent.

Vacancy rates varied considerably in different metros of the state, however, with the Ft. Collins –Loveland area’s vacancy rate dropping to a ten-year low of 2.1 percent while Greeley’s vacancy rate increased to a two-year high of 6.3 percent. Vacancy rates in Grand Junction and Pueblo both remained above 6.5 percent due to flat job markets.

“After three quarters of solid rent growth, turnover has led to some higher vacancy rates in Greeley, but for the most part, vacancy rates remain low and more or less where they were about a year ago and they’re near ten-year lows in many cases.” McMaken said.

Vacancy rates in all metropolitan areas measured for the fourth quarter of 2013 were Colorado Springs; 7.1 percent, Ft. Collins/Loveland, 2.1 percent; Grand Junction, 6.7 percent; Greeley, 6.3 percent; Pueblo, 8.3 percent. The vacancy rate in metro Denver, measured last month in a separate survey, was 5.2 percent. 

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

Friday, March 7, 2014

Greeley employment shows growing strength over past two years

According to the establishment survey of employment, total payroll employment in the Greeley area has shown significant growth over the past two years.

Year-over-year growth in payroll employment in the Greeley area during December 2013 was near the highest levels we've seen in the past decade. According the survey, more than 3,400 jobs were added in the Greeley area from December 2012 to December 2013. November 2013 showed an increase of 3,600 jobs, year over year. The first graph shows that the December total growth was similar to some of the biggest growth months during the past decade. Numbers are in 1,000s: 

The second graph shows total payroll employment by month. In this graph we can see that Greeley's December total was well above its old peak reached during September 2008, and was the highest total reached in any December ever. We also see that 2012 showed substantial growth over 2011, and that 2013 then added to 2012's gains. During 2010 and 2011, employment stalled in the region, but has accelerated since 2012. 

Establishment Survey: Employment growth slows, but remains positive

Total non-farm employment in Colorado, according to the establishment survey, his  a new all-time high during December 2013. At 2.4 million payroll jobs, employment is now slightly above the old 2008 peak reached at the end of the last expansion. The fact that the establishment survey shows a new high contrasts with the household survey that shows that employment has not yet reached the old peak. This discrepancy can be explained by the methods used for the two surveys. The establishment survey indicates total jobs, while the household survey shows total employed persons. A single person who works  two jobs will show up as a single employed person in the household survey, but show up as two payroll jobs in the establishment survey.

The first graph shows total payroll employment for each month. We see that in December, the total was both the highest December total ever reached, and also that the total was above the old June 2008 peak. In general, the second half of 2013 showed numerous new peaks in employment.

The second graph shows year-over-year gains in payroll employment. We see that overall growth has been similar to what was seen during the expansion of 2003-2008. In terms of growth, it appears that late 2012 and early 2013 saw the peak in employment growth with around 60,000 jobs gained, year over year during that period. Since September 2013, growth has fallen below 50,000 jobs each month, and December's growth was at the lowest level since April 2012. In December 2013, there were 43,000 more payroll jobs in Colorado than in December 2012. Back in February 2013, more than 66,000 jobs were added, year over year. 

Housing News Digest, March 7

Cover story: Will metro Denver's apartment boom bring rents down? Metro Denver in 2014 is on track to set a record for the most new apartment units in a year. The question is: Will it be enough to bring down record-high rents? Developers furiously building new multifamily projects across the metro area expect to deliver 10,000 units by year’s end, with more than half of the new units opening in downtown Denver, according to ARA Colorado (formerly Apartment Realty Advisors).

  Colorado Springs-area home construction declines again in February The recent slowdown in local homebuilding continued last month, as permits issued for the construction of single-family homes tumbled by nearly one-fourth when compared with a year earlier, according to a Pikes Peak Regional Building Department report released Monday.

  Colorado construction defects bill is on its way, but details remain unknown A bill seeking to jump-start the Denver area’s promising condominium construction sector will be introduced this session, but its sponsor said he remains unsure what types of legal reform will be a part of it.

  Colorado in a building boom despite lagging commercial starts Residential and public-works construction projects are leading a Colorado building boom, with the value of starts nearly doubling from 2009 to $14.2 billion in 2013, according to McGraw Hill Construction. Commercial construction continues to lag, however. The "nonresidential building sector is showing growth, but its pace of expansion so far has been modest, relative to the other two sectors," McGraw Hill chief economist Robert Murray said in an interview. "I think it is a similar picture across the country in that this has been a very slow-to-get-going recovery for construction."

  Working-class families look for housing affordability in surrounding towns Fort Collins’ housing market is squeezing out its working class. Retail and service workers, young professionals and others whose wages fall below Larimer County’s median household income of $75,800 are choosing to leave the Choice City in search of affordable housing. Chris Smith grew up in Fort Collins and has considered this home for most of his 46 years. But he and his wife just closed on a house in Severance.

  Homeowners left paying on damaged homes WELD COUNTY - For homeowner's affected by September's floods, the past few months have been anything but easy. Heather owns a home in Weld County; she asked that we not use her last name. "It has been a nightmare," she said. Her house sits on a property that had a low to moderate risk of flooding-- a risk that turned into a certainty six months ago

Thursday, March 6, 2014

Zillow: Home values up in all Colorado metros in January 2014

According to to most recent Zillow Home Values report, home values as measured by the Zillow Home Value Index,were up from January 2013 to January 2014 in all Colorado metro areas including Denver, Colorado Springs, Ft. Collins, Greeley, Grand Junction, Boulder and Pueblo metros.

Home values in the United States were up in January, increasing 6.3 percent from January 2013 to January 2014, rising to $169,600.

The year-over-year changes for Colorado metros were:

Change from January 2013 to January 2014 (by %):
Colorado statewide: +7.0
Boulder +8.4
Colo Springs +5.6
Denver metro +8.0
Ft. Collins +7.2
Grand Junct +3.2
Greeley +9.6
Pueblo +4.7

Note in teh first graph that Pueblo over the past year has begun to get caught up with the other metros in terms of year-over-year index increases. Grand Junction, meanwhile, appears to be falling behind the other metros more and more. GJ's January YOY increase was the smallest reported since early 2013, and GJ's YOY increase has been the smallest among the metros for the past three months. Nonetheless, all areas did report YOY increases during January, and all areas have reported increases for the past ten months. Greeley, driven by an improving job market, partially due to oil development showed the most growth in January with Ft Collins-Loveland and metro Denver close behind. 

As can be seen in the second graph, in recent years home values have shown the most stability and/or growth in Boulder, Fort Collins and in Denver metro, and those three metros also have the highest values. Prices in Denver metro, Ft Collins, Greeley and Boulder are all now back above peak levels from before the financial crisis.

The Zillow home values in January 2013 for each metro area are (in $s):

Colorado 233,200
Boulder 350,900
Colo Springs 198,800
Denver metro 243,900
Ft. Collins 245,500
Grand Junct. 174,000
Greeley 187,800
Pueblo 108,200

Not surprisingly, Boulder has the highest home value level and Pueblo has the lowest. The largest decline in home values in recent years is seen in the Grand Junction area where home values have declined from about 220,000 to 174,000 since 2007. Greeley prices, on the other hand, have recently accelerated as new growth driven by oil has driven up demand for real estate in the region.

See the home price archive for comparisons with other indices.

Zillow home valuations, known as the median "Zestimate valuation" is just one of many indices we consult, and it tends to show some of the largest growth rates. Indeed, the Zillow growth rates tend to be above those of the FHFA and Case-Shiller indices. It is helpful as a means of comparing different metro areas.

Slideshow: Colorado Springs Apartment Vacancies and Rents

The Division of Housing released its Colorado Springs vacancy and rent survey for the fourth quarter of 2013.

We saw some softening in the multifamily market in Colorado Springs as a result of new construction in both multifamily and single-family houses (since single-family houses are a substitute for multifamily units). It is also likely a factor that total employment, according to the household survey, was down in Colorado Springs in December.

The first graph shows the metro-wide vacancy rate for Colorado Springs. As is often the case due to seasonality, the vacancy rate slightly spiked during the fourth quarter. Note that this has happened for the past four quarters:

If we divide out the various regions of the Colorado Springs area, it's clear that in general, vacancy rates are way down from where they were in 2009, with the largest drops coming in the Southeast and Security-Widefield/Fountain regions. 

The vacancy rate headed up to 7.7 percent in the Far Northeast, and this is not surprising since much of the new multifamily construction is in that region. In fact, if we include the vacancy units in new lease-ups, the vacancy rate in the region hit 13 percent in the fourth quarter. But of course as those new units fill, the vacancy rate will come back down. 

The areas with the highest vacancy are the Far Northeast and the Southeast. Interestingly, these are the two areas where rents have been pushed upward the most over the past 18 months. The average rent increased 3.4 percent in the Far Northeast over 18 months, and the Southeast increased 13 percent during the same period. We often find that vacancy rate head upward after a period of strong rent growth as turnover increases in response to rent increases. Most regions reported vacancy rates near 5 percent for the fourth quarter.

The next graph shows the average rent for the Colorado Springs area. We see that the average rent fell from the 3rd quarter to the 4th quarter, which is what we generally expect to see in the fourth quarter due to seasonal issues. Year over year, the average rent was still up, however, although barely. It was up 1 percent, which is one of the smallest rates of increase in more than two years. Nonetheless, the overall trend continues to be upward.

The final graph shows the average rent for each market area. Here we see those big rent increases over 18 months mentioned above. Note how the rent line and the orange line both show substantial growth in recent quarters. The overall trend us upward in the other markets as well. Note that the the average rent in the Security/Widefield/Fountain area (the purple line), however, is actually below where it was a decade ago. The rent in that area has gone nowhere in recent years, and if adjusted for inflation, it's even down over the past decade. The central region, meanwhile, has taken off since 2009.