Friday, May 30, 2014

News Digest, May 30

Study: Affordable housing situation getting worse in Colorado Springs area
El Paso County's affordable housing shortage should near 19,900 units by 2019 - a gap most likely to affect the county's poorest residents and middle-class earners, a new housing assessment has found. + captio A low vacancy rate for both rentals and homes for purchase, poor earnings and a disproportionate number of new high-end units in El Paso County are largely to blame, according to the preliminary results of a report on the region's affordable housing stock, which was commissioned by Colorado Springs and the county.

Challenge to affordable housing rules is dropped A California businessman who owns numerous rental units in Aspen on Wednesday dismissed his lawsuit that challenged the constitutionality of local affordable housing regulations, ending a six-year legal battle.

Colorado Springs puts plans for a homeless day center on hold for the short-term Creation of a homeless day center in Colorado Springs will be delayed up to a year amid concerns that nonprofits need more time and flexibility to embark on the project, a Colorado Springs official said this week. The project's delay marks the first setback to Mayor Steve Bach's initiative to end homelessness, affecting one of the more popular aspects of the six-point plan he announced in late January. But two nonprofit leaders also said it signaled a greater willingness by the city to listen to their suggestions, rather than rush to an uneducated, one-size-fits-all approach.

March foreclosures fall 7 percent

The March foreclosure data for Colorado's 12 metropolitan counties is now available. Foreclosure filings and foreclosure auction sales were near an eight-year low during March 2014, with foreclosure filings dropping 7 percent, year over year, from March 2013 to March 2014. Foreclosure auction sales, over the same period, dropped 35.3 percent in all metro s combined. 

The first graph shows  filings and sales for each month since 2007.  There were 981 foreclosure filings and 404 foreclosure sales during March: 

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 March's total was the lowest total ever recorded in March 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 March's total of 404 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 March, which means that both filings and sales have been down YOY every month for the past 17 months. However, March's decline in filings was the smallest decline experienced over that 17 months. 

Here are charts showing the breakouts by metropolitan counties.

This chart shows foreclosure filings for March 2013 and March 2014.  Total filings were down 7 percent year over year.

This chart shows foreclosure auction sales comparing March 2013 and March 2014. The overall total was down 36.3 percent. 

This graph shows the month over month change in foreclosure filings. From February 2014 to March 2014, total foreclosure filings rose 7.3 percent. 

From February 2014 to March 2014, total foreclosure sales at auction rose 0.7 percent. 

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

1st Q 2014 Vacancy and Rent Report for Colorado Springs:

Note: There is an error on page one where the text reads: "Rents do not include the cost of rental discounts and concessions. For the fourth quarter of 2013, rental discounts and concessions averaged 11.9 percent, up from 7.3 percent for the prior quarter."

 This SHOULD state: "Rents do not include the cost of rental discounts and concessions. For the first quarter of 2014, rental discounts and concessions averaged 11.9 percent, up from 7.3 percent for the prior quarter."

Monday, May 5, 2014

Metro Denver's average rent up 8 percent in first quarter as rent growth strengthens region-wide

In new data released this week the apartment vacancy rate in metro Denver was up year over year in metro Denver, rising from 4.6 percent during the first quarter of 2013 to 5.1 percent during the first quarter of 2014. The vacancy rate in metro Denver was 5.2 percent during the fourth quarter of 2013.

The first graph shows the metro-wide vacancy rate:

We can see that the vacancy rates in recent quarters has come up a bit from 2013's very low rates. This is due to new construction in downtown Denver and several other submarkets. Overall, however, vacancy rates remain near some of the lowest levels recorded since 2001.

In the second graph, we see that the decline in the vacancy rates since 2009 have not been limited to any one or two county areas, and that the declines have been general. With the exception of Denver county and Boulder/Broomfield, the first-quarter vacancy rates were all under 5 percent. Denver County and Boulder/Broomfield reported vacancy rates of 6.8 percent and 6.7 percent, respectively, however, and this was due to new construction of  units. The lowest vacancy rate at the county level was found in Jefferson county where the vacancy rate was 3.4 percent.

The average rent for metro Denver can be seen in the third graph. The average rent hit $1,073 during the first quarter of 2014 , and was up from $992 during the first quarter of last year.  The average rent for the area was 1,041 during the fourth quarter of 2013. 

We can see steady increases in general with only a couple of periods of declining rents: from 2001 to 2002, and from 2008 to 2009.  The periods of the greatest growth in recent periods have been the late 1990s and the period since 2011. Rent growt hhas accelerated since 2009.

The fourth graph shows the growth rates in average rent more clearly.  We can see that year-over-year growth rates since the first quarter of 2012 have been coming in at more than 4 percent each quarter. Historically, this is a strong growth rate, but we can also see that it's still below what was reported during the dot-com boom, when growth rates were often above six percent. Nevertheless, the growth over the past seven quarters has been substantial, and the growth rate for the first quarter of 2014 is the highest growth rate measured since 2001. The average rent grew 8.1 percent from the first quarter fo4 2013 to the first quarter of 2014.

In a county-by county basis, we find the following growth rates for the first quarter of 2013 to the first quarter of 2014: 
Adams 8.5%
Arapahoe 8%
Boulder/Broomfield 6.7%
Denver 8.3%
Douglas 6.3%
Jefferson 8.1%

The final graph shows the vacancy rate for all market areas, from the first Q of 2013 to the first Q of 2014. We see that almost all submarkets have fallen below five percent over the past year. This shows that even the traditionally less-demanded areas are seeing tightening vacancies as more popular submarkets tighten up and residents begin to seek vacancy housing across all submarkets. 

Homeownership in Colorado falls again in 2013

According to the most recent data from the Census Bureau, the homeownership rate in Colorado fell again in Colorado, dropping to 64.4 percent, which was the lowest rate reported since 1997 in Colorado.  The national homeownership rate during 2013 65.1 percent. During 2012, the homeownership rate was 65.3 percent in Colorado and 65.4 percent nationwide. Nationally, the 2013 homeownership rate was the lowest rate reported since 1995.

The first graph shows annual homeownership rates since 1984. In Colorado, the homeownership rate has fallen every year since 2003, and nationally, it has fallen every year since 2004.

When people think of declining homeowership rates, they often think of foreclosures and people being unable to afford home purchases. These are certainly factors, but they are not the only ones. We can indeed look to foreclosures and a general weakness in the economy when we see the low homeownership rates of the late 1980s in the first graph. When we examine more recent trends in homeownership rates, however, it is likely that an expansion of a younger population interested more in multifamily housing is also a major factor.

If we look at the homeownership rate a second way, we can see this at work. The second graph shows the trend in renter-occupied units. This is just the homeownership rate subtracted from 100. Here we see that the growth in occupied rental units has been increasing since 2002, but it still does not reach where it was in 1989.

We can note that in 1989, home prices in Colorado were faring quite poorly, but the proportion of residents who were renters remained quite high, as a result of a weak economy in 1989. Today, however, renters continue to grow. In the current cycle, as opposed to 1989, home prices are growth quickly (8 to 10 percent year over year) and show a different dynamic at work.

Friday, May 2, 2014

New Home Sales in US West Down From 2013 Levels

New single-family home sales in the U.S. West were down 27 percent from March 2013 to March 2014, coming in at 8,000 new homes for March 2014, and marked the third month in a row during which new home sales declined form the same month one year earlier. According to the most recent Census Bureau report on new home sales, new home sales grew, year over year through 2012 and during much of 2012 and 2013, but began to moderate during late 2013 and have turned negative in recent months.

The report, which monitors sales activity for newly constructed houses, showed that new home sales in the West remain down 78 percent from peak levels. 

The first graph shows monthly new home sales totals for each month since 2003. While still up from 2010 and 2011 levels, 2014 totals so far show no signs of outpacing 2013. 

In the second graph, we see the year-over-change for each month, and it is clear that growth rates have come down considerable since 2012 and early 2013. The last three months are negative growth rates, and growth rates have been negative during 7 of the last 9 months. 

A month-by-month look at the West region: 

Comparing monthly totals, we find that the first 3 months of 2013 were rather robust compared to the previous year, but for the same period this year, all months are down. In March especially, totals were nothing remarkable and were even down from 2010 levels.

The number of new homes for sale, on the other hand was up 43 percent, rising from 30,000 during August 2012 to 30,000 during March 2013. to 43,000 during March 2014. This reflects growth in new home production, which we know has increased throughout the region, including Colorado, in response to significant growth in home prices during 2013.  

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. We see in the graph that the inventory bottomed out in 2012, but has come up a little over the past year. Inventory was tied at a 38-month high during March 2013, rising to 34,000 which was the highest reported since February 2011.

Housing News Digest, May 2

San Jose Leaders Look To Build ‘Pods,’ ‘Microhouses’ To Shelter The Homeless A new idea is taking shape in San Jose to help the down and out get out of tents and doorways and into more sturdy shelters. The idea involves building new neighborhoods for the homeless with shed-sized buildings.

Construction-defects reform bill companion dies in Colorado Legislature A three-pronged approach to addressing the shortage of affordable condominiums in Colorado lost a prong Thursday when a Senate committee decided there was no need to have multiple state agencies study the issue.

  Developers intent on improving state of downtown Colorado Springs housing It has been nearly two years since the Urban Land Institute called for the creation of 250 to 300 housing units in downtown Colorado Springs, and the city has yet to see such results. But a handful of local developers are pushing through economic and bureaucratic hurdles in attempts to reach that goal. The ULI report, published in June 2012, suggested that the development of additional living space in the city’s core would not only create the potential to attract residents, but also business and social opportunity — ultimately economic development and revitalization.

  Open house set for student housing in Greeley GREELEY - Construction on a 92-unit student-housing complex with 262 beds in Greeley is nearly complete, and an open house is scheduled from 11 a.m. to 5 p.m., Wednesday, April 30. University of Northern Colorado students and other members of the public can tour the finished portions of the University Flats at UNC, 1758 6th Ave. University Flats is two blocks from the University of Northern Colorado campus. Preleasing is going on now for August move-ins.

 Colorado Springs-area homebuilding falls again in April The pace of local homebuilding for the first few months of 2014 continues to lag behind last year, according to a report Thursday by the Pikes Peak Regional Building Department. Single-family building permits, which measure the number of homes to be constructed by builders, totaled 257 in April, a nearly 15 percent drop from the same month last year, the report showed. Permit totals have declined in seven of the last nine months on a year-over-year basis.