Thursday, June 30, 2011

In May, employment in Colorado metro areas improves relative to the nation overall

The BLS released its report yesterday on unemployment in 372 metro areas in the US. The data for Colorado is not different from the statewide report already released by the Colorado Department of Labor and Employment. The chart with local unemployment rates is here.

Nevertheless, the report does provide some comparisons with other metro areas in the nation. The map on the last page shows that the Colorado Springs, Grand Junction, Pueblo and Greeley metro areas all have unemployment rates (not seasonally adjusted) above the national rate of 8.7 percent (not seasonally adjusted). The Fort Collins-Loveland area, the Denver area and the Boulder area all have unemployment rates below the national rate.

The map:

Statewide, Colorado's unemployment rate (seasonally adjusted) has moved below the national rate for the second month in a row following a three month period(January-March 2011) during which Colorado's unemployment rate was higher than the nation's. Prior to January 2011, the unemployment rate in Colorado had been below the national rate for several years.

The Boulder and Fort Collins areas have posted better unemployment rates than the nation for quite some time. Denver has in the past month now dropped below the national rate. The unemployment rates in the other metro areas (Greeley, C. Springs, Pueblo, Grand Junct.) have generally been above the national rate since the recession began in Colorado in 2008.

Kansas City Fed: Manufacturing Rebounds in Tenth Fed District

The Tenth Federal Reserve District, governed by the Federal Reserve Bank of Kansas City, includes Colorado. According to a press release issued by the KC Fed today:

Federal Reserve Bank of Kansas City Releases June Manufacturing Survey

KANSAS CITY, Mo. - The Federal Reserve Bank of Kansas City released the June Manufacturing Survey today. According to Chad Wilkerson,vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that growth in Tenth District manufacturing activity rebounded solidly in June after a brief slowdown last month, and producers remained generally optimistic about future activity.

“Factories in the region basically resumed their solid pace of growth from earlier in the year, following some disruptions in May,” said Wilkerson. “Also, hiring plans remain fairly solid for the second half of the year.”

Wilkerson said raw materials price indexes fell for the second straight month, but more producers plan to raise selling prices in the months ahead. According to the report:

Price indexes were mixed for finished goods, but raw materials indexes fell further indicating slower price appreciation. The month-over-month raw materials price index dropped from 54 to 36, and the finished goods price index also edged lower. The year-over-year raw materials price index eased from 87 to 85, while the finished goods price index remained unchanged. The future raw materials price index fell from 58 to 55, while the future finished goods price index increased somewhat, indicating slightly more firms plan to pass recent cost increases through to customers.

May's prospects for manufacturing were less robust than June's.

According to the June Beige Book for the Tenth District, issued on June 8:

Manufacturing and Other Business Activity
Growth in District manufacturing activity slowed following rapid growth in recent months, while other business activity expanded further. Factory orders declined after surging earlier in the spring, but factory hiring continued at solid rates and firms remained relatively optimistic about future sales. Growth in transportation activity accelerated from the previous survey, and most firms reported optimism about future sales. The majority of high-tech services firms reported strong growth in sales, though the pace slowed a bit from the previous month. Capital spending plans improved for transportation companies, and high-tech and manufacturing firms also reported fairly solid plans for future expenditures.

Energy Codes: New classes and field demonstrations

Colorado Department of Local Affairs and the Governor's Energy Office present:

Energy Codes Support Partnership
2009 International Energy Conservation Code


The Simulated Performance Path

Class and Field Demonstrations

Topics will include:
Building Science and the Energy Code
Pathways of compliance and mandatory aspects of code
Highlight on the Simulated Performance Path and the required documentation
Better Wall Assemblies
Insulation and Air Barriers and vapor barriers
Field demo of Duct leakage testing and Blower Door testing

Ideal for Code officials, Contractors, Builders, and Designers

2 classes are coming up (click the links for details):
Longmont, July 14
Greenwood Village, July 18

CoreLogic: Denver metro home prices down 3.6 percent, Colorado prices down 3.9 percent

Home prices in Colorado fell 3.93 percent from May 2010 to May 2011, continuing a downward trend in home prices in Colorado and nationwide. According to the May Home Price Index (HPI), released today by CoreLogic, The year-over-year decline for Colorado was the smallest decline in four months, and the drop for the Denver area was the smallest in five months. However, the trend in negative year-over-year changes continues and year-over-year changes have been negative for each month since August 2010.

Nationally, the index fell 7.42 percent, and it fell 3.6 percent in the Denver-Aurora-Broomfield metro area during the same period.

Comparing year-over-year changes in the HPI in all states and the District of Columbia, Colorado experienced the 30th largest decline in the home price index. Annual changes in the HPI ranged from -16.4 percent in Idaho to +4.4 percent in New York.

The graph shows the year-over-year changes for the past 25 months in the US, Colorado and the Denver metro area. Over the past two years, the general trend in all three areas has been shaped by the home buyer tax credit, which was introduced in 2008 and expired in April 2010. Clearly, home prices climbed throughout the duration of the tax credit period, but have declined since the credit's expiration.

During most months in the past two years, the Colorado and metro Denver HPI have performed better (from a property owner's perspective) than the national HPI. The national HPI has declined more than the local HPIs in each month since August 2010.

This data for May suggests that home prices have not yet turned around in Colorado as of May 2011. Local Realtor data, as well as the Case-Shiller data all show that in year-over-yea comparisons, home prices continue to fall when compared to the same month in the prior year.

New pending home sales data from NAR suggests some new strength in home sales transactions at the regional level, but in Colorado statewide, home sales activity through May remains about equal with 2009.

See the home price data archive for more.

The CoreLogic HPI is a three-month weighted average of March, April and May (with May weighted the most) and is not seasonally adjusted.

Housing News Digest, June 30

Company wants to drill for oil and gas on Banning Lewis Ranch
A Houston exploration and production company says it intends to drill for oil and gas on the sprawling Banning Lewis Ranch on Colorado Springs’ east side if its bid to purchase the lion’s share of the property is approved by a bankruptcy court judge.

Ultra Resources, a subsidiary of Ultra Petroleum, emerged Wednesday as one of two winning bidders in an auction this week of the 21,500-acre ranch, whose owners filed for Chapter 11 bankruptcy protection last year in U.S. Bankruptcy Court in Delaware. Ultra is seeking to buy the undeveloped 18,000 acres of the ranch, which is bounded by Woodmen, Marksheffel and Meridian roads and Fontaine Boulevard.

McKinstry, Kaplan Joining Otten Johnson As Associates
Michael “Ty” McKinstry and Michael E. Kaplan have joined Otten Johnson Robinson Neff + Ragonetti PC as associates.
McKinstry, who has a juris doctor from the University of Colorado, will focus on real estate and land use matters, and assist clients in the industrial, office, retail and finance industries.

Denver No. 6 in Case-Shiller
The Denver area housing market showed an overall drop of 4.1 percent in April from April 2010, but that was good enough for sixth place in the 20 metropolitan statistical areas covered by the closely watched and influential S&P;/Case-Shiller Home Price Indices released today.

And on a month-to-month basis, Denver home prices rose 1.5 percent in April from March, good enough for fifth place. Only Washington, D.C., gaining 3 percent, performed dramatically better than Denver from March to April San Francisco rose by 1.7 percent and Seattle and Atlanta each gained 1.6 percent.

UDR sets record with $104M D.C. apartment buy
UDR Inc. has closed on a $104 million buy of an apartment complex in Washington, D.C., shattering the record for the highest price per square foot ever achieved in the D.C. region for Class A rental product.

Longmont won't wait to collect fees
The Longmont City Council won’t allow homebuilders to put off paying impact fees until after a home is occupied, the Longmont Times-Call reports.

Wednesday, June 29, 2011

Pending home sales rise 15 percent in West

Pending home sales in the western US fell in May by 14.9 percent year over year, according to new pending home sales data released yesterday by the National Association of Realtors. According to the press release:

Pending home sales rose strongly in May with all regions experiencing gains from a year ago, pointing to higher housing activity in the second half of the year, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, rose 8.2 percent to 88.8 in May from an upwardly revised 82.1 in April and is 13.4 percent higher than the 78.3 reading in May 2010. The data reflects contracts but not closings, which normally occur with a lag time of one or two months.

The pending home sales index for the western region of the US, which includes Colorado, rose to 104.9 from 91.3, while the national index rose 15.5 percent from 89.0 to 102.8 year over year.

All regions of the country showed gains in pending home sales, year over year. The rise from May 2010 to May 2011 reflects the drop off in new pending home sales that followed the end of the homebuyer tax credit in April 2010. Homes needed to be under contract by April 2010 to be eligible for the tax credit. New properties under contract fell after April, so year-over-year comparisons with May 2010 and June 2010 are likely to show gains.

Month to month, the pending home sales index rose 19.7 percent in the West and 5 percent nationally. This was expected as home buying tends to increase from April to May.

The West showed the second-smallest increase in the index among all regions. the Midwest showed the biggest gains with a year-over-year increase of 20.7 percent.

Pending home sales help us predict future closings, so this news suggests that closings in June and July may be stronger both month over month and year over year.

Closings have been rather weak in Colorado so far this year. Comparing to 2010 is of limited value due to the tax credit-driven run-up in closings, but compared to both 2009 and 2008, total closings in 2011 are either flat or down. According to the CAR data (seen here) there have been 21,262 closings through May in 2011. During the same period of 2009, there were 21,152 and during 2008 there were 26,586. There were 23,461 during the same period of 2010. So far, 2011 is about even with 2009, which was a weak year.

Housing permits by county: Almost all new multifamily permits in only 3 counties

Of the 1,042 new multifamily permits issued during the first five months of 2011, 989 of them, or 94 percent, have been issued in only three counties. According to new housing permit data recently released by the Census Bureau, almost all of new multifamily permitting activity year-to-date through May 2011 has occurred in Denver, El Paso and Larimer counties with 633 permits, 230 permits, and 126 permits, respectively.

Including permits for single-family permits, and permits for duplexes, triplexes, and fourplexes, 4,727 permits have been issued in Colorado during 2011.

The map shows which counties have the highest concentrations new permit activity. Not all counties report local permit data, but the counties that have reported data account for approximately 81 percent of statewide permit activity.

(See here for statewide permit data through May 2011.)

Permit activity shown for each county is shown proportional to the number of existing housing units. For example, year-to-date, Denver, which has reported 963 new housing units through May, has issued one new permit for every 277 existing housing units in that county. By contrast, Pueblo County has issued 64 units year to date, which is only one new unit for every 952 existing housing units in that county.

Permit activity is broken in quartiles:
Burgundy: 1st quartile (most permit activity)
Green: 2nd quartile
Orange: 3rd quartile
Yellow: 4th quartile (least permit activity)

Among metropolitan counties, the total number of permits issued year to date are:
Adams - 218
Arapahoe - 241
Boulder - 78
Broomfield - 17
Denver - 963
Douglas - 354
El Paso - 838
Jefferson - 185
Mesa - 135
Pueblo - 64

Most permit activity is for single-family units.

At 4,727 total new units for the state, year-to-date, permit totals are well below totals that were common during the past decade. For example, during the same period (Jan-May) of 2005, 18,855 permits were issued in Colorado, with 1,808 of them being for multifmaily units.

Note: Permit activity measures "New Privately Owned Housing Units." and does not include commercial construction such as retail or office.

Multifamily permits up 32 percent so far in 2011

Year-to-date through May in Colorado, building permits issued for multifamily construction are up 32 percent, year over year, while permits issued for singlefamily construction are down 11 percent for the same period.

This year, through May, there have been 1013 multifamily permits issued in Colorado, and 3489 singlefamily permits issued. For the same period during 2010, there were 763 multi-family permits issued, and 3938 single-family permits.

For the month of May alone, single-family permits are up, year-over-year, by 19 percent, but multi-family permits are up 907 percent. There were 909 single-family permits and 131 multi-family permits issued during May 2011. There were 758 single-family permits issued during May 2010 and only 13 multi-family permits issued during the same period.

The second graph shows that overall, both multi-family and single-family permits in May are at levels below what was typical over the past decade.

New construction of single-family homes has shown some indications of moderate growth in recent months. Recent stats on May sales of newly-built homes from the Census Bureau showed new homes sold in the entire western United States during May 2011 grew 33 percent over May 2011. Nevertheless, new home sales in the West remain at the second-lowest May total recorded in at least ten years.

Additionally, multifamily activity has also shown indications of renewed growth in the year-to-date totals. There has been much optimism within the multifamily industry about rent growth which in turn will lead to new construction. Year-to-date totals for 2011 are now at a three-year high, but growth in new construction has been small, with 2011's total only slightly above 2009's year-to-date total of 981.

The third graph shows that May's permit total was up from 2010 and is now at a three-year high, but totals remain at only a fraction of what was issued during May of 2006, 2007 and 2008.

In spite of 10-year lows in vacancy rates and increasing strength in rents, new permitting and construction in multifamily housing has been slow to warm up. New construction has likely been constrained by a lack of availability in financing for new projects.

Growth in singlefamily permit activity suggests there is some hope among singlefamily homebuilders. May's permit total for singlefamily units was at a 3-year high, although it remains well below typical May totals reported over the past decade.

Housing News Digest, June 29

Loan assistance available to Colo. homeowners
The Adams County Housing Authority has been selected to administrate the Emergency Homeowner Loan Program (EHLP) across the state of Colorado. EHLP will provide approximately 984 Colorado homeowners at-risk of foreclosure with the opportunity to apply for an interest-free loan to help pay their monthly mortgage for up to two years, or up to $50,000 whichever comes first.

To qualify, homeowners must:

Have experienced a reduction in income due to involuntary unemployment or underemployment due to economic conditions or a medical condition; Be at least three months delinquent on their first mortgage and at risk of foreclosure; Reside in the property as their primary place of residence; Meet other qualifying program criteria including income restrictions as defined by the U.S. Department of Housing and Urban Development (HUD).

Making housing affordable
The Joint Center for Housing Studies at Harvard reports that between 2001 and 2007, affordable housing stock fell 6.3 percent while affluent housing stock increased by nearly 100 percent. The center further reports that for every new affordable housing unit that is created, two are lost to abandonment, waste, "condominiumization," or expensive rental conversions.

Banks’ Appetite for Jumbos May Soften Blow of New Loan Limits
As competition picks up, lenders including Citigroup Inc. (C), Bank of America Corp. (BAC) and Wells Fargo & Co. (WFC) are easing credit requirements and narrowing the gap on rates compared with government-backed loans. With deposits costing near zero and demand for commercial loans weak, banks and credit unions see an opportunity in high-end borrowers who haven’t suffered as badly as other Americans as foreclosures mount and unemployment hovers above 9 percent

Denver home prices steady, some sellers on sidelines
Metro Denver heads into the prime summer season with fewer available homes on the market. The monthly inventory of unsold homes in May declined 11.1 percent year-over-year to 19,573 units. The number was virtually unchanged from April, which recorded the lowest level of inventory in nearly a decade.

Home Prices Are Stabilizing
Data reported over the last two weeks offered yet more positive signals for real estate investors. Both the FHFA and Standard & Poor’s real estate pricing metrics have now illustrated positive changes in average home prices in April.

Last week, the FHFA House Price Index produced its first monthly increase since May 2010. The index, which measures only the prices of homes backing mortgages that have been sold to or are guaranteed by Fannie Mae (OTC: FNMA.OB) or Freddie Mac (OTC: FMCC.OB), rose 0.8% on a seasonally adjusted basis from March to April. Of course, residential real estate prices were still 5.7% lower than April of 2010, and benefited from the first-time homebuyer tax break.

HUD: Some non-profits exempt from SAFE Act requirements

HUD published its rules today on the SAFE Act. See here for the published rule.

The new information does not appear to conflict with the provisions in Colorado Senate Bill 206, passed by the General Assembly last session. See here for more on this from the Division of Housing.

Consult your legal counsel for a determination on whether or not your organization is exempted by SB 206 and/or the new HUD rule.

See page 11 of the Rule for this section on non-profits:

The SAFE Act does not cover employees of bona fide nonprofit organizations who act as loan originators with respect to residential mortgage loans outside a commercial context.
Individuals who act as loan originators with respect to certain kinds of loans as employees of "bona fide" nonprofit organizations, as defined by this final rule, are not subject to the licensing and registration requirements of the SAFE Act. Under the circumstances defined in this final rule, such individuals are similar to government employees who act as loan originators pursuant to government-funded and -regulated housing assistance programs, in that employees of a bona fide nonprofit organization who act as loan originators do so for public or charitable purposes,and not for the profit of another individual or entity. Employees of bona fide nonprofit organizations who act as loan originators do not act in a commercial context and consequently are not covered by the SAFE Act.

HUD recognizes that the mere fact of an organization’s 501(c)(3) status is insufficient to conclude that its employees who act as loan originators necessarily do so for the benefit of the borrower and for public or charitable purposes, rather than for the profit of the organization or another entity or individual. Instead, the organization’s activities, purpose, incentive structures,and loan products must be considered in order to determine that its employees who act as loan originators do so outside of a commercial context. Accordingly, this final rule provides that an organization is considered to be a "bona fide" nonprofit organization if the organization demonstrates to the satisfaction of the applicable regulator that the organization:

(1) Maintains tax-exempt status under section 501(c)(3) of the Internal Revenue Code of 1986;
(2) Promotes affordable housing or provides homeownership education, or similar services;
(3) Conducts its activities in a manner that serves public or charitable purposes;
(4) Receives funding and revenue and charges fees in a manner that does not incentivize the organization or its employees to act other than in the best interests of its clients;
(5) Compensates employees in a manner that does not incentivize employees to act other than in the best interests of its clients;
(6) Provides to or identifies for the borrower residential mortgage loans with terms that are favorable to the borrower and comparable to mortgage loans and housing assistance provided under government housing assistance programs; and
(7) Meets such other standards that the state determines appropriate. With respect to whether particular mortgage terms are favorable to borrowers, the applicable regulator should examine the interest rate that the home loan would carry; the charges that are imposed on the borrower for origination, application, closing and other costs; whether the mortgage includes any predatory characteristics; the borrower’s ability to repay the loan; and the term of the mortgage.

Finally, to ensure that all of the individual’s actions in the course of acting as a loan originator are subject to the control of the bona fide nonprofit organization and are consistent with the organization’s mission and practices, the individual must be an employee of the organization and must be acting within the scope of his or her employment on behalf of the organization. (Applicability of SAFE Act licensing requirements to volunteers is addressed below under the section of this preamble that addresses “for compensation or gain.”)

Tuesday, June 28, 2011

Bankruptcy filings in Colorado down 2.4 percent

In Colorado during May, total bankruptcy cases filed fell 2.4 percent, year over year, to 2,845 cases. During May 2010, 2,916 cases were filed. May was the fourth month in a row in which bankruptcies declined year over year, and it marks only the fifth time in at least four years that a monthly bankruptcy total has been lower than the same month one year earlier.

The first graph shows the year-over-year changes in bankruptcy case filings since January 2007:

The appearance of sustained declines in the year-over-year comparisons reinforces the likelihood that consumers are beginning to get a handle on debts now that more than three years have passed since the beginning of the national 2007-2009 recession.

In general, however, bankruptcy filings have grown since 2006 following the implementation of the 2005 Bankruptcy Act (discussed here).

The large spike in 2005 preceded the implementation of the new bankruptcy rules. Filings totals have now returned to the levels experienced just prior to the final run-up in cases in 2005.

Recent monthly bankruptcy totals are now on a level similar to what was experienced during May 2004 and 2005, during a non-recessionary period. The decline in bankruptcy filings from April to May was expected. April tends to be a peak month for bankruptcy filings as people use their tax refunds to pay for bankruptcy attorneys and filing costs.

Case-Shiller: Denver home price index falls 4.1 percent, year over year

Case-Shiller’s home price index for the Denver area rose 1.5 percent from March to April, and fell 4.1 percent,year over year, from April 2010 to April 2011.

According to the Case-Shiller report including data up through April, many cities measured by the index showed improvement from March to April, reflecting seasonal factors, but also showing some of the largest improvements in several months:

Data through April 2011, released today by S&P; Indices for its S&P;/CaseShiller
1 Home Price Indices, the leading measure of U.S. home prices, show a monthly increase in prices for the 10- and 20-City Composites for the first time in eight months. The 10- and 20-City Composites were up 0.8% and 0.7%, respectively, in April versus March. Both indices are lower than a year ago; the 10-City Composite fell 3.1% and the 20-City Composite is down 4.0% from April 2010 levels. Six of the 20 MSAs showed new index lows in April - Charlotte, Chicago, Detroit, Las Vegas, Miami and Tampa.

In year-over-year comparisons for March, Minneapolis showed the largest drop, with a decline of 10.0 percent, while the index in Phoenix fell 8.4 percent. Home price indices fell in 19 of the 20 cities included in the study.

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. Prices have been largely flat since mid-2009.

The 20-city composite is down 32.8 percent since it peaked in July 2006, but the Denver index is down only 12.8 percent from its August 2006 peak.

Nevertheless, the Denver index has returned to 2001 levels. In addition, the Denver Index remains near the lowest level experienced since March 2009, and is now only 1.7 percent above where it was when it hit its initial recessionary trough in March 2009. The Denver Index was 122.32 during April 2011, and it was 120.39 during March 2009.

The second chart compares year-over-year changes in the Denver area index and in the 20-city composite. The Denver index did not achieve the rates of growth experienced by the national index, but the Denver index did not experience comparable rates of decline following the onset of the national recession either. Overall, the index has been less volatile in Denver than has been the case for the 20-city composite. However, year-over-year growth in the 20-city composite during April was negative with a decrease of 4.0 percent, and the Denver area index’s fall of 4.1 percent is the tenth month in a row in which the growth rate has been negative. In the 20-city index, the year-over-year change has only been negative for the most recent seven months.

The year-over-year change of -4.1 percent for the Denver index in April marks the largest year-over-year decline in 24 months. The Denver index has not fallen by more than 4.1 percent since May 2009 when the year-over-year change was -4.5 percent.

The last chart provides a closer look at year-over-year changes in the Denver index. Note that for July through April, the change has fallen below zero, and likely reflects the end of the homebuyer tax credit’s end which has led to a fall in demand and a decline in the home price index. The upward trend in the index in response to the tax credit is clear during late 2009 and early 2010.

The chart shows that from July 2010 through April 2011, the home price index has been below the index for the same period a year earlier (July 2009 through April 2010). Given that 2009 was itself a weak year for home sales, this data does not suggest a speedy rebound for home prices.

Home sales closings: Denver area down 19 percent, Colo. Springs area falls 12 percent

Home sales closings in the Denver area fell 19.6 percent from May 2010 to May 2011, while closings in the Colorado Springs area fell 12.1 percent during the same period.

According to data recently released by the Colorado Association of Realtors, the number of closings in the Denver area fell year over year from 3,408 during May 2010 to 2,797 during May 2011. In the Colorado Springs area, the total number of closings fell from 888 to 780 during the same period.

The number of closings increased in Colorado Springs from April to May, and fell slightly during the same period in metro Denver. There were 2,809 closings in metro Denver and 748 closings in the Colorado Springs area during April.

The first graph shows the year-over-year changes for each month since 2004 in metro Denver. May's year-over-year decline was the fifth month in a row in which the year-over-year change was negative. Ten months of the last twelve have shown negative year-over-year changes in the region.

The second graph shows the same measure for the Colorado Springs area. Home sales closings have arguably been stronger in the Colorado Springs area than in the metro Denver area. Only eight of the past twelve months have shown negative year-over-year changes in closings during the past twelve months, and the Colorado Springs area reported 13 months of positive year-over-year changes from June 2009 through June 2010.

Overall, these numbers show that overall sales transactions remain muted. This is likely due to ongoing challenges in obtaining mortgages and a lack of demand fueled by ongoing uncertainty about employment and wages.

In addition, year-over-year comparisons in closings continue to be affected by the run up in closings through June 2010 that occurred due to the end of the homebuyer tax credit. In the face of this 2010 run-up, 2011 numbers will tend to be considerably smaller. While legally, homes could be still be eligible for the tax credit when closing as late as September 2010, most of these tax-credit closings occurred by the end of June 2010. More sound comparisons in year-over-year changes in closings will likely be available later this summer.

See here for the latest on median home prices.

Note: closings information reflects single-family homes sales only. The metro Denver district does not include Boulder County.

Median home prices: Metro Denver down 3.4 percent, Colo. Springs off 5.8 percent

Median home prices in the Metro Denver and Colorado Springs areas fell again year over year, dropping 3.4 percent in Metro Denver from May 2010 to May 2011. The median price fell 5.8 percent in Colorado Springs during the same period.

According to data recently released by the Colorado Association of Realtors, prices have been showing signs of stability in recent months, with Metro Denver prices near $223,000 during the past six months. In Colorado Springs, the median price has been near $183,000 for the past three months.

More specifically, the median home price in May 2011 was $223,195 in Metro Denver and the median price was $183,947 in the Colorado Springs region.

The first graph shows median home prices for the Metro Denver and Colorado Springs regions since 2003.

As of May 2011, the median price in Metro Denver is 15 percent below the June 2006 peak of $263,881. In the Colorado Springs area, the May 2011 median home price was 20 percent below the July 2007 peak of $230,399.

In general, median home prices in the two regions have fallen since mid-2010 following the end of the homebuyer tax credit, although they have stabilized in recent months.

The second and third graphs show how far below the most recent peak of the median home prices in the two regions.

By this measure, The Colorado Springs area is near an 18-month low, and during May 2011 was 79% of 2007's peak. In Metro Denver during May, the median home price was 84% of 2006's peak price.

Comparisons with Case-Shiller and April Prices

Metro Denver prices reflect recent home price data released today by Case-Shiller. The Case-Shiller index showed that home prices, in data up through April in Metro Denver, had increased slightly month-over-month, but remained down, year-over-year by 4 percent.

The Case-Shiller numbers are a three-month average up through April. Similarly, the Realtors Association's April median price for metro Denver show a year-over-year decline of 3.2 percent.

Note: The median prices presented here are for single-family homes only and do not include condos.

Monday, June 27, 2011

Housing News Digest, June 28

$200 apartment lease rate hikes? It's about supply and demand.
Dwayne Gladhill is moving out of his third-floor, one-bedroom apartment in northeast Colorado Springs. He says $950 per month is too much to pay for what he's getting -- especially since that figure represents a sudden $200 hike compared to what he's paying now and it doesn't include the garage that was part of his $750 rate.

Meadows wins tax credits for apartments
GLENWOOD SPRINGS, Colo. — Glenwood Meadows at long last might be able to proceed with at least the first 60 units of residential development that is to be part of the larger mixed-use project.

Steele Properties, which is under contract to buy a piece of property for the first set of housing units at the Meadows, was successful in winning its recent bid for Colorado Housing and Finance Authority (CHFA) tax credits to build the 60 apartments.

Homes at Low End of Market Remain Most Vulnerable to Price Drops
A continuation of tight credit conditions for first-time buyers and a foreclosure pipeline full of homes bought with subprime loans will mean that house prices at the low end of the market will continue to fall at a faster rate than prices at either the middle or high end, according to analysts at the research firm Capital Economics.

CNBC ranks Colorado No. 5
CNBC ranks all 50 states in 10 categories. Colorado received 1,512 points out of a possible 2,500 points. Colorado’s strongest category is business friendliness, which measures the state’s legal and regulatory climate. It finished in sixth place in that category. Colorado also ranked No. 7 in workforce and quality of life.

Cohn, however, said Colorado struggled in CNBC’s economy category, falling to No. 26 from No. 8 last year. Cohn said “after three years of steady growth, Colorado’s economy has lagged the national recovery the past two years, in part because of the sluggish construction industry.”

Uneven fall of house prices could tumble another 3%
Analysts at both Bank of America Merrill Lynch and Capital Economics forecast another 3% fall for house prices before they reach a bottom at the end of the year.

While homes on the lower-tier price range will get there faster and at a much harder fall, a housing recovery is in sight, analysts said.

Housing News Digest, June 27

Renters in Greeley face tightest market in a decade
But she and several other potential renters these days are caught in the middle of the tightest rental market the area has seen since 2002.

Real estate officials believe it’s a product of not only the high foreclosure rate in Greeley in the past few years that has kicked former owners back into the rental market, but the lack of people qualifying for home loans, and new employees to all of northern Colorado who are finding Greeley the least expensive place to rent.

Teens fighting adults for traditionally youth-held jobs
Getting a summer job used to be a given for teenagers. Now, it has become a competitive task requiring much more than a desire to work.
Ambition, attitude and being trained in a set of skills can help, but employment experts said there is no guarantee of landing a gig.
Patrick Holwell, workforce economist with county career service Arapahoe/Douglas Works, said the job outlook for youth employment locally and elsewhere is dire.

ULI chair named
Chris Achenbach, principal and director of construction at Zocalo Community Development, on July 1 becomes the chair of the executive committee for the Colorado District Council of the Urban Land Institute.

He succeeds Bill Mosher, senior managing director of Trammell Crow Co. Upon completing his two-year term on June 30, Mosher will remain involved with preparations for the international ULI Fall Meeting to be held in Denver in October 2012.

Niobrara boom heats up industrial real estate market
(Source: Greeley Tribune, Colorado)By Sharon Dunn, Greeley Tribune, Colo.
June 26--The impact of the Niobrara boom in northern Weld County is being felt throughout northern Colorado from the jobs it's creating to the tax treasuries it's fueling.

Its presence also is being felt increasingly in the northern Colorado real estate market, where many companies have been looking to relocate.

Landlords see income gains on rental properties
Americans who rented out properties gained $3.3 billion in total income from that endeavor during the month of May, up from $2.9 billion in April, according to the U.S. Bureau of Economic Analysis.

The BEA's latest report suggests predictions of a more rental-focused housing market are coming true.

Friday, June 24, 2011

Housing News Digest, June 24

New state law bans private transfer fees on home sales
“The governor and legislature stood up for homeowners by protecting consumers from these predatory fees,” Tennessee Land Title Association President Mark Rosser said. “This bill is an important step in enhancing consumer protections, safeguarding the real estate market and protecting our property rights system in Tennessee.”

Tennessee joins Alabama, Arizona, Arkansas, California, Colorado, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Texas, Utah, Virginia and Washington in restricting the fees.

With USDA Support, a Colorado Resident has a New Home
Owning a home in the same area where he built his business is a win-win for new homeowner Greg Kane. In early June 2011, Kane purchased his studio condominium at Riverbend, Colorado, through the help of US Bank Home Mortgage and the USDA Rural Development Guaranteed Rural Housing Loan Program. Homeownership was the right answer for Kane’s housing dilemma.

Market 'Snapshot' Reveals Decline in Strategic Defaults
The phenomenon of strategic default has become a growing concern for the industry, but a new “Market Insight Snapshot” released by Experian Thursday suggests the percentage of mortgage defaults involving borrowers who decided to simply throw in the towel is trending down.

FDIC calls Colorado bank ‘critically undercapitalized,’ orders capital boost
Federal regulators have ordered Castle Rock-based Colorado Capital Bank to boost its capital immediately, categorizing the bank as “critically undercapitalized,” according to a FDIC enforcement action made public on Friday.

Denver ranks high for rents
Metro Denver had the 55th-highest typical apartment rents in 2009 out of 385 U.S. markets, according to a new analysis of U.S. Census Bureau data. Among the 65 largest metro areas, Denver had the 23rd highest rents that year.

Thursday, June 23, 2011

Mass layoffs fall 25 percent in Colorado, new jobless claims fall 15 percent

Mass layoff events fell 25 percent to 45 events during the first five months of 2011 in Colorado. There were 60 mass layoff events during the same period last year. According to a new report released Wednesday by the U.S. Bureau of Labor Statistics, there were 10 mass layoff events during May 2011, which is the same amount as occurred during May 2010.

Monthly mass layoff events grew rapidly after October 2008 in Colorado, and have gradually lessened since early 2010.

Nationally, mass layoff events increased 0.9 percent from 1,354 during May 2010 to 1,364 during May of this year.

In the year-to-date total for May, mass layoffs have now fallen two years in a row after peaking at 86 mass layoffs during the first five months of 2009. The first graph shows year-to-date totals for May since 2001:

Mass layoffs were rare from 2004 through most of 2008.

Overall, the most recent mass layoffs dats suggests that the employment situation continues to stabilize. New layoffs continue to lessen, but as we've seen in the most recent employment data, job growth continues to disappoint.

New jobless claims

New claims for unemployment insurance rose year over year in may by 14 percent to 1,171 in May. There were 1,024 new claims during May of last year. New claims for unemployment insurance have also gradually fallen since early 2010. The 14 percent increase in May, compared to May of 2010, is substantially higher than the year-over-year change at the national level. However, it is too soon to know if this increase indicates any sort of new trend.

As can be seen in the third graph, year-over-year changes in new unemployment claims points toward more and more stability in the labor markets as most year-over-year changes has been below zero since late 2009.

In year-date totals for new unemployment claims through May, totals are down 15 percent year over year. There were 4,987 new claims during the first five months of 2011, compared to 5,926 new claims during the same period last year. In the year-to-date total for May, new claims for unemployment insurance have now fallen two years in a row after peaking at 8,087 claims during the first five months of 2009. The last graph shows year-to-date totals for May since 2001:


In spite of the 14 percent year-over-year increase in new claimants for May alone, the year-over-year comparisons clearly show that both new claims and mass layoffs are down from both 2009 and 2010 so far this year. However, total employment in Colorado is still 190,000 jobs below peak levels. New layoffs and new unemployment claims continue to fall, but there is little job creation going on at the same time to provide re-entry into the workforce. The fact that recent layoffs are such a small portion of the total number of jobless persons suggests that those people who are unemployed have been unemployed for an extended period of time. (The most recent Colorado employment data states that there are 226,000 unemployed workers in Colorado.)

New home sales up 33 percent in West, but remain at historic lows

New single-family home sales rose slightly in the US, and rose by one-third in the West region, which includes Colorado. However, according to new data released by the Census Bureau today, new home sales in the West remain at the second-lowest May total recorded in at least ten years.

The report, which monitors sales activity for newly constructed houses, reported that in the West, new home sales were up year over year, increasing 33 percent to 8,000 in May 2011 from 6,000 new homes sold in May 2010. Nationwide, sales rose 15 percent, increasing from 26,000 to 30,000 during the same period.

In May, new home sales were at the second-lowest May total in more than a decade. Only May 2009 reported fewer new home sales with a total of 6,000. The first graph shows monthly new home sales totals for each month since 2003:

For the West region:

The second graph shows that new home sales continue to fall and have generally followed a downward trend since the middle of the decade.

New home sales peaked during the spring and summer of 2005 and have trended downward since. The number of new houses sold in the United States is down 76 percent since the peak of March 2005, and new home sales in the West have fallen 79 percent since sales peaked in the region during March 2004.

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

The number of new homes for sale has also fallen off considerably. The number of new houses for sale in the West has fallen 75 percent since the total peaked during June 2007, and the same total has fallen 71 percent in the US since the number of new homes for sale peaked in the US during August 2006.

The number of new single-family homes for sale in the West is now at the lowest level it's been in more than ten years. This reflects very low demand in the face of an ongoing and large number of new foreclosures and low-priced properties in many areas of the West, including Colorado. Although foreclosures have fallen in Colorado in recent years, foreclosure rates remain at historic highs.

As a final note, we can also look to the new home inventory. In this case, we calculate inventory by subtracting the number of new home sales in a given month from the number of new homes for sale at the end of the previous month. In the final graph, we see that the inventory is now at a ten-year low of 27,000 homes. This is good news for owners seeking to sell homes since it suggests that fewer new homes are sitting and waiting to be sold, thus diminishing some of the inventory-driven downward pressure on prices.

In the most recent housing starts data for May, discussed here, there were some signs of life in new housing construction as as regional housing starts hit a 33-month high. Nevertheless, starts remained at historic lows, so new home sales and homes for sale are likely to continue at very low levels, at least in the near term.

Housing New Digest, June 23

Laws Protecting Broker Commissions Gain Traction In States
The Tarheel state follows Colorado and Michigan which adopted similar laws in August and October of 2010, respectively. Legislation has been introduced in a number of other states over the last year, including Oregon, North Dakota and Delaware.

Real-Estate Attorney Steven G. Wright Joining Polsinelli
Real-estate attorney Steven G. Wright, one of the longest-serving attorneys at Isaacson Rosenbaum, later this month will join the Denver office of Polsinelli Shughart.
Wright praised Ryley Carlock & Applewhite, the firm that’s taking 12 of his current colleagues. But he described his move to Polsinelli as a “unique opportunity.”

Residential vacation rentals targeted for taxes
Aspen homeowners who offer their properties as vacation rentals and aren’t on the city’s radar likely will be soon — in the form of paying sales and lodging taxes, as well as obtaining an annual business license and a related permit.

Aspen City Council on Tuesday OK’d moving forward with tracking down hundreds of vacation rentals that are off the government’s tax rolls and making them comply with the rules, which are currently being revised.

Bankrate: Long-term mortgage interest rates at 'ultra-low levels'
Mortgage rates remained mostly unchanged this past week, with the 30-year, fixed-rate mortgage remaining 4.5% for a second week.

Even still, disappointing economic news kept rates well below 5% and significantly lower than the 6% mark that defined more stable economic times. The U.S. has not seen mortgage rates higher than 6% since late 2008.

Hickenlooper appoints new OEDIT director
DENVER - Gov. John Hickenlooper has appointed Ken Lund, chief legal counsel in the Governor's office, as the new executive director of the Colorado Office of Economic Development and International Trade.

Lund, previously with Holme Roberts & Owens in Denver, will take the position officially on Aug. 1, replacing Dwayne Romero, who is returning to the private sector as president of Related Colorado, a real estate firm.

Wednesday, June 22, 2011

FHFA: April house prices in Mountain region fall 10.9 percent

House prices in April in the Mountain region, which includes Colorado, fell 10.9 percent, year-over-year. Nationally, the house price index fell 5.6 percent. The new house price index numbers, released today by the Federal Housing and Finance Agency, also showed that the national index is down 19.1 percent from the peak level reached in June 2007, while the Mountain region's index is down 32.2 percent over the same period.

The FHFA monthly index is calculated using purchase prices of houses purchased with loans that have been sold to or guaranteed by Fannie Mae or Freddie Mac.

The decline in house prices, both regionally and nationally, continues the trend that began in mid-2007 as prices have fallen almost constantly since the peak.

From March 2011 to April 2011, however, the US index increased by 1.8 percent, which is one of the largest month-to-month increases recorded since 2006.

The 10.9 percent decline in the Mountain region is the largest year-over-year decline recorded since July 2009. Year-over-year declines have accelerated in recent months, but any comparison between the spring months of 2011 with the same period of 2010 must take into account the effects of the homebuyer tax credit. To be eligible for the tax credit, new buyers needed to have properties under contract by April 2010. The rush to purchase before the deadline would have pushed up the demand for housing during the Spring of 2010. So, year-over-year comparisons with April 2010 will show much less demand in April 2011 than during the year prior.

Notably, the FHFA index does not show a "double dip" as can be seen in the Case-Shiller data (discussed here) in which prices begin to recover in 2009, but then fall again after mid-2010. The FHFA monthly data shows almost nothing but losses following mid-2007.

The second chart shows each month's house price index compared to the same month a year earlier:

We can note that the Mountain region has performed more poorly (from a seller's perspective) than the national index. This runs contrary to some local experience and some statistics. The Case-Shiller data for the Denver metro area, for example shows that local prices did not decline as much as the national composite index following the financial panic in 2008.

Since we're looking at regional, data, however, we have to keep in mind that this data reflects house prices in Arizona and Nevada, and this no doubt will continue to put downward pressure on regional prices for now.

Since the Case-Shiller data is specific to the Denver area, this contrast between the two studies might also suggest that while the Denver area has recovered somewhat, many areas of the state are doing less well. Home prices in Grand Junction, for example, are down considerably from peak levels experienced in 2008. (According to FHFA quarterly data)

Colorado personal income up 3.2 percent

New personal income data for Colorado was released today by the BLS.

Colorado has now exceeded the personal income levels reached prior to the financial panic of 2008.

At $223.8 billion, personal income in Colorado has now exceeded the peak levels reached during the third quarter of 2008, when personal income reached $216.8 billion. Personal income is now up by 3.2 percent from previous peak levels.

Personal income in Colorado still lags the US as a whole and the Rocky Mountain region. As of the 1st quarter of 2011, The Rocky Mountain region is 3.7 percent above peak levels and the US is 3.7 percent above its own previous peak which occurred during the second quarter of 2008.

Over ten years from the 1st quarter of 2002 to the first quarter of 2011, US personal income increased 44 percent, and in Colorado it increased 42 percent. In the Rocky Mountain region, the increase for the same period was 49 percent.

Personal income figures are not adjusted for inflation. Over the past decade, the consumer price index in the United States West region increased 23 percent. So, income growth has outpaced inflation, but real income growth is about half of nominal income growth.

Since the peak levels reached during the third quarter of 2008, personal income is up 3.2 percent, but the CPI has increased 1.9 percent during the same period.

Much of the increase that has occurred may be attributed to a 29 percent increase in personal current transfer receipts since the 2008 peak.

The effect of personal current transfer receipts

An important component of personal income is "personal current transfer receipts." These are forms of income not died to wages and employment income and include payments such as social security payments, unemployment insurance, Medicare and Medicaid.

When personal current transfer receipts are removed from personal income, income growth is not as robust.

The second chart shows personal income minus personal current transfer receipts.

Without the inclusion of transfer receipts, personal income in Colorado is only 0.1 percent above peak levels. In other words, by this measure, Colorado only returned to peak income levels during the first quarter of this year.

When adjusted for inflation, however, personal income (minus transfer receipts) has declined since 2008. Since the peak period, the CPI has increased 1.9 percent. Comparing the 0.1 percent growth in income since the peak with the 1.9 percent increase in the CPI, we see that income growth has not kept up with price inflation and that real incomes have not yet returned to peak levels.

By this measure we also find that Colorado lags both the nation and the Rocky Mountain Region. Since the peak period, income minus transfer receipts in the Rocky Mountain Region has increased 0.4 percent. Nationally, personal income minus transfer receipts is 0.6 percent above peak levels.


Overall, Colorado's real estate markets and labor markets have not suffered as much as many markets, but in a variety of ways, including personal income, Colorado is recovering more slowly than the nation. Compared to all other states, Colorado is ranked in the middle, placing in the third quintile. See the map here.

Generally speaking, personal income has been largely flat in Colorado since 2008 reflecting a sluggish job market and wage growth. Income growth from wages and employment has been sluggish as is shown when transfer receipts are excluded from calculations. This makes sense given that May 2011 employment data showed Colorado's total employment totals falling by 6,100 jobs when compared year over year.

Note: Personal income is the income received by all persons from all sources. Personal income is the sum of net earnings by place of residence, property income, and personal current transfer receipts. Total personal income will rise as population rises, even if household incomes are declining. Property income is rental income of persons, personal dividend income, and personal interest income. Net earnings is earnings by place of work (the sum of wage and salary disbursements, supplements to wages and salaries, and proprietors' income) less contributions for government social insurance, plus an adjustment to convert earnings by place of work to a place-of-residence basis. Personal income is measured before the deduction of personal income taxes and other personal taxes and is reported in current dollars (no adjustment is made for inflation).

Housing News Digest, June 22

Colorado economic-development chief leaving after 4 months
A real estate professional, Romero was little known to Denver-area economic development leaders when his appointment was announced in January.
He previously served as president of Related Colorado, a Snowmass Village real estate development and investment firm, leading the firm’s hospitality and property-management divisions. During his brief tenure as OEDIT’s chief, Romero continued to work one day a week for the company, to which he will now return upon leaving the state post.

Longmont Ends Inclusionary Zoning Program
The City Council also voted 4-3 to end the "inclusionary zoning" portion of its affordable housing program.

Established in 1995, the program required builders to either set aside 10 percent of their homes as affordable, or else make a "payment in lieu" to make up for not supplying those homes. The homes remain affordable, through deed restrictions, for a minimum of 10 years.

Several builders and developers have asked the council to remove the program, saying the set-aside makes a difficult financing situation even worse. Deanna Dyer, president of the Longmont Realtor's Association, said she still supported down-payment assistance, but that deed restrictions were too much.

500-unit Broomfield apartment complex sold for $78M
Chicago-based AMLI Residential has added to its presence in the U.S. 36 corridor near Interlocken with the recent purchase of a 500-unit apartment complex in Broomfield for $78.82 million.

Lawmakers: Government guarantee preserves 30-year mortgage
The prevalence of the 30-year mortgage in the housing market will rapidly diminish and eventually disappear without a government guarantee for related mortgage-backed securities.

Two members of the House Financial Services Committee, Reps. Gary Peters (D-Mich.) and John Campbell (R-Calif.) told attendees at the American Securitization Forum's annual meeting in Washington that this is precisely what will happen if legislation they plan to introduce is not passed into law.

Irvine: Luxury Condos become Rental Apartments
The luxe new high-rise condos at Astoria in Irvine’s Central Park West are no longer for sale — they’re for rent.
The apartments at Astoria, once priced to sell from $415,000 to $779,000 - along with homeowner association (HOA) dues ranging from $915 to $965 a month — now rent beginning at $2,590.

Tuesday, June 21, 2011

Upcoming Wells Fargo Housing Counseling/Foreclosure Prevention Event

We received the following notice from Wells Fargo that may be of interest to some readers:

Are you a Wells Fargo or Wachovia mortgage customer facing mortgage
payment challenges? If so, we invite you to get the answers you need at a
free workshop being held right in your community.

You’ll personally meet with a Wells Fargo representative who will
confidentially discuss your financial concerns and options. Plus, you
get the opportunity to see if you’re eligible for a loan modification under
the government’s Home Affordable Modification Program.
For more information, call 1800-405-8067

Crowne Plaza Hotel - Denver Airport
15500 East 40th Avenue
Denver, CO 80239
Tuesday, July 12, 2011
9AM - 7PM
Free Parking

Click here to register.

Sign up by Sunday, July 10, 2011
Walk-ins welcome but registration is recommended.

Get answers to your questions:

Learn about options that may help you
overcome payment challenges

Understand how you may be able to keep
your home and avoid foreclosure

Find out ways to help you get back on track

Connect with helpful resources such as
housing counselors and learn about online
tools available to you

Consumer prices in May in western U.S. climb 3.2 percent

The Bureau of Labor Statistics released last week the May CPI for US urban areas and regions. In the West region, from May 2010 to May 2011, the CPI increased 3.2 percent. This is the largest year-over-year increase since 2008, before the deflationary effects of the 2007-2009 recession began to be felt.

In the first graph, we can see that the CPI growth in May 2011 is now at the third-highest increase observed for May during the past ten years. Only 2006 and 2008 showed larger increases, and price increases in those years were partially countered by strong growth in employment and incomes, but at the present time, income growth has been flat in recent years, as discussed here.

The price increases are being largely driven by transportation costs, such as gasoline, which increased by 11.1 percent, year over year. Food costs also increased significantly, rising 3.7 percent.

Recent price increases will impact household calculations and attitudes on spending as many households conclude that discretionary spending will need to be scaled back in the face of increasing food and transportation costs. These price increases come in the face of continued lackluster performance in the labor markets as discussed here.

This in turn will have effects on home purchase activity as well. Note: In addition to the issue of disposable income is the issue of interest rates. Should the Federal Reserve conclude that inflation does need to be addressed, the resulting increase in interest rates would also push down home purchase activity.

The second graph shows year-over-year changes in CPI for all months since 2002. If current trends continue, CPI growth will return to pre-recession levels in coming months.

NAR: Home prices in U.S. West fall 12.6 percent

Home prices in the West region of the U.S., which includes Colorado, slipped 12.6 percent from May 2010 to May 2011. According to new existing home sales data, released today by the National Association of Realtors, home prices fell more in the West than in any other region. The median home price in the Northeast, for example, rose 6.1 percent from May 2010 to May 2011.

The first graph shows median home prices for all regions plus the U.S. The median home price in the West remains below the annual median home prices for 2008, 2009 and 2010. After six months of declines from mid 2010 to early 2011, the median home prices has remained generally flat in the West during the past five months.

Nationally, home prices fell 2.9 percent, year-over-year.

Home sales transactions (closings) fell 8.2 percent in the West region, which was the smallest drop in home sales closings, year-over-year. Home sales dropped 20 percent in the Midwest from May 2010 to May 2011, and closings fell by 12.9 percent nationally during the same period.

The second graph shows closings by region. Closings have grown for the past three months, largely driven by seasonal factors, but May 2011 closings remain below May 2010 levels. All regions showed declines in the year-over-year comparisons for May.

Much of this can be attributed to the closings left over from the rush to purchase properties under the homebuyer tax credit. To take advantage of the tax credit, properties needed to be under contract by April 2010. May 2010's closings reflect this. So, it is to be expected that closings are down in May compared to one year earlier.

Nevertheless, both home purchase activity and median prices remain well below peak levels.

According to the NAR press release:

NAR chief economist [Lawrence Yun] said temporary factors held back the market in May, as implied from prior data on contract signings. “Spiking gasoline prices along with widespread severe weather hurt house shopping in April, leading to soft figures for actual closings in May,” he said. “Current housing market activity indicates a very slow pace of broader economic activity, but recent reversals in oil prices are likely to mitigate the impact going forward. The pace of sales activity in the second half of the year is expected to be stronger than the first half, and will be much stronger than the second half of last year.”[Emphasis mine.]

Yun doesn't say why the second half of the year should be much stronger, and this is not clear given ongoing complications from lending activity, inflation and the risk of further exogenous shocks like a Greek default on debt, which would likely affect credit availability even in the U.S.

Note, see the most recent Colorado median home price and closings data from the Colorado Assoc. of Realtors, for more local sales activity and median prices.

Housing News Digest, June 21

HUD to lend $41.3M in Colorado to help ward off foreclosures
The U.S. Department of Housing and Urban Development and NeighborWorks America have launched the Emergency Homeowners’ Loan Program to help homeowners who are at risk of foreclosure in Colorado and elsewhere.
Congress approved $1 billion for HUD — including $41,286,747 in Colorado — to implement the loan program as part of the Dodd-Frank financial reform legislation. The program was created to assist homeowners at risk of foreclosure because they have lost their jobs or are making less money.

Metro Denver’s employment back to pre-recession level in Q4 2012, forecast says
Employment in the Denver area won’t return to pre-recession levels until the fourth quarter of 2012, said a report released Monday by the U.S. Conference of Mayors.
The report, prepared by the group and ISH Global Insight — a division of Douglas County-based IHS Inc. — identifies the Denver area as Denver, Arapahoe, Jefferson, Adams, Broomfield, Douglas, Elbert, Park, Clear Creek and Gilpin counties.

1515 Wynkoop sold for estimated $120 million
The 1515 Wynkoop office building in Denver's Lower Downtown has been sold to American Realty Advisors of Glendale, Calif., for an estimated $120 million, or $391 per square foot.

Denver nation's fastest selling market
This may come as a shock to people struggling to sell their homes in the Denver area, as well as Realtors listing homes, but in May, homes on average sold faster in Denver than any place in the nation, according to an analysis of 146 metropolitan areas tracked by

May marked the second consecutive month that Denver had the boasting rights as the No. 1 metropolitan area for home sales speed in the country, according to, which is owned by the National Association of Realtors.

Forecast: Colorado's economy to stay on slow road to recovery
That projected increase in revenue is a result of employment and wages growing faster than was predicted at the time of the most recent quarterly economic forecast in March, said Natalie Mullis, chief Legislative Council economist. The state has gained about 39,000 jobs since September, and every industry except for the construction, financial and media sectors has seen an increase, she said.
But the housing market remains in “a nervous state of disequilibrium,” with housing prices expected to fall for two more years and with apartment pricing remaining flat even as vacancy rates rise. The housing market “is going to be a drag on the market for the next three to five years,” Mullis said.

Monday, June 20, 2011

Housing starts in West hit 33-month high

Housing starts in the West Census region of the US, which includes Colorado, were up 21 percent from May 2010 to May 2011, counting both single-family and multi-family units. According to new housing construction and housing starts data released today by the US Census Bureau, there were approximately 13,700 housing units started in the West during May 2011. Of the new units started, 9,000 were single-family structures and 4,700 were structures containing more than one housing unit.

Nationally, housing starts fell 1 percent during the same period, with total housing starts falling to a total of 55,600.

The first graph shows the overall trend of housing starts nationally and in the West census region. Total housing starts remain near ten year lows in both measures.

The West census region includes California, so given the size of the West census region, the fact that total housing starts are at 13,700 indicates that new home construction continues to be very light throughout the region. Housing starts totals ranging from 35,000 to 45,000 were common from 2004 to 2006.

The second graph shows the difference between single-family starts and starts for structures with more than one housing unit. Both remain near ten-year lows, and single-family starts fell 2 percent from May 2010 to May 2011. Starts for structures with more than one unit, however, increased by 123 percent during the same period. Given recent data showing strength in the demand for rental-housing, the housing starts data may suggest that developers of rental housing are beginning to move forward with construction of new multifamily structures.

The third graph shows month-by-month comparisons in housing starts for each year. MAy's housing starts total increased from April to May as was expected. May tends to be a robust month for new housing starts. However, the May 2011 total of 13,700 starts is the third-lowest total for May housing starts in more than 10 years. On the other hand, May produced the largest number of housing starts reported in any month since October 2008 suggesting that stability may be returning to the market for new construction.

Buildfax:Remodeling activity increases 18 percent in West

Residential remodeling activity increased 18 percent in the Western U.S. from April 2010 to April 2011. According to the April 2011 Residential Buildfax Remodeling Index, released last week by BUILDERadius, The Western U.S. showed the largest rate of increase in its index for April 2011, outpacing all other regions and the U.S. as a whole.

According to Buildfax's April 2011 release:

In April, all regions posted month-over-month gains, and only the Midwest posted a year-over-year loss. The West was up 16.8 points (18%) year-over-year and up 5.3 points (5%) month-over-month. The Midwest was down 16.9 points (19%) year-over-year and up 10.7 points (17%) month-over-month, recovering slightly from a lower-than-average March. The Northeast was up 3.2 points (5%) year-over-year and 9.1 points (14%) month-over-month, and the South was up 9.6 points (11%) year-over-year and 10 points (12%) month-over-month.

According to Joe Masters Emison, vice president of research and development at BuildFax, “April traditionally sets a baseline for the rest of the year in residential remodeling activity, and April 2011 is the best we’ve seen since the beginning of the index in April 2004.”

In the graph, we see that the year-over-year percent change in the western region has outpaced all other regions and the U.S. as a whole for the past three months. Although growth rates have been solid in recent months, April's year-over-year percent change was nevertheless the smallest change since December 2010.

Overall, the report suggests substantial increases in the amount of residential remodeling activity in the economy. Often, remodeling activity reflects an availability of household capital for some construction and home-improvement activities while there may be an absence of the large amounts of household capital necessary for relocation and new home purchases.

As we've seen in recent data for new home sales and housing starts, new home construction remains at historic lows. Many homeowners turn to remodeling projects, as is reflected in the April report.

The big exception is the Midwest region, which has shown substantial decreases in remodeling activity over the past two months. Buildfax theorizes that this may reflect unusually cold weather in the Midwest during the early part of Spring this year.

As a supplement, I've included the second graph which shows the year-over-year change in the numeric value of the index by region.

About the BuildFax Remodeling Index

The BuildFax Remodeling Index is based on construction permits filed with local building departments across the country. The index tracks the number of properties permitted. The national and regional indexes all have an initial value of 100 set in April of 2004, are based on a three-month moving average, and are not seasonally adjusted.