Boulder-Denver Economy, OUR Nation and YOUR Real Estate - Part II

Any good real estate agent or relocation professional should stay on top of their local economic news as well as the news at the national level, and at Colorado Landmark, Realtors that's just what we try to do every week.  As I said in my previous post, last week I had the privelege of attending the Rocky Mountain Relocation Council's Fall Conference held at the Arvada Center.  My previous post was about national economic news conveyed to us by an economist from Wells Fargo Bank.

The second speaker of the morning was Cheryl Meyn from Denver's The Genesis Group.  Cheryl has an extensive background in Denver area real estate and spoke to us about economy in Colorado and specifically the 7-County Denver Metro Area.  Here are a few highlights from her presentation:

• Real estate overall:  If you look at the statistics, theoretically the Denver area real estate market bottomed out last year in 2009. 
• Unemployment:  Hovering around 8%, Colorado's unemployment rate is one of the lower rates in the nation.  We are experiencing a lessening of job losses which is giving the area economy some stability, but unfortunately not much in the way of job growth yet.  We have lost a net 45,000 jobs in this recession (at one point it was as high as 52,000) and it could take 3 years to recover from that.  Our area unemployment rate is not expected to go under 7% until late 2011.
• Mortgages and foreclosures:  18-20% of Coloradans are underwater on their mortgages, compared to 25-30% nationally, however foreclosure activity for 2010 is 10% below 2009 levels.  70% of all of the area's foreclosure activity is in Adams, Arapahoe and Denver counties.
• Housing inventory:  We have 3 years inventory of properties over $1M.  Local home builders have shown incredible restraint and we have little to no new construction inventory which has helped our resale market significantly
• Home Prices:  We have actually experienced a 3.6% increase in price activity in the last year.
• Housing Demand:  Pent up demand in our area is growing as we are seeing our population and # of households grow.  From 2005-2010 it was predicted that we would see a growth in households of 75,459 but the actual figure is 80,909.  From 2010 to 2015 we will see 80,952 additional households in our area.  Owner occupancy has declined from 66.7% in 2005 to 60.9% today and we have the lowest vacancy rates since 1994. 

So, what's in Colorado's future?  Housing will stay flat in 2010 and might improve somewhat in 2011.  Resales, which were down 8% in 2010 will see a rebound in 2011.  There are signs of improvement on the foreclosure front, and in-migration continues to be strong, with people still moving to Colorado.   All you have to do is check in with the national news media once in a while to hear various Colorado communities earning accolades for one thing or another, so it's no wonder people want to relocate here!

For Boulder County, the employment numbers are quite optimistic.  The most current numbers from the Bureau of Labor Statistics (for August 2010) put the Boulder Metropolitan area's unemployment at 6.4%.  Broomfield County recorded a 7.1% unemployment level for August 2010, so closer to the state level of 8.0% recorded for September 2010.

On the other hand, foreclosure activity is definitely catching up with our area.  According to RealtyTrac foreclosure filings in Boulder County were up in Sept 2010 with 234 filings, the highest number in 12 months.  The highest numbers were in Louisville (75) and Longmont (67).  Month-over-month price appreciation levelled out at 0.0%.  Only 29 foreclosure properties actually SOLD in Sept 2010 though.  Foreclosure activity is expected to rise, while the # of pre-foreclosure properties rose significantly last month from the single digits to over 60 properties.  The majority of the foreclosures are in the $100-300k range.  The foreclosures in our area don't necessarily translate to huge price savings for buyers -  10% in most of the county, with 20% in Longmont.

Broomfield County saw 52 new foreclosures in Sept 2010 and actiity is also expected to rise there.  Only 10 foreclosure properties actually SOLD in Sept 2010 though.  As in Boulder County, month-over-month price appreciation levelled out at 0.0%.  The majority of the foreclosures are also in the $100-300k range.

Pam Metzger
Director of Relocation, Business Development and Finance
Colorado Landmark, Realtors
www.facebook.com/COLandmark
www.twitter.com/COLandmark 
www.facebook.com/365ThingsBoulder

Danver Ranking means Good News for Boulder Real Estate, Boulder Jobs

Price Waterhouse/Cooper and the Urban Land Institute recently released a report detailing 10 national cities to watch with regard to commercial real estate recovery and growth. For the third year in a row Denver ranked in the top ten! Given the reasons cited for Denver's ranking it follows that the Boulder area plays a huge factor in the Denver area's economic health.

Why? Because the study specifically cited green initiatives as the main booster in the area's local economy and that the city is a national hub for alternative energy, wind farm manufacturing and natural gas. Many of the companies that play the biggest roles in these local industries are right in OUR backyard, in Broomfield, Golden, and even in Boulder proper, so Denver ... say a big thank you to the Boulder Area for your accolades!

Many of these energy industry companies are growing and expanding, which should be good news for our local employment figures. When companies hire locally and bring in talent from outside the area that provides a boost in consumer spending and real estate sales, thus increasing tax revenues for local municipalities. Conoco Phillips will have a significant impact on our local economy when they start staffing up their facility from 2012-2014.

For the full report click HERE, but if you just want some highlights, here they are. Denver was:

#10 - Multifamily and Commercial Investment

#9 - For Sale Homebuilding

#8 - Apartment Buy/Hold/Sell Recommendations

#8 - Office Property Buy/Hold/Sell Recommendations

#11 - Retail Property Buy/Hold/Sell Recommendations

#12 - Hotel Buy/Hold/Sell Recommendations

More news you can use from Colorado Landmark, Realtors.

Pam Metzger

Director of Relocation and Business Development

Colorado Landmark, Realtors

pam@coloradolandmark.com

twitter = @pmcolorado

News You Can Use - Tax Credit, Unemployment, Boulder Housing Market

If you read my blog you know that I will give you the straight scoop - no sales pitch or baloney here! If you dare, read on ....


As long anticipated, the House and Senate have both approved an extension to the homebuyers tax credit of 2009. The credit will now be extended to April 30, 2010. First time homebuyers will get a credit up to $8000 depending on income level, and veteran homebuyers who have been in their home for at least 5 years can receive up to $6500 depending on income level. The original tax credit was set to expire November 30th. Every realtor in the country is now going to be emailing their clients saying "now is the time!" Is it??


This IS good news for homebuyers who want to keep some cash in their pocket after their purchase. The other good news is that interest rates are still at near-record lows. I researched rates in Colorado today and for a $250-299k conventional loan with no points borrowers can get rates between 4.75-5.125% with varying fees. A jumbo in the $500-549k range will be at 4.875-6.4% with varying fees.


The bad news is that unemployment figures continue to be discouraging. At the national level CNN reports that we hit 10.2% in October 2009, the highest level reached since 1983 and indicating 22 straight months of declining employment. Worst case forecasts for the first two quarters of 2010 are in the 10.5% range. Among the hardest hit sector are teens ages 16-19 whose rate rocketed to 27.6% in October. Teens now have to compete with adults for jobs in industries like food service and retail, typically dominated by the teen demographic. Obama has signed a bill allowing the jobless to receive up to an additional 20 weeks of unemployment benefits which is sure to help out many households, even in our relatively stable and affluent Boulder area.


In Colorado we are hovering around a 7.0% unemployment rate. The state's unemployment figures for October will come out on November 20th. In our immediate area, for September 2009 Boulder County was at 5.5%, Broomfield County was at 6.6% and Weld County was at 7.5%. Some major area employers (IBM, Sun) have announced pending layoffs but it is unclear how many of them will come from our area. And of course our white knight Conoco Phillips is scheduled to bring jobs to our area but the initial build-out of 2012 is suspect, and could be pushed out by a couple years. That's a chicken we can't count until it hatches!


The term "jobless recovery" is being thrown about, but how our nation or our local economy can experience a real recovery without putting more people back to work is beyond me.


All that bad news being said, in Boulder (MLS sub-area 1) median home prices remain stable in the low-mid $500k range. Louisville (MLS sub-area 2) median home prices have jumped all over the place, ranging from $310-425k over the course of 2009 so far, coming in at $$324k in October. Longmont is steady in the low $200's. Superior is a robust market seeing median home prices range from $342k all the way up to $675k! Proximity to transportation, employment, open space, good schools, etc... continue to bolster the Louisville-Superior area's housing market.


So ... to buy or not to buy ... Speaking from purely my own opinion if you have some confidence about your employment situation and intend to stay in your house more than 2-3 years then this really IS the time to buy. And that's honestly not realtor-speak, because I am not one! The late fall-winter selling season typically gives buyers the least amount of inventory to look at, but the most negotiating power. The combination of the tax credit and crazy-low interest rates makes this a perfect storm for you (in a good way). If you have dreams of becoming a fix and flip artist though, think again. Probably too risky given that we don't know exactly where housing prices are going to go.


If you are a seller, consider putting your home, or keeping your home, on the market this winter. Yes, there are fewer buyers, but those in the market are serious. Relocation buyers (job transfers, life changes, etc...) are still out there too in addition to the local prospects. And your home will look so pretty decorated for the holidays! BUT (and there is always a "but") these buyers are going to be looking for a deal, if not a steal. If you want top dollar for your home then frankly don't list it. (And expect to wait until around 2014 to get your price! again, my opinion)



As a seller, if you have some room to negotiate and just want out, then price it fairly given it's condition, age, and location. Offer a buyer something for "free", like a view, or landscaping. How do you do this? Price it similar to a recently sold home or another currently listed home that perhaps didn't have your location backing to open space, or your soothing backyard pond. This way the buyer thinks they are getting a freebie. Let go of that "gotta get" mentality and the ego that compels you to want to get more than your neighbor did for their home. This is not time to worry about stuff like that. I have trained many of my agents on "price positioning" and we are seeing great results.


Stay tuned for more information and insights from Colorado Landmark, Realtors - your Boulder and Front Range experts.



Pam Metzger
Colorado Landmark, Realtors
pam@coloradolandmark.com
twitter = @pmcolorado

Boulder MISSED the List - Say it Ain't So!!

Kiplingers Personal Finance Magazine just published their list of 2009 Best Cities, with the tag line that this year “It’s all about Jobs”. Well in this economy isn’t that the truth!!

I took a look at this list expecting to see one or more Colorado cities at the top and was shocked that none of our Colorado home towns made the list! Kiplingers’ numbers guru, Kevin Stolarick, evaluated 361 U.S. cities for their growth potential; he looked not just at the overall number of jobs, but also at the quality of those positions and the ability of cities to hold on to them when the economy softens. Employment here in Colorado, and Boulder in particular, has held pretty steady during the current economic downturn, so … I decided to look at the study a little closer and find out why we didn’t make the list.

The top ranked cities (in order) were Huntsville, AL, Albuquerque, NM, greater Washington DC/MD/VA area, Charlottesville, VA, Athens, GA, Olympia, WA, Madison, WI, Austin, TX, Flagstaff, AZ, and Raleigh, NC. Since Boulder in particular is often likened to several of these cities I wanted to see how we compared on each of the individual ranking areas.

Allbuquerque, Washington DC, Madison, Austin and Raleigh are all much bigger metropolitan areas compared to Boulder, which I think is a plus for Boulder. Who wants the fight the DC area beltway traffic everyday? You can get from one end of Boulder to the other in 15 minutes even at peak commute times. Score one for Boulder.

The statistic that really should have put Boulder on top is the % of Creative-class Workers. According to Kiplingers, creative-class workers -- scientists, engineers, educators, writers, artists, entertainers and others -- inject both economic and cultural vitality into a city and help make it a vibrant place to live. Compared to the top ten ranked cities, and all of the other Colorado cities that made the study, Boulder is second only to the greater Washington DC area for % of Creative-class workers, while the DC area’s population over 18 times bigger than Boulder’s!! Boulder shows 43.4% Creative-class Workers as compared to 43.6% in DC, a scant difference. That to me is amazing. The next closest city on the top ten list was Huntsville with only 39.7%. Clearly there is a significant brain trust that chooses to make their home beneath the Flatirons.

Median household income was the next statistic used in the rankings. Clearly a high median household income is indicative of local salary levels, which is a huge draw for people wanting to reside in any city. Again, Boulder was second only to Washington DC in this category – Boulder’s median household income reported at $63,064 compared to a whopping $81,163 in Washington DC. The next highest median household income was in Madison, WI at $58,090 and Denver was at $58,039. Madison is another college town, with UW often compared to CU in terms of the type of educational experience for students, quality of instruction, college town atmosphere, etc…

Four year salary growth was also used to compare the cities, and again Boulder ranked higher than all but one of the top 10 ranked cities. Boulder’s rate was reported at 12.0 while Olympia reported an astounding 22.0! Wonder when everyone will start moving to Washington State?? The next closest city to Boulder on the top 10 list was Hunstville with 9.7. Elsewhere in Colorado, Fort Collins made an impressive showing at 13.6, while big sister Denver reported in a lackluster 7.0 and Pueblo a dismal 4.7. Interestingly, there were some cities that appeared on the top 10 list, like Charlottesville, that reported only marginal salary growth at 4.8. So why in the heck isn’t Boulder on the top ten list – it should be!!

Not so fast … there was one remaining statistic that, in my opinion, was the killer for Boulder, and that was the Cost of Living Index. If 100 is the baseline, then Boulder reports in at a daunting 124. This means that goods and services costing $100 in places like Greeley, CO, Athens, Madison and Raleigh will cost you $124 in Boulder. Boulder being 24% more expensive is nothing to disregard casually, especially when it comes to housing. With an average single family home price of $725,617 in April 2009 in the City of Boulder, and $459,714 in Boulder County, living here sure ain’t cheap! However, not surprising is that the greater Washington DC area has a cost of living index of 138! Guess living near all of those fancy politicians has its price. Hmmm – would I rather live near the Flatirons, or the White House? Gee … tough choice … not!

What does all of this mean? In my humble opinion Boulder should have made Kiplingers’ top ten list. Three of the four statistics clearly place us on this list, if not at the very top. One factor that wasn’t included in the study, probably because it is too subjective, is quality of life. There are reasons that all of those Creative-class Workers choose to live in Boulder – yes salaries and salary growth are motivators to be sure. But the fact is that we live in a truly incredible place – astounding natural beauty, abundant and varied close-in recreational opportunities, vibrant downtown, great mix of local and nationally branded shopping, award winning restaurants, and a top ranked school system. Kiplingers, you really missed the boat on this one – Boulder should have made your top ten list. People in Boulder don’t need to read Kiplingers to know this, and maybe now they won’t bother to read it at all!

This article contributed by:

Pam Metzger

Director of Relocation and Business Development

Colorado Landmark, Realtors

pam@coloradolandmark.com

303-302-8839 (direct)

www.twitter.com/pmcolorado