Friday, July 29, 2011

Review of recent home price data

Here at the Division of Housing blog we follow several different measures of home prices. Here is a summary of recent reports:

The National Association of Realtors releases a monthly report on median home prices and transactions. The report only covers the western US as a region and does not have specifics for Colorado or the Denver area. The most recent report is through June, and shows prices increasing 9.5 percent in the west, year over year. The May data showed prices falling 12.6 percent, year over year, for that month.

The Colorado Association of Realtors released median home price data specific to Colorado and many of its regions. The CAR data for May showed the median price down 10.4 percent in May, year over year. In Denver metro, the price was down 3.2 percent.

Case-Shiller has released its home price index for May (actually a 3-month average through May). The data is for the Denver metro area only. Its index shows Denver prices down by 3.3 percent.

Corelogic released home price data specific to both Colorado and the Denver area. Corelogic reported most recently that in May, home prices decreased 3.9 percent in Colorado and 3.6 percent in the Denver area.

The Federal Housing and Finance Agency, which is focused on GSE-related transactions, reported regional data for May in which the Mountain region, including Colorado, posted a home price decline of 9 percent. FHFA also released regional data which has data specific to Colorado and all Colorado metro areas. The second Q report through June is not yet available, although the 1st Q report reported that Colorado experienced a price drop of 6.3 percent, with Denver metro prices dropping 1.6 percent.

All price measures reported here showed year-over-year declines in home prices in Colorado and metro Denver for May. The one measure providing June data, NAR's existing home sales report, showed a price gain of 9.5 percent for the region. How much this regional number applies to Colorado remains to be seen. The data is overwhelmingly in favor of a price drop from May 2010 to May 2011, but June may show increases. In fact, the aftermath of the home buyer tax credits points toward a year-over-year gain for prices in June and during the summer. Since demand dropped off so significantly immediately following the end of the tax credits, it stands to reason that home prices would be depressed following the end of the tax credit (i.e., during Summer 2010) and that a year-over-year comparison between this summer and last summer would then likely produce a percentage change in positive territory. Whether or not this would signal a price increase in the larger economic context may not be clear until the fall.

Multifamily permit trends in Colorado counties since 2008

During the first half of 2011, 89 percent of all new multifamily permits were issued in only three Counties: Denver, El Paso and Larimer counties.

This percentage is down slightly from May 2011, in which 95 percent of new permit activity was found in the three counties. Since May, multifamily permit activity has increased in Mesa, Boulder and Summit counties.

Through June 2011, there have been a total of 1163 multifamily permits issued in reporting counties. Of those, 1039 were in Denver, El Paso and Larimer Counties. Totals for all counties that reported multifamily permit activity:

Denver 683
El Paso 230
Larimer 126
Mesa 64
Boulder 34
Summit 16
Boulder 10

The first map divides counties with permit activity in quartiles. Quartiles are based on a multifamily permit index based on the number of permits compared to the number of existing housing units in each county.

Top Q: Brown
2nd Q: Green
3rd Q: Orange
Bottom Q: Yellow
No MF permits issued: White



If we look at multifamily activity over time, we see that multifamily permit activity has increased in some areas in recent years, while it has decreased in other areas.

In the chart, we see multifamily permit activity from 2008 through June 2011. In some areas, a large number of permits were issued, but in those same counties, almost no multifamily permit activity has been seen since the financial crisis of 2008. In Adams County, for example, 108 MF permits were issued in 2008 alone, yet from 2009 to June 2011, only 33 permits have been issued. No multifamily permits have been issued in Adams county during 2011. Araphoe County has seen a similar trend in which mutifamily permits have waned since 2008, with no multifamily permits being issued in 2011.

On the other hand, in El Paso county, where permit activity also dropped off sharply in 2009, multifamily permit activity in the first half of 2011 is almost three times 2010's full-year total. At the current pace, El Paso County will match the number of multifamily permits issued in 2008 before the crisis.



The next two maps show the overall relative trends for reporting counties since 2008 and since the financial crisis.

In first map of the two shows multifamily permit activity in all reporting counties including 2008 through June 2011. Note that multifamily permit activity is widespread and that numerous mountain and western slope counties are in the top two quartiles. Mesa, Weld and El Paso Counties are all in the top quartiles.



The last map shows permit activity by quartile in the period including 2009 through June 2011. Essentially, we're looking only at permit activity after the 2008 financial crisis. We see that since the crisis, multifamily permit activity is much less widespread and also that Mesa County and El Paso County have fallen to the third quartile. Weld County has fallen to the bottom quartile.



Looking again to permit activity for the first half of 2011 (see the map at the top of this article), we see that El Paso and Mesa Counties has risen to the top quartile again, and in all periods surveyed, Denver County remained in the top quartile while Larimer County has remained in the top two quartiles for the duration.

Clearly, the counties with the most robust activity in multifamily permits, relative to other counties, have been Denver County and Larimer county. Also, during the first half of 2011, El Paso County has seen significant growth allowing it to become one of the most active counties in multifamily permitting right now.

This examination of the past 42 months also allows us to make some guesses about where new multifamily construction will actually take place over the next two to three years. While many counties saw relatively large numbers of permits issued in 2008, it is likely that in many cases, the intervention of the financial crisis prevented many of these permits from becoming housing starts. In many of those cases, the projects are likely still pending if they are proceeding at all. If they are still pending, permits issued in 2008 may still provide some indications of where new multifamily construction may take place in the near term.

Note: When discussed here, a "multifamily permit" refers to one unit in a building of 5 or more units. Counties shown in white have reported no multifamily permits issued.

Housing News Digest, July 29

Real GDP still below Pre-Recession Peak

• GDP: Not only has growth slowed, but the recession was significantly worse than earlier estimates suggested. Real GDP is still not back to the pre-recession peak.

Frazier Family in Colorado Reaps Economic Solar Rewards
An ex-Miami homeowner turned west toward Boulder, Colorado, Kate Frazier and her family have begun to change their lifestyle since they moved into their new housing development called Holiday in 2007. These homes were state of the art with renewable energy systems including residential solar installations on the rooftop.

Ultra Petroleum makes bid on Colorado Springs acreage
Houston-based Ultra Petroleum CorpbizWatch ’s $26.5 million cash bid to buy undeveloped real estate in Colorado Springs has been postponed until Aug. 3.

The swath of 18,000 acres known as the Banning Lewis Ranch and near the Niobrara shale was intended to be a master planned community including as many as 75,000 homes. However, several years of false starts strained finances, and last year owners sought Chapter 11 bankruptcy protection.


ConocoPhillips to look for oil in Denver suburbs

ConocoPhillipsbizWatch will expand its search for oil within the Niobrara play by acquiring rights to as many as 46,000 acres in Adams, Arapahoe, Douglas and Elbert counties. The Houston company isn’t saying how much it’s paying in a deal struck with Lario Oil & Gas Co.


Hit with foreclosures, Bank of America donating, demolishing homes
Bank of America Corp., faced with a glut of foreclosed and abandoned houses it can’t sell, has a new tool to get rid of the most decrepit ones: a bulldozer.

The biggest U.S. mortgage servicer will donate 100 foreclosed houses in the Cleveland area, and in some cases contribute to their demolition in partnership with a local agency that manages blighted property. The bank has similar plans in Detroit and Chicago, with more cities to come, and Wells Fargo & Co., Citigroup Inc., JPMorgan Chase & Co. and Fannie Mae are conducting or considering their own programs.

Thursday, July 28, 2011

Manufacturing slows in July

The Federal Reserve Bank of Kansas City today released its manufacturing survey of the Tenth District, which includes Colorado.

This is not directly related to housing, of course, but just as an FYI, here's the report summed up in a few sentences:

Growth in Tenth District manufacturing slowed in July after a solid rebound in June. However, producers remain generally upbeat about future activity. Price indexes were little changed from the previous month, though plans to raise selling prices eased somewhat.

The year-over-year factory indexes eased slightly, but remained at solid levels. The composite year-over-year index edged down from 31 to 24, and the production, new orders, shipments, and order backlog indexes also fell.

The employment index moved slightly lower after reaching a sixyear
high last month. The capital expenditures index eased from 13 to 8, while the new orders for exports index was basically unchanged.

Remodeling projects increase 21 percent in U.S. West

Residential remodeling activity increased 21 percent in the Western U.S. from May 2010 to May 2011. According to the May 2011 Residential Buildfax Remodeling Index, released last week by BUILDERadius, The Western U.S. showed the largest rate of increase in its index value, outpacing all other regions.

According to Buildfax's June 2011 release:

The Residential BuildFax Remodeling Index rose 22% year-over-year—and for the nineteenth straight month—in May to 124.3, the highest number in the index to date. Residential remodels in May were up month-over-month 14.6 points (13%) from the April value of 109.7, and up year-over-year 22.1 points from the May 2010 value of 102.2.

“Through the first five months of 2011 we have seen impressive gains within the remodeling index and May has continued that trend with a record setting month,” said Joe Emison, Vice President of Research and Development at BuildFax. “Even with the continued struggles in the economy, the remodeling industry has been a bright spot, as consumers look to make upgrades to their current homes, rather than purchasing a new residence. Based on the trends from the first months of this year, we expect to continue seeing strong gains from coast to coast.”


In the graph, we see that the year-over-year percent change in the western region has fallen slightly below the national index, but outpaces all other regions.



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 housing starts in the West, new single-family home construction remains at historic lows. Construction in multifamily housing has increased, but new permit activity and starts are both down in single-family housing. In an environment of little new single-family product and lackluster sales, many homeowners have turned to remodeling projects, as is reflected in the May report.

The big exception is the Midwest region, which has shown substantial decreases in remodeling activity over the past three months.

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.

FHFA: House prices fall 9 percent in mountain region

House prices in May in the Mountain region, which includes Colorado, fell 9.0 percent, year-over-year. Nationally, the house price index fell 6.1 percent. The new house price index numbers, released last week by the Federal Housing and Finance Agency, also showed that the national index is down 18.9 percent from the peak level reached in June 2007, while the Mountain region's index is down 30.6 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. It is a repeat-sales index similar to the Case-Shiller index, but limited to GSE loans.

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 April 2011 to May 2011, however, the US index increased by 1.2 percent, which is one of the largest month-to-month increases recorded since 2006. Over the same period, the index rose 3.4 percent in the mountain region.



Notably, the FHFA index does not show a "double dip" as can be seen in the Case-Shiller data (shown 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.

Comparisons with other indices:
The National Association of Realtors data shows increases in home prices and home sales activity in May 2011 compared to May 2010.

NAR data tends to be very optimistic (from a Realtor perspective) compared to other indices like CoreLogic or Case-Shiller, but we would nevertheless expect a bit of an increase from May 2010 to May 2011. May 2010 was a period of depressed sales and prices since it immediately followed the end of the homebuyer tax credits. Nevertheless, the FHFA data for May shows a continued decline.

Case-shiller also showed continued declines for home prices in May 2011, when compared year-over-year. The Case-Shiller decline, however, was smaller than the FHFA decline with a drop of 4.6 percent.

The national CoreLogic home price index fell 7.42 percent during this period, and the Corelogic index for Colorado fell 3.93 percent.

Pending home sales up 15.5 percent in West



Pending home sales in the western US fell in June rose 15.5 percent year over year, according to new pending home sales data released today by the National Association of Realtors. According to the press release:

Lawrence Yun, NAR chief economist, said there may be some increase in closed existing-home sales. “For the majority of transactions, the lag time between pending contacts to actual closings is one to two months. Therefore, the two consecutive months of rising activity should lead to overall improvement in closed sales in upcoming months,” he said. “Though a higher than normal cancellation rate can hold back final closing figures, it could well be that some past cancellations are nothing more than delayed buying decisions rather than outright cancellations.”

Yun said tight credit and economic uncertainty have been constricting the market. “The best way to ensure a more solid recovery in housing is to simply return to normal, sound credit standards so more creditworthy home buyers can get a mortgage,” he said.


The pending home sales index for the western region of the US, which includes Colorado, rose from 96.9 to 111.9, year over year, while the national index rose 17.3 percent from 92.7 to 108.7, year over year.

All regions of the country showed gains in pending home sales, year over year. The rise from June 2010 to June 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 6.7 percent in the West and 5.7 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 22.1 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 News Digest, July 28

Local apartment rents climb to record high
Apartment rents are soaring as units continue to fill up, two reports show.

The average monthly rent for a Colorado Springs-area apartment jumped to a record high of $759.01 during the second quarter, according to a report released Wednesday by the Colorado Division of Housing and Apartment Association of Southern Colorado. That’s up $22 from the first quarter and $40 from the same period last year.

Rents were up nearly everywhere in the Colorado Springs area. The highest average rent, $848.54, was found in the far northeast part of the city, up from $840.25 a year ago. The only area with a year-over-year decline in rent was Security-Widefield-Fountain south of Colorado Springs, where the second-quarter average rent of $577.16 was $38.50 lower than the same period in 2010.

RealtyTrac: Colorado 9th for foreclosures
In addition to Greeley, others with foreclosure rates among the top 20 included Boise City-Nampa, Idaho, Atlanta-Sandy Springs-Marietta, Ga., and Salt Lake City.

California, Nevada and Arizona cities accounted for all top 10 metro foreclosure rates and 15 of the top 20 metro foreclosure rates in the first half of the year. Only one Florida metro area posted a foreclosure rate among the top 20 — Cape Coral-Fort Myers at No. 12 — in sharp contrast to the first half of 2010, when Florida cities accounted for nine of the top 20 metro foreclosure rates nationwide.

Developers break ground on the Peaks at Woodmen
This week, 10 apartment buildings that will house 230 luxury living units began to emerge at the undeveloped corner of Woodmen Road and Union Boulevard.


Mortgage Electronic Registration Systems, Inc. (MERS) is withdrawing from the foreclosure business.
The organization has issued a policy update to its members stating that no foreclosure proceeding may be initiated in the name of MERS and no legal proceedings in a bankruptcy may be filed in the name of MERS.

Before a lender or investor starts a foreclosure or files a bankruptcy motion, they must execute an assignment of the security instrument from MERS to themselves as the mortgagee and record the transfer with the applicable county clerk or public land records office, MERS said

29-unit Denver condo building sells
The Inca 29 Urban Brownstones in Denver sold for $5.39 million. The building near Commons Park has 29 units that sell for $475,000 to $1.42 million. Dennis Huspeni reports on this and other sales in his Real Deals blog.

Wednesday, July 27, 2011

The Government-Benefits Bubble

Here's a recent contribution to the Mises Economics blog. The national trends discussed here are essentially identical in the Colorado economy. What increase we have had in personal income has been driven by increases in transfer receipts such as unemployment insurance and is not due to actual wage or employment growth.

Here's a snippet:

Looking at the quarterly data we can see that from the first quarter of 2008 to the first quarter of 2001, personal income overall increased 5 percent in the US. However, if we subtract transfer receipts, we see that income has increased by 0.7 percent. Transfer receipts, on the other hand, increased 30 percent during the same period.

From Jan. 2008 to Jan. 2011, the CPI increased 4.3 percent, so income that is not derived from transfer receipts went down in real terms. In other words, if we don’t count government assistance, we have less income now than we did three years ago.

Looking at these numbers over the last ten years, we see that from the 1st Q 2002 to the 1st Q 2011, personal income increased 44 percent, but when transfer receipts are removed, income increased only 37 percent. At the same time, transfer receipts increased 85 percent.

Over this ten year period, from Jan. 2002 to Jan. 2011, the CPI increased 24 percent. So, relying on this analysis alone, we could say that income did increase somewhat in real terms during this period, but that transfer receipts increased by more than twice as much.

Two-part feature at Inside Real Estate News

Thanks to John Rebchook for featuring a two-part series of articles by yours truly at his real estate site:

State's foreclosures fade to national background
, June 27, 2011

State's housing picture brighter than many areas, July 7, 2011

I'm often quite bearish these days, as readers know, but these two articles explore some of the reasons that Colorado's real estate markets are actually in better shape than is often reported.

Kansas City Fed: region "expanded at a moderate pace" in June

The Federal Reserve today released its July Beige Book. Some snippets from the District 10 portion, which includes Colorado's economy:

The Tenth District economy expanded at a moderate pace in the June and early July survey period. Consumer spending rose solidly and was especially strong among restaurants and auto dealers. Factory production rebounded from weakness in the prior survey period, and high-tech and transportation services firms reported continued growth. District bankers reported weaker loan demand but increased deposits and improved loan quality. Weak home sales and expanded inventory levels further pressured single-family home prices, while commercial real estate activity remained slow but stable. Activity in the energy sector was robust as drilling expanded in most District states. Conditions in agriculture were generally strong. Rising input costs were reported in several sectors, but wage pressures were limited to select industries and occupations.


Consumer Spending

District tourism visitor counts were generally up, especially at Colorado mountain resorts, but were slowed by wildfires and drought in northern New Mexico. District hoteliers reported increased occupancy and daily room rates.


Real Estate and Construction

Excess inventory weighed on single-family home prices, while commercial real estate remained weak but stable. Real estate firms reported flat existing home sales, higher home inventory, and lower home prices in June and early July. Contacts reported an increased share of existing home purchases by investors in all-cash transactions. Expectations for improvement in the housing sector were subdued. Home builders reported little new construction activity but noted increased buyer traffic. Entry-level homes sold well, along with high-end homes in some Colorado mountain resort communities.


Wages, Prices and Inflation

District contacts reported only limited wage pressures but noted additional upward pressure on input prices. Labor shortages and wage pressures were reported in the retail sector and for select occupations in the high-tech, energy, and transportation sectors. In addition, several contacts expected future non-wage employment costs to rise as a result of increased state unemployment insurance premiums. Manufacturers reported continued upward pressure on input costs; slightly fewer manufacturers reported increased finished product prices.

Kansas City Fed: region "expanded at a moderate pace" in June

The Federal Reserve today released its July Beige Book. Some snippets from the District 10 portion, which includes Colorado's economy:

The Tenth District economy expanded at a moderate pace in the June and early July survey period. Consumer spending rose solidly and was especially strong among restaurants and auto dealers. Factory production rebounded from weakness in the prior survey period, and high-tech and transportation services firms reported continued growth. District bankers reported weaker loan demand but increased deposits and improved loan quality. Weak home sales and expanded inventory levels further pressured single-family home prices, while commercial real estate activity remained slow but stable. Activity in the energy sector was robust as drilling expanded in most District states. Conditions in agriculture were generally strong. Rising input costs were reported in several sectors, but wage pressures were limited to select industries and occupations.


Consumer Spending

District tourism visitor counts were generally up, especially at Colorado mountain resorts, but were slowed by wildfires and drought in northern New Mexico. District hoteliers reported increased occupancy and daily room rates.


Real Estate and Construction

Excess inventory weighed on single-family home prices, while commercial real estate remained weak but stable. Real estate firms reported flat existing home sales, higher home inventory, and lower home prices in June and early July. Contacts reported an increased share of existing home purchases by investors in all-cash transactions. Expectations for improvement in the housing sector were subdued. Home builders reported little new construction activity but noted increased buyer traffic. Entry-level homes sold well, along with high-end homes in some Colorado mountain resort communities.


Wages, Prices and Inflation

District contacts reported only limited wage pressures but noted additional upward pressure on input prices. Labor shortages and wage pressures were reported in the retail sector and for select occupations in the high-tech, energy, and transportation sectors. In addition, several contacts expected future non-wage employment costs to rise as a result of increased state unemployment insurance premiums. Manufacturers reported continued upward pressure on input costs; slightly fewer manufacturers reported increased finished product prices.

Real Estate News Digest, July 27

Below is a great article on Colorado bank closures. It's been a brutal year for banks closures in Colorado, and for small and medium-sized banks overall.

Banks closing in Colorado at unprecedented pace
Even as the economy continues to show tepid improvement, more Colorado banks have failed this year than in the past two years combined, and perhaps more since the savings and loan debacle in the 1980s.

Four of the banks had presences in Fort Collins, Loveland or Windsor, and all but one were acquired by other financial institutions.

The Colorado Division of Banking on Friday closed Greeley-based Bank of Choice; two weeks ago, the state shut down Signature Bank with branches in Windsor.

‘Greening the MLS' will take some time
GLENWOOD SPRINGS, Colorado — Area real estate listings now include information about energy efficiency improvements, indoor air quality and whether sustainable building materials were used during construction.http://www.blogger.com/img/blank.gif

MBA: Mortgage Purchase Application Index Lowest Since February

The Refinance Index decreased 5.5 percent from the previous week. The seasonally adjusted Purchase Index decreased 3.8 percent from one week earlier.
...
The average contract interest rate for 30-year fixed-rate mortgages increased to 4.57 percent from 4.54 percent, with points increasing to 1.14 from 0.98 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

Colorado Springs apartment rents hit all-time high, climb 5.5 percent

Click here for the report.

The average rent in the Colorado Springs metro area hit a new high during the second quarter of 2011, climbing 5.5 percent, year over year, to $759. According to a new report on apartment rents and vacancies, released today by the Colorado Division of Housing and the Apartment Association of Southern Colorado, the average rent for the region was up from $719 reported during the second quarter of 2010, and was up from 2011’s first quarter average rent of $737.

The median rent also hit an all-time high of $740 during the second quarter, rising from 2010’s second-quarter median rent of $684.

The average rent increased in all types of apartments measured, including all types of units from efficiency apartments to three-bedroom apartments.

The average rent also increased in all sub-markets measured during the second quarter except in Security/Widefield/Fountain where the average rent dropped from $615 to $577, year over year. The average rent in the Northwest region of Colorado Springs, on the other hand, increased 67 dollars from $765 during last year’s second quarter, to $832 during the same period this year.

“The second quarter of this year continues a trend of solid rent growth in the area,” said Gordon Von Stroh, a professor of business at the University of Denver, and the report’s author. “Growth in both the average rent and the median rent has outpaced inflation over the past year, so we’re seeing some real growth which was expected now that many vacancy rates in the area have been cut in half over the past couple of years.”

Average rents for all market areas were: Northwest, $832; Northeast, $727; Far Northeast, $848, Southeast, $673; Security/Widefield/Fountain, $577; Southwest, $781; Central, $720.

The apartment vacancy rate in the Colorado Springs metro area rose to 6.4 percent during the second quarter of 2011, rising from 2010’s second-quarter vacancy rate of 5.8 percent. The second-quarter rate increased from this year’s first quarter rate which was also 5.8 percent, and a ten-year low.

The vacancy rate declined in the Northwest, Northeast and Central areas of Colorado Springs, while the vacancy rate increased in Far Northeast, Southeast, Southwest and the Security/Widefield/Fountain area.

Vacancy rates for all market areas were: Northwest, 5.8 percent; Northeast, 5.4 percent; Far Northeast, 7.5 percent, Southeast, 9.0 percent; Security/Widefield/Fountain, 15.0 percent; Southwest, 4.8 percent; Central, 4.3 percent.

Among the states, Colorado posts 23rd highest unemployment rate

According to the BLS press release:

Regional and state unemployment rates were little changed in June. Twenty-eight states and the District of Columbia registered unemployment rate increases, 8 states recorded rate decreases, and 14 states had no rate change, the U.S. Bureau of Labor Statistics reported today. Thirty-nine states posted unemployment rate decreases from a year earlier, eight states and the Dishttp://www.blogger.com/img/blank.giftrict of Columbia reported increases, and three states had no change. The national jobless rate was little changed at 9.2 percent, but was 0.3 percentage point lower than a year earlier.


22 states reported unemployment rates that were higher than Colorado's, including California, Nevada, Florida, Michigan and Washington State.

Colorado's unemployment rate has moved below the national rate for the third 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 graph shows a comparison between the two rates since 2006:



The unemployment rate in Colorado fell slightly from May to June, falling to 8.5 from 8.7 percent, according to the seasonally-adjusted numbers. The national rate rose slightly from 9.1 percent to 9.2 percent during the same period.

The BLS map below shows state by state comparisons.



Within the Rocky Mountain region, Colorado has the third highest unemployment rate:
Arizona, 9.3%
Colorado, 8.5%
Idaho, 9.4%
Montana, 7.5%
New Mexico, 6.8%
Utah, 7.4%
Wyoming, 5.9%

With Colorado's unemployment rate below the national rate, Colorado may continue to be seen as a desirable location for job seekers. This may in turn impact overall household formation in Colorado and the demand for housing.

Colorado remains in the middle of the pack when it comes to statewide unemployment rates. At the regional level, however, Colorado contains some metro areas that have unemployment rate well below the national rate, such as the Boulder area and the Fort Collins area.

Housing News Digest, July 27

Commissioners agree to sponsor Centennial grant application
STERLING -- The Logan County Commissioners delayed their public hearing on a proposed Colorado Division of Housing grant application on behalf of Centennial Mental Health on Tuesday until representatives could arrive. They later opened the hearing when the representatives arrived but there were no comments from the public attending.

Regional Housing Alliance makes homeownership real
It is a great time to buy a home in La Plata County, and the Regional Housing Alliance of La Plata County can be an important partner throughout the process.

Condos and homes are now affordable for many of us who thought we could never own a home. If you have ever wondered whether you could afford to buy and have one hour to spare, United Way of Southwest Colorado encourages you to visit with the amazing staff at the Regional Housing Alliance to learn how the process can work for you and your family.

Banks closing in Colorado at unprecedented pace
Even as the economy continues to show tepid improvement, more Colorado banks have failed this year than in the past two years combined, and perhaps more since the savings and loan debacle in the 1980s.

Four of the banks had presences in Fort Collins, Loveland or Windsor, and all but one were acquired by other financial institutions.

The Colorado Division of Banking on Friday closed Greeley-based Bank of Choice; two weeks ago, the state shut down Signature Bank with branches in Windsor.

‘Greening the MLS' will take some time
GLENWOOD SPRINGS, Colorado — Area real estate listings now include information about energy efficiency improvements, indoor air quality and whether sustainable building materials were used during construction.http://www.blogger.com/img/blank.gif

MBA: Mortgage Purchase Application Index Lowest Since February

The Refinance Index decreased 5.5 percent from the previous week. The seasonally adjusted Purchase Index decreased 3.8 percent from one week earlier.
...
The average contract interest rate for 30-year fixed-rate mortgages increased to 4.57 percent from 4.54 percent, with points increasing to 1.14 from 0.98 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

Colorado Springs apartment rents hit all-time high, climb 5.5 percent

Click here for the report.

The average rent in the Colorado Springs metro area hit a new high during the second quarter of 2011, climbing 5.5 percent, year over year, to $759. According to a new report on apartment rents and vacancies, released today by the Colorado Division of Housing and the Apartment Association of Southern Colorado, the average rent for the region was up from $719 reported during the second quarter of 2010, and was up from 2011’s first quarter average rent of $737.

The median rent also hit an all-time high of $740 during the second quarter, rising from 2010’s second-quarter median rent of $684.

The average rent increased in all types of apartments measured, including all types of units from efficiency apartments to three-bedroom apartments.

The average rent also increased in all sub-markets measured during the second quarter except in Security/Widefield/Fountain where the average rent dropped from $615 to $577, year over year. The average rent in the Northwest region of Colorado Springs, on the other hand, increased 67 dollars from $765 during last year’s second quarter, to $832 during the same period this year.

“The second quarter of this year continues a trend of solid rent growth in the area,” said Gordon Von Stroh, a professor of business at the University of Denver, and the report’s author. “Growth in both the average rent and the median rent has outpaced inflation over the past year, so we’re seeing some real growth which was expected now that many vacancy rates in the area have been cut in half over the past couple of years.”

Average rents for all market areas were: Northwest, $832; Northeast, $727; Far Northeast, $848, Southeast, $673; Security/Widefield/Fountain, $577; Southwest, $781; Central, $720.

The apartment vacancy rate in the Colorado Springs metro area rose to 6.4 percent during the second quarter of 2011, rising from 2010’s second-quarter vacancy rate of 5.8 percent. The second-quarter rate increased from this year’s first quarter rate which was also 5.8 percent, and a ten-year low.

The vacancy rate declined in the Northwest, Northeast and Central areas of Colorado Springs, while the vacancy rate increased in Far Northeast, Southeast, Southwest and the Security/Widefield/Fountain area.

Vacancy rates for all market areas were: Northwest, 5.8 percent; Northeast, 5.4 percent; Far Northeast, 7.5 percent, Southeast, 9.0 percent; Security/Widefield/Fountain, 15.0 percent; Southwest, 4.8 percent; Central, 4.3 percent.

Apartment Realty Advisors is also a major sponsor of this report. The Vacancy and Rent Surveys are a service provided by the Colorado Department of Local Affairs’ Colorado Division of Housing and the Apartment Association of Southern Colorado to renters and the multi-family housing industry on a quarterly basis. The Colorado Springs Area Vacancy and Rent Survey reports averages and, as a result, there are often differences in rental and vacancy rates by size, location, age of building, and apartment type. For more information, please see the Division of Housing’s economics blog at www.divisionofhousing.com.


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Tuesday, July 26, 2011

Among the states, Colorado posts 23rd highest unemployment rate

According to the BLS press release:

Regional and state unemployment rates were little changed in June. Twenty-eight states and the District of Columbia registered unemployment rate increases, 8 states recorded rate decreases, and 14 states had no rate change, the U.S. Bureau of Labor Statistics reported today. Thirty-nine states posted unemployment rate decreases from a year earlier, eight states and the Dishttp://www.blogger.com/img/blank.giftrict of Columbia reported increases, and three states had no change. The national jobless rate was little changed at 9.2 percent, but was 0.3 percentage point lower than a year earlier.


22 states reported unemployment rates that were higher than Colorado's, including California, Nevada, Florida, Michigan and Washington State.

Colorado's unemployment rate has moved below the national rate for the third 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 graph shows a comparison between the two rates since 2006:



The unemployment rate in Colorado fell slightly from May to June, falling to 8.5 from 8.7 percent, according to the seasonally-adjusted numbers. The national rate rose slightly from 9.1 percent to 9.2 percent during the same period.

The BLS map below shows state by state comparisons.



Within the Rocky Mountain region, Colorado has the third highest unemployment rate:
Arizona, 9.3%
Colorado, 8.5%
Idaho, 9.4%
Montana, 7.5%
New Mexico, 6.8%
Utah, 7.4%
Wyoming, 5.9%

With Colorado's unemployment rate below the national rate, Colorado may continue to be seen as a desirable location for job seekers. This may in turn impact overall household formation in Colorado and the demand for housing.

Colorado remains in the middle of the pack when it comes to statewide unemployment rates. At the regional level, however, Colorado contains some metro areas that have unemployment rate well below the national rate, such as the Boulder area and the Fort Collins area.

Housing starts in West at 33-month high, multifamily starts make gains

Housing starts in the West Census region of the US, which includes Colorado, were up 26 percent from June 2010 to June 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 June 2011. Of the new units started, 8,900 were single-family structures and 4,800 were structures containing more than one housing unit.

Nationally, housing starts rose 16 percent during the same period, with total housing starts rising to a total of 62,900.

Total housing starts remain well below peak levels both nationally and in the West. June 2011 housing starts in the West were 76 percent below the peak reached during May 2004. Nationally, June 2011 was 68 percent below peak levels. The national peak in housing starts was reached during May 2005.

Multifamily starts have rebounded more than single-family starts. In the West, single-family starts are 81 percent below peak levels while multifamily starts are only 29 percent below peak levels.



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 first 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 5.3 percent from June 2010 to June 2011. Starts for structures with more than one unit, however, increased by 242 percent during the same period, rising from 1,400 units during June 2010, to 4,800 units during June of this year. 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 second graph shows month-by-month comparisons in housing starts for each year in the West. June's housing starts total increased from May to June as was expected. June tends to be a robust month for new housing starts. However, the June 2011 total of 13,700 starts is the third-lowest total for June housing starts in more than 10 years. On the other hand, June 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.



More sustained growth was visible in starts for structures with more than one housing unit. June was the fourth month in a row in which growth in multifamily starts has been significant. As can be seen in the third graph, the June 2001 multifamily total for starts has greatly exceeded the totals for both 2009 and 2010. With the exception of July 2010, June 2011's total for multifamily starts is the largest total since August 2008, before the 2008 financial panic.



This data suggests that multifamily starts have established a clear growth trend over the past several months, and given the demand for rental housing as an alternative to home ownership, this trend is poised to continue.

NAR: Home prices in U.S. West rise 9.5 percent

Home prices in the West region of the U.S., which includes Colorado, rose 9.5 percent from May 2010 to May 2011. According to new existing home sales data, recently released by the National Association of Realtors, home prices rose more in the West than in any other region. The median home price in the Midwest, for example, fell 5.3 percent from June 2010 to June 2011.

The first graph shows median home prices for all regions plus the U.S. The median home price in the West surged above the annual median prices in the West for 2009 and 2010, but remains below the annual median price for 2008. The median price in the west during June 2011, rose well above the median prices reported during all months of the previous year, rising to $240,400. During June of 2010, the median price for the region was $219,600.

This is a very large and uncharacteristic increase in the West, and tends to contradict recent trends which show much more subdued increases. As a regional number, it does suggest that demand in many areas of the region, such as California and Arizona, may be experiencing some substantial increase in demand, but a trend has not been established at this point.



Nationally, home prices rose 0.8 percent, year over year.

Home sales transactions (closings) fell 2.6 percent in the West region, which was the smallest drop in home sales closings of any region, year-over-year. Home sales dropped 16 percent in the Northeast from June 2010 to June 2011, and closings fell by 8.8 percent nationally during the same period.

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

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. June 2010's closings reflect this. So, it is to be expected that closings are down in June compared to one year earlier.



Nevertheless, both home purchase activity and median prices remain below the peak levels experienced during 2009.

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.

The NAR tends to be the most optimistic among the various reports on home prices and home sales activity. The most recent Case-Shiller data, although only through May, suggests continued declines in prices.

Mass layoffs down 27 percent during first half of 2011 in Colorado

Mass layoff events fell 27 percent to 54 events during the first half of 2011 in Colorado. There were 74 mass layoff events during the same period last year. According to a new report released last week by the U.S. Bureau of Labor Statistics, there were 9 mass layoff events during June 2011, which is down 35 percent from the 14 events reported during June of last year.

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



Nationally, mass layoff events decreased 10 percent from 1,861 during June 2010 to 1,661 during June of this year.

In the year-to-date total for June, mass layoffs have now fallen two years in a row after peaking at 97 mass layoffs during the first half of 2009. The second graph shows year-to-date totals for June since 2001:



Mass layoffs were rare from 2004 through most of 2008.

Overall, the most recent mass layoffs data 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 June by 42 percent to 708 in June 2011. There were 1,237 new claims during June of last year. New claims for unemployment insurance have also gradually fallen since early 2010. Nationally, new claimants fell 6.5 percent during the same period.

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-to-date totals for new unemployment claims through June, totals are down 20 percent year over year. There were 5,695 new claims during the first half of 2011, compared to 7,163 new claims during the same period last year. In the year-to-date total for June, new claims for unemployment insurance have now fallen two years in a row after peaking at 8,919 claims during the first half of 2009. The last graph shows year-to-date totals for June since 2001:




Analysis
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 179,000 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 for 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 234,477 unemployed workers in Colorado.)

Colorado loses 7,500 jobs in June, unemployment rate declines

Colorado lost 7,559 jobs in June 2011 compared to June of last year, but the non-seasonally-adjusted unemployment rate fell year-over-year from 8.9 percent to 8.7 percent. According to the most recent employment data released by the Colorado Department of Labor and Employment, total employment in June, not seasonally adjusted, fell to 2.453 million jobs. There were 13,788 fewer people in the work force during June, compared to June 2010, which contributed to the decline in the unemployment rate.



From June 2010 to June 2011, total employment fell 0.3 percent, while the labor force shrank 0.5 percent. The total labor force in May included 2.687 million workers.

As can be seen in the second graph, total employment and total workforce size have decreased month-over-month, and both remain down in year-over-year comparisons. Both remain well below the July 2008 peak.



The employment total is 179,000 jobs below the peak levels experienced during July 2008 when there were 2.63 million employed workers. Compared to the labor force peak in July 2008, the labor force is now down by more than 79,000 workers.

In the third graph is shown the year-over-year comparisons, by percent, for total employment. Not since August 2008 has Colorado posted a positive change in total employment when compared to the same month a year earlier. Although overall total employment has increased since January 2010, employment totals remain negative in each year-over-year comparison. The annual declines, however, have generally grown smaller in recent months. The last four months (March, April, May and June 2011) have shown some of the the smallest year-over-year drops in employment since September 2008 when total employment fell 0.3 percent from the previous September.



The graph also shows the year-over-change in total employment. Total labor force size has fallen more than employment in the last four months, which helps to explain the drop in the unemployment rate. Although the state has not actually added jobs in the YOY comparisons, the number of people looking for work (as defined by the Household Survey) has declined, pushing the unemployment rate down.

These numbers come from the Household Survey employment data, so the size of the workforce is dependent on the number of people stating that they are actively looking for work if not employed. Discouraged workers who have stopped looking for work are excluded.

Case-Shiller: Denver home price index falls 3.3 percent, year over year

Case-Shiller’s home price index for the Denver area rose 1.4 percent from April to May, and fell 3.3 percent,year over year, from May 2010 to May 2011.

According to the May report from the S&P/Case-Shiller Home Price Index, including data up through May, many cities measured by the index showed improvement from April to May. The increase largely reflects seasonal factors.

The report noted that there were signs of life in the industry, but that annual comparisons still showed some hesitancy in the markets:

“Other recent housing statistics show that single-family housing starts were up moderately in June, and are at about the same pace as a year ago. Existing-home sales were flat in June, reportedly because of contract cancellations and tight credit. The S&P/Experian Consumer Credit Default indices showed a continuing decline in mortgage default rates since last winter. Other reports confirm that banks have tightened lending standards in the past year, making it harder to qualify for a mortgage despite very low interest rates.

Combined, these data all support a continuation of the ‘bounce-along-the-bottom’ scenario we have witnessed in the housing market over the past two years. “While the monthly data were encouraging, most MSAs and both Composites fared poorly in annual terms.


In terms of year-over-year comparisons, Denver's market showed a less-small decrease than all but four of the 20 cities measured in the index. Only Washington, D.C. showed a positive increase, with the index rising 1.3 percent. The index dropped in all other cities. Boston, Los Angeles and New York showed slightly smaller declines than Denver, with all three cities' indices falling 3.2 percent.

Phoenix and Tampa reported the largest declines, with the home price index in both cities dropping 9.5 percent.

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 32.3 percent since it peaked in July 2006, but the Denver index is down only 11.6 percent from its August 2006 peak.

Nevertheless, the Denver index has returned to 2003 levels. In addition, the Denver Index remains near the lowest level experienced since July 2009, and is now 3.1 percent above where it was when it hit its initial recessionary trough in March 2009. The Denver Index was 124.00 during May 2011, and it was 123.78 during May 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 May was negative with a decrease of 4.0 percent, and the Denver area index’s fall of 3.3 percent is the eleventh 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 eight months.



The last chart provides a closer look at year-over-year changes in the Denver index. Note that for July through May, the change has fallen below zero, and 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.



In recent months, the Denver index has been slightly above the indices for the same months of 2009. Comparisons with the same period of 2010 is problematic given the large effects of the end of the tax credit. Comparing to 2009, we see that prices have still moved little since the first half of 2009 when the index was in the 120-123 range. During the first half of 2011, the Denver index has been in the 122-124 range, signalling very limited growth over the past two years.

Housing starts in West at 33-month high, multifamily starts make gains

Housing starts in the West Census region of the US, which includes Colorado, were up 26 percent from June 2010 to June 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 June 2011. Of the new units started, 8,900 were single-family structures and 4,800 were structures containing more than one housing unit.



Nationally, housing starts rose 16 percent during the same period, with total housing starts rising to a total of 62,900.



Total housing starts remain well below peak levels both nationally and in the West. June 2011 housing starts in the West were 76 percent below the peak reached during May 2004. Nationally, June 2011 was 68 percent below peak levels. The national peak in housing starts was reached during May 2005.



Multifamily starts have rebounded more than single-family starts. In the West, single-family starts are 81 percent below peak levels while multifamily starts are only 29 percent below peak levels.







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 first 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 5.3 percent from June 2010 to June 2011. Starts for structures with more than one unit, however, increased by 242 percent during the same period, rising from 1,400 units during June 2010, to 4,800 units during June of this year. 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 second graph shows month-by-month comparisons in housing starts for each year in the West. June's housing starts total increased from May to June as was expected. June tends to be a robust month for new housing starts. However, the June 2011 total of 13,700 starts is the third-lowest total for June housing starts in more than 10 years. On the other hand, June 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.







More sustained growth was visible in starts for structures with more than one housing unit. June was the fourth month in a row in which growth in multifamily starts has been significant. As can be seen in the third graph, the June 2001 multifamily total for starts has greatly exceeded the totals for both 2009 and 2010. With the exception of July 2010, June 2011's total for multifamily starts is the largest total since August 2008, before the 2008 financial panic.







This data suggests that multifamily starts have established a clear growth trend over the past several months, and given the demand for rental housing as an alternative to home ownership, this trend is poised to continue.

NAR: Home prices in U.S. West rise 9.5 percent

Home prices in the West region of the U.S., which includes Colorado, rose 9.5 percent from June 2010 to June 2011. According to new existing home sales data, recently released by the National Association of Realtors, home prices rose more in the West than in any other region. The median home price in the Midwest, for example, fell 5.3 percent from June 2010 to June 2011.

The first graph shows median home prices for all regions plus the U.S. The median home price in the West surged above the annual median prices in the West for 2009 and 2010, but remains below the annual median price for 2008. The median price in the west during June 2011, rose well above the median prices reported during all months of the previous year, rising to $240,400. During June of 2010, the median price for the region was $219,600.

This is a very large and uncharacteristic increase in the West, and tends to contradict recent trends which show much more subdued increases. As a regional number, it does suggest that demand in many areas of the region, such as California and Arizona, may be experiencing some substantial increase in demand, but a trend has not been established at this point.



Nationally, home prices rose 0.8 percent, year over year.

Home sales transactions (closings) fell 2.6 percent in the West region, which was the smallest drop in home sales closings of any region, year-over-year. Home sales dropped 16 percent in the Northeast from June 2010 to June 2011, and closings fell by 8.8 percent nationally during the same period.

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

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. June 2010's closings reflect this. So, it is to be expected that closings are down in June compared to one year earlier.



Nevertheless, both home purchase activity and median prices remain below the peak levels experienced during 2009.

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.

The NAR tends to be the most optimistic among the various reports on home prices and home sales activity. The most recent Case-Shiller data, although only through May, suggests continued declines in prices.

Mass layoffs down 27 percent during first half of 2011 in Colorado

Mass layoff events fell 27 percent to 54 events during the first half of 2011 in Colorado. There were 74 mass layoff events during the same period last year. According to a new report released last week by the U.S. Bureau of Labor Statistics, there were 9 mass layoff events during June 2011, which is down 35 percent from the 14 events reported during June of last year.

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



Nationally, mass layoff events decreased 10 percent from 1,861 during June 2010 to 1,661 during June of this year.

In the year-to-date total for June, mass layoffs have now fallen two years in a row after peaking at 97 mass layoffs during the first half of 2009. The second graph shows year-to-date totals for June since 2001:



Mass layoffs were rare from 2004 through most of 2008.

Overall, the most recent mass layoffs data 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 June by 42 percent to 708 in June 2011. There were 1,237 new claims during June of last year. New claims for unemployment insurance have also gradually fallen since early 2010. Nationally, new claimants fell 6.5 percent during the same period.

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-to-date totals for new unemployment claims through June, totals are down 20 percent year over year. There were 5,695 new claims during the first half of 2011, compared to 7,163 new claims during the same period last year. In the year-to-date total for June, new claims for unemployment insurance have now fallen two years in a row after peaking at 8,919 claims during the first half of 2009. The last graph shows year-to-date totals for June since 2001:




Analysis
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 179,000 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 for 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 234,477 unemployed workers in Colorado.)

Colorado loses 7,500 jobs in June, unemployment rate declines

Colorado lost 7,559 jobs in June 2011 compared to June of last year, but the non-seasonally-adjusted unemployment rate fell year-over-year from 8.9 percent to 8.7 percent. According to the most recent employment data released by the Colorado Department of Labor and Employment, total employment in June, not seasonally adjusted, fell to 2.453 million jobs. There were 13,788 fewer people in the work force during June, compared to June 2010, which contributed to the decline in the unemployment rate.



From June 2010 to June 2011, total employment fell 0.3 percent, while the labor force shrank 0.5 percent. The total labor force in May included 2.687 million workers.

As can be seen in the second graph, total employment and total workforce size have decreased month-over-month, and both remain down in year-over-year comparisons. Both remain well below the July 2008 peak.



The employment total is 179,000 jobs below the peak levels experienced during July 2008 when there were 2.63 million employed workers. Compared to the labor force peak in July 2008, the labor force is now down by more than 79,000 workers.

In the third graph is shown the year-over-year comparisons, by percent, for total employment. Not since August 2008 has Colorado posted a positive change in total employment when compared to the same month a year earlier. Although overall total employment has increased since January 2010, employment totals remain negative in each year-over-year comparison. The annual declines, however, have generally grown smaller in recent months. The last four months (March, April, May and June 2011) have shown some of the the smallest year-over-year drops in employment since September 2008 when total employment fell 0.3 percent from the previous September.



The graph also shows the year-over-change in total employment. Total labor force size has fallen more than employment in the last four months, which helps to explain the drop in the unemployment rate. Although the state has not actually added jobs in the YOY comparisons, the number of people looking for work (as defined by the Household Survey) has declined, pushing the unemployment rate down.

These numbers come from the Household Survey employment data, so the size of the workforce is dependent on the number of people stating that they are actively looking for work if not employed. Discouraged workers who have stopped looking for work are excluded.

Case-Shiller: Denver home price index falls 3.3 percent, year over year

Case-Shiller’s home price index for the Denver area rose 1.4 percent from April to May, and fell 3.3 percent,year over year, from May 2010 to May 2011.

According to the May report from the S&P/Case-Shiller Home Price Index, including data up through May, many cities measured by the index showed improvement from April to May. The increase largely reflects seasonal factors.

The report noted that there were signs of life in the industry, but that annual comparisons still showed some hesitancy in the markets:

“Other recent housing statistics show that single-family housing starts were up moderately in June, and are at about the same pace as a year ago. Existing-home sales were flat in June, reportedly because of contract cancellations and tight credit. The S&P/Experian Consumer Credit Default indices showed a continuing decline in mortgage default rates since last winter. Other reports confirm that banks have tightened lending standards in the past year, making it harder to qualify for a mortgage despite very low interest rates.

Combined, these data all support a continuation of the ‘bounce-along-the-bottom’ scenario we have witnessed in the housing market over the past two years. “While the monthly data were encouraging, most MSAs and both Composites fared poorly in annual terms.


In terms of year-over-year comparisons, Denver's market showed a less-small decrease than all but four of the 20 cities measured in the index. Only Washington, D.C. showed a positive increase, with the index rising 1.3 percent. The index dropped in all other cities. Boston, Los Angeles and New York showed slightly smaller declines than Denver, with all three cities' indices falling 3.2 percent.

Phoenix and Tampa reported the largest declines, with the home price index in both cities dropping 9.5 percent.

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 32.3 percent since it peaked in July 2006, but the Denver index is down only 11.6 percent from its August 2006 peak.

Nevertheless, the Denver index has returned to 2003 levels. In addition, the Denver Index remains near the lowest level experienced since July 2009, and is now 3.1 percent above where it was when it hit its initial recessionary trough in March 2009. The Denver Index was 124.00 during May 2011, and it was 123.78 during May 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 May was negative with a decrease of 4.0 percent, and the Denver area index’s fall of 3.3 percent is the eleventh 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 eight months.



The last chart provides a closer look at year-over-year changes in the Denver index. Note that for July through May, the change has fallen below zero, and 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.



In recent months, the Denver index has been slightly above the indices for the same months of 2009. Comparisons with the same period of 2010 is problematic given the large effects of the end of the tax credit. Comparing to 2009, we see that prices have still moved little since the first half of 2009 when the index was in the 120-123 range. During the first half of 2011, the Denver index has been in the 122-124 range, signalling very limited growth over the past two years.