Friday, December 30, 2016

November Foreclosure Sales in Colorado Metro Areas Continue to Fall to New Lows

During November 2016, there were 147 foreclosure sales in Colorado's metro areas, which means foreclosure sales totals are near the lowest levels ever recorded since the report was first initiated in 2007.

Foreclosure activity in general throughout 2016 has shown numerous declines throughout the year as home prices increase, job losses remain muted, and demand for real estate remains strong.

Foreclosure sales are the final stage of the foreclosure process when foreclosing properties are sold to a third party or become bank-owned.

In November, foreclosure sales were down 29 percent compared to November 2015 in the metro areas, falling from 207 during November 2015 to 147 during November 2016.

For the first eleven months of this year combined, there was a total of 2,138 foreclosure sales in Colorado's metro areas, which was down 26.3 percent compared to the same period of 2015, when there were 2,899 foreclosure sales.

Foreclosure filings, which are the first step in the foreclosure process, were up slightly in November 2016 compared to November of last year. There were 469 foreclosure filings in Colorado's metro areas, which is an increase of 0.9 percent over November 2015's total of 465. For the first eleven months of this year combined, foreclosure filings were down 5.8 percent, falling from 6,050 to 5,697 from 2016 to 2016.

2016's falling foreclosure totals continue a multi-year trend in foreclosures which have been declining since 2009 and are now at some of the lowest levels ever recorded.

The Colorado counties measured for this metro-area report are Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, El Paso, Jefferson, Larimer, Mesa, Pueblo, and Weld counties.

The report can be found below:

Wednesday, December 21, 2016

Colorado Metro Foreclosures Hit New Low in September 2016

During September 2016 in Colorado's metro Counties, there were 438 new foreclosure filings. That's the lowest total ever recorded since I began tracking monthly totals in 2007. September 2016's total was down 13.2 percent from September 2015 when new foreclosure filings totaled 505.

"Filings" refers to "notices of election and demand" which are the first step in the foreclosure process. Filings had peaked at 4,030  in December 2007, but September 2016's total was down 89 percent from that peak. 

Foreclosure "sales," which are the point in the foreclosure process where foreclosing properties are sold off at auction, are also down considerable from the 2008 peak. during September 2016, there were 158 foreclosure sales in the metro counties. That's down 38 percent from September 2015, and it's down 94 percent from the peak of 2,706 in January 2008. 

Due to high price inflation for homes — and the related phenomena of high demand, moderate new construction, and rising population — foreclosure totals continue to decline, and show few signs of increasing substantially barring a significant change in current economic conditions. 

The counties included in this analysis — which constitute around 85 percent of statewide activity — include Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, El Paso, Jefferson, Mesa, Pueblo, and Weld counties. This data is collected from each county's public trustee office.

Tuesday, October 4, 2016

Tax Return Data Shows Declining Average Tax Collections in Colorado

Most of the employment data used in economic trends analysis depends on survey data using samples. This data can be useful, but it's always helpful to have other sources to provide context to the data.

One way to analyze trends on an annual basis is to use tax return data. Tax return data, of course, is especially reliable because misrepresenting income on tax returns can bring stiff fines and even jail time. 

Specifically, there are at least two helpful data points here. One is the number of filers for each year. This tells us how many people (or joint filers) had enough income to necessitate filings a return. When the number of people with jobs declines, the number of filers will decline. What the job market is adding many new workers, the number of filers will tend to increase. 

Looking at the total number of filers putting in income tax returns, we see the following trend: 

Not surprisingly, as job growth surged at the end of the last economic boom, we saw total filers peak in 2008. After that, it took six years for total filers to return to where they were. Now, the total number of filers includes more than just full time workers. It can include people with other sources of income as well. Nevertheless, this does gives us some insight into how much job creation was taking place during this period. 

What we do find is that the last economic downtown was indeed rather severe, especially when we note that during the post-2002 downturn, filer totals returned to the former peak after only three years. 

Since 2014, filer totals has exceeded the peak.

As a second measure, we can also look at average tax collections. We find this by dividing gross tax collections (including individual income tax, employment taxes, and estate and trust income tax) by the number of income tax filers. This is just an estimate of total income taking place, of course, but using the same methodology over time, it does provide us with a trend. 

 I have also adjusted this for inflation (using the CPI). What we find here is that real real average income tax collections have been declining over time. 

Some of this may be due to people voluntarily retiring and accepting less income — and thus, a lower standard of living. But in many cases, it may also reflect declining real wages and a decline in the number of work hours. For example, we do know that nationwide, the number of workers who are involuntary part timers has been significantly higher during this cycle than during past cycles. 

In an earlier post, we also noted that real incomes in Colorado have been flat or declining, depending on the measure. We see a similar trend here to that found in median household income in Colorado (see original post):

Note: All data comes from annual "Internal Revenue Service Data Book." Calculation based on total  income tax collections found in Table 5. This is then divided by filer totals (individual income taxes) found in Table 3. 

Tuesday, September 27, 2016

Colorado's homicide rate increases, Pueblo reports highest rate

The FBI released new homicide data yesterday showing the US nationwide homicide rate increased to 4.9 per 100,000. That's up from 2014's rate of 4.4 per 100,000.

Nevertheless, the US homicide rate remains near a 50 year low, and 2015's rate is comparable to homicide rates found during the late 1950s when the US was in the midst of a historical lull in homicide rates.

In Colorado, we find a similar situation. 2010's homicide rate was the lowest recorded since 1960, with 2015's rate up from that. However, the overall trend has generally been flat over the past ten years:

In 2015, the Colorado homicide rate increased to 3.2 per 100,000, up from 2014's rate of 2.8 percent. However, 2015's homicide rate is what in no way unusual compared to the last decade of data. These totals are among some of the lowest we've seen in decades.

We see little to suggest that the legalization of recreational cannabis use has led to any sizable increase in homicides, or that gun control measures in recent years have had any impact that is measurable.

Colorado's homicide rate increased 14 percent from 2014 to 2015, compared to a ten percent increase for the nation overall during the same period.

Compared to other states, Colorado has the 16th-lowest homicide rate in the nation. Nearby states in the northern Rocky Mountain region have some of the lowest homicide rates in the nation with Idaho coming in at 1.9 per 100,000, and Utah at 1.8 per 100,000:

For additional reference here is a map of all states:

As The New York Times and New York magazine recently reported, the nationwide increase in homicides was largely driven by increases  in violence in seven large cities nationwide. Denver was not among them.

Regional Differences

A with the nation overall, Colorado's homicide situation varies geographically. Within the state's metropolitan areas, the homicide rate ranges from 0.9 per 100,000 in Boulder to 8.0 in Pueblo. Pueblo's homicide rate is higher than both the statewide rate and the nationwide rate:

Homicides increased in Pueblo, Colorado Springs, Denver, and Fort Collins. The rate in Greeley was unchanged. Homicides decreased over the year in Grand Junction and Boulder. Colorado overall remains remarkably safe in terms of homicides. With homicide rates around 2 per 100,000, northern Colorado and Western Colorado are among the safest places on earth.

Pueblo's rising homicide rates have been blamed on increasing gang activity.

Statewide in 2015, there were 176 recorded cases of "murder and nonnegligent manslaughter." That's up from 151 cases in 2014.

Of those 176 in Colorado, 108 were reported in the Denver metro area (with 53 in the city of Denver itself). 26 were reported in Colorado Springs and 13 in Pueblo. Pueblo's homicide rate is much higher, of course, because its population is considerably smaller than that of Colorado Springs or metro Denver.

In areas outside of Metro Denver, we're generally dealing with small numbers. Pueblo's total homicides increased 30 percent from 2014 to 2015, but that's an increase from 10 to 13 over the period. This hardly indicates an established trend toward an epidemic of violence. Nevertheless, one would prefer to see movement in the opposite direction.

Wednesday, September 14, 2016

How have oil prices affected Greeley employment?

According to the most recent employment data from the Department of Labor and Employment, there were  approximately 101,00 payroll jobs in Greeley during July 2016. That's up from the 98,000 jobs estimated during July of last year. However, total payroll employment in the region has gone only sideways since 2014.

In October of 2014, there were 102,000 jobs in the Greeley area, but since then, payroll employment has never exceeded 102,000 positions. In other words, employment growth has been flat for the past two years:

Compare this trend to the one in Fort Collins, right next door. In the case of Fort Collins, the overall job trend mirrors that of the state overall with an unbroken upward slope since 2009: 

Since 2014, unlike Greeley, Fort Collins has only continued upward on the same trend as before.

Oil prices, not surprisingly, appear to be a big factor in this trend in Greeley. Last December, for example, The Tribune reported that "Colorado's oil rigs drop to lowest in 13 years." By May of 2016, the Denver Post was reporting that rigs had dropped to a 16-year low.

In late 2014 and early 2015, oil prices plummeted from over 100 dollars per barrel to under 50 dollars per barrel. Nationwide, less-productive rigs shut down and national oil production fell.

This has had an impact on employment in the area, and we see it in the numbers.

In fact, during a seven month period in late 2015 and early 2016, job growth actually turned negative in the Greeley area. Meanwhile, the state of Colorado overall has not experienced year-over-year losses since 2010.

Here are the Greeley YOY changes. During July 2016, job growth was up 2.3 percent. But, that is on the fourth month in a row of growth following a period of decline. The graph shows how job growth began to disappear in 2015:

We can contrast this with the same time period in Fort Collins where job growth remains solid throughout the period. In July of 2016, there were 160,000 payroll jobs, which was an increase of 3 percent of the previous July.  In Fort Collins, that's a continuation of the general trend we've seen since 2012:

Of course, the decline of employment in Greeley doesn't mean there are immense numbers of unemployed people in Greeley now. Many of the newly-unemployed workers in Greeley moved away, as many of them were not native to Greeley in the first place. On the other hand, those temporary workers did often spend their wages in Greeley, enriching local businesses. Now that many of those workers have gone will mean a scaling back for the Greeley economy.

The magnitude of this remains, to be seen, however, and it look like the Greeley area has already returned to a period of job growth. For now.

Note on data: All this data comes from the "Establishment" survey of employment which measures payroll positions. It is different from the Household survey that is used to calculate the unemployment rate and which measures employed persons. Thus, the establishment survey can include part time positions, and a person holding two jobs could show up as two jobs in the establishment survey data. 

Tuesday, September 13, 2016

Central Banks Hold Steady in August, No Sign of Rate Hikes

August is now behind us, and as a sign of the concern central bankers share over the weakness found in the world's major economies, there is no sign of any effort to rise target rates at central banks. 
From the Fed to the European Central Bank, to the Bank of England and beyond, there appears to be no appetite for attempting to return to more "normal" monetary policy. We're apparently in a state of virtual permanency when it comes to "extraordinary" monetary policy which involves keeping the target interest rate at zero or near zero for years on end. 
In fact, the only movement we've seen at a major central bank in recent days comes from the Bank of England where the bank cut the target rate from 0.5 percent to 0.25 percent. Except for that change, and continued declines in Australia, nothing has moved since last Spring: 
In late July, the Fed declined to raise the Federal Funds rate. But, of course, they maintained the usual posture of saying that a rate hike was just around the corner. Cutting through the posturing, Bloomberg wondered at the time if the Fed is becoming even more dovish. 
Now, the Fed appears likely to do nothing at its next meeting. The Wall Street Journal avers:
[W]ith inflation holding below the Fed’s 2% target and the unemployment rate little changed in recent months, senior officials feel little sense of urgency about moving and an inclination toward delay, according to their public comments and recent interviews.
This comes just weeks after the Bank of England cut its key interest rate to the lowest rate of its 322-year history, dropping the target rate to .25 percent. 
The given excuse for this was the chance that Brexit might lead to an economic slowdown. Thus, according to BofE Governor Mark Carney:
 “There is a clear case for stimulus, and stimulus now,” Mr. Carney said at a news conference, in the latest attempt by officials to reassure Britons that they are acting decisively.
Meanwhile, as one looks around the central-bank landscape, one is left wondering what central banks will do when something really goes wrong. With rates all already so close to zero (or even below zero) any serious economic disruption, such as an obvious recession, is increasingly likely to lead to helicopter money, negative rates, or an intensification of attacks on cash, such as that found in Ken Rogoff's recent book The Curse of Cash
Another possible route to "stimulus," of course, is good ol' fashioned fiscal policy such as spending on public works and other types of government spending. 
The European Central Bank urged European governments to do as much last week when ECB president Mario Draghi sang the praises of government stimulus and criticized Germany for not spending enough. 
The European economy overall is so weak, though, that projections suggest that even with massive amounts of monetary stimulus, price inflation will not reach the ECB's 2 percent target any time soon. With its credibility on the line, however, the ECB appears reluctant to cut its deposit rate even further below negative 0.4 percent, or its MRO rate below zero, where it already sits. 
"Wait and see" appears to be the approach for now.
Through August, here are central bank target rates and resources: 
  • USA: 0.5%
  • Canada: 0.5%
  • UK: 0.25%
  • Australia: 1.5%
  • China: 4.35%
  • ECB: -0.4%
  • Japan: -0.1%
The rates used for this analysis are: 
Here's a look at recent changes in closer detail:

Colorado Springs average rent grows by all-time high of 10.2 percent

During the second quarter of 2016, rent growt hin Colorado springs hit an all-time high of 10.2 percent, bringing the average rent in the metro area to 991 dollars, which is also an all-time high. That's up from the first quarter  of this year when the average rent was 959. The average rent during the second quarter of last year was 899 dollars.

According to data released by the Colorado Division of Housing, the average rent in Colorado Springs continues to grow at a historically high rates:

The last time the average rent grew at a similar rate was during the dot-com boom at the very end of the 1990s. If we look at the average rent over, time, we find that the general trend has, not surprisingly been upward, but has increased more rapidly over the past five years than was the case during the previous decade:

Looking just at nominal rent levels, however, can be misleading, and if we adjust for inflation using the nationwide CPI, we find that rents actually went down in real terms from 2003 to 2009. While there was some growth from 2009 to 2013, we see that even in inflation-adjusted terms that rent growth has picked up since 2014. Real rents only surpassed the 2001 high in 2014 following a long period of flat rents. Now, however, inflation-adjusted rents have surpassed the old 2001 peak, and have set several new all-time highs in recent quarters:

As one might expect, this year's robust rent growth reflects low vacancy rates. While not setting any records, the vacancy rates for Colorado Springs over the past year have been generally rather low, with the vacancy rate even dipping below five percent twice over the past two years. (A vacancy rate below five percent is generally regarded as "low".) In any case, recent vacancy rates are among the lowest we've seen since the dot-com boom days, and certainly among the lowest we've seen over the past decade.

Finally, we should note that vacancy rates and rents can be significantly affected by seasonal issues, with the fourth quarter often showing the softest markets each year, with the third quarter often showing the strongest markets. 

So, it can be helpful to compare vacancy rates to the same quarters in previous years. In the final graph, we see the second quarter of this year compared to previous years. 2016's second quarter vacancy rate was higher than the previous year, but nevertheless remains near a ten-year low. 

With some of the highest foreclosure rates among metro counties in Colorado, and with a fairly sedate job market compared to Denver and northern Colorado, Colorado Springs has been more slow to experience strong price growth in housing. However, over the past two years, it has become clear that Colorado Springs is now seeing unusually high growth in rents and housing demand. Future rents will depend partially on new housing construction, and we'll look at that in a future post.

Monday, September 12, 2016

Bankruptcy filings up 11 percent from July to August, contrary to the usual trend

According to federal bankruptcy court records, there were 1,106 bankruptcy filings in Colorado during August. That's up 11 percent from July's total of 990, and it's down 8.5 percent from August 2015's total of 1,208.

Overall, the general trend has been downward since 2010, as we can see in the first graph:

An unusual thing happened in August, though: bankruptcy filings increased from July to August. Since 2007, this only happened once before, during 2011.  In other words, bankruptcies usually fall during this period, but from July to August of this year, bankruptcies rose at the highest rate experience since 2006:

It remains to be seen whether or not this signals a change in the downward trend we've seen seeing for the past six years.

There have been other indicators, though, that this year bankruptcy activity has been leveling off, rather than continuing the sharp down ward trend that we saw from about 2012 to 2015. The next graph shows how year-over-year changes in bankruptcy activity has been rather sizable with year-over-year declines of 20 percent or more being rather common. So far, this year, the degree to which filings have been declining become smaller compared to 2015. From August 2015 to August 2016, bankruptcies fell 8.5 percent. From August 2014 to August 2015, bankruptcies fell 16.9 percent.
Are bankruptcies surging in Colorado? At this time, there's not enough or an established trend to say this, although the most recent data may suggest that the most robust portion of the current expansion may be softening. 

Saturday, September 10, 2016

Housing construction rising in Pueblo,but not by much

Through July of this year, the Pueblo area reported 156 permits for private housing units. That's an increase of 13.3 percent compared to 2015, although overall permitting activity is up from the low points experienced in the wake of the 2007-2009 recession. (All permit data used in this article is form the Census Bureau.)

The first graph shows total permit activity for each year for the period of January-July:

While permits are down this year compared to last, they are nonetheless up compared to every year in the period from 2011-2014.

Over the past decade, only three years showed increases over the previous year. The second graph shows year-to-year change in permits for the period from January-July (values are in %):

Most of the past decade has reflected an experience of declining permit activity from the housing-bubble highs prior to 2008. A significant decline began in 2007 and the area really didn't begin to show signs of life again until 2015.

The vast majority of this activity is in singlefamily homes, as the next graph shows. The red bars show where multifamily units were built in addition to singlefamily units. Small numbers of multifamily units were built in a number of months during 2008 and 2009. However, after 2009, multifamily units only register in six months of the more than 80 months that have passed since then. The last multifamily permitting that took place was in May 2015 when 62 units were permitted for a senior housing project known as Oakshire Trails.

Other than that, multifamily housing construction has been exceedingly rare in recent years.

Needless to say, the Pueblo area has not experienced the same sort of apartment demand that was notably strong in the metro Denver area from 2012 to around 2015.

Singlefamily housing has slowly come back since 2011, but gains have been slow and measured. Nevertheless, if we look just at singlefamily permits (excluding multifamily) for the period of Jan-July, we find that 2016's singlefamily activity is at an eight-year high:

Moreover, with the exception of the change from 2011-2012, the year-over-year increases for 2015-2016 was at a ten-year high through July of this year.

Friday, September 9, 2016

Total nonfarm employment in Colorado up in July, growth trend continues

For now, there are few dark clouds on the horizon for payroll employment totals in Colorado. While employment growth has softened somewhat since 2014, it remains well above zero.

According to state-level employment data, released on August 22, year-over-year employment growth in Colorado increased 3 percent, which was the largest increase since July of last year when growth reached 3.2 percent. There were a total of 2.62 million jobs in Colorado in July, compared to 2.55 million jobs one year earlier.

That equates to 76,000 more jobs, year-over-year.

This should not be equated for new employed persons, however, as this measure of employment counts only jobs and not people. Thus, a single person with two jobs would show up as two jobs by this measure, and two job holders should not be assumed. The Household Survey, which counts employed persons, will be considered in a separate post.

Nevertheless, job growth, strictly speaking, continues in positive territory.

On a month-to-month basis, we also find that July 2016 was strong. In this case, job growth tends to be negative from June to July due to seasonal issues. So, to get a better sense of how July compares, we must compare to previous June-July periods in each year. When we do this, we find that the job losses for the June-July period were the smallest we've seen in more than a decade:

So, by both these measures, we find that job growth in July was solidly positive.

This continues a period of net job growth over the job losses that occurred in the wake of the 2008 financial crisis when more than 200,000 jobs were lost in Colorado. Since 2013, though, Colorado has added 255,000 jobs above and beyond its old 2008 peak prior to the last recession:

Wednesday, August 3, 2016

Average rent in metro Denver hits new high as vacancies remain low

To the surprise of very few, the Denver Post reported last month that the average rent in metro Denver continues to rise. According to the Metro Denver Apartment Vacancy and Rent Survey, the average rent during the second quarter of 2016 was $1,371, which was up from teh first quarter's average rent of 1,315. The second quarter rent marks a new all-time high:

The increases in rental rates reflects ongoing low vacancy rates in the region. For the second quarter, the apartment vacancy rate in Metro Denver was 5.4 percent, which was down from the first quarter rate of 6.1 percent. During the second quarter 2015, the vacancy rate was 4.5 percent. Overall, we can see that, excluding a surge in vacancies during the fourth quarter of last year, the vacancy rate in metro Denver remains low, although not as low as what we frequently saw during the 1990s:

As the economy has slowly expanded in the wake of the 2007-2009 recession, apartment vacancies have tightened, and reached especially low levels in 2014. The market has loosened a bit since then, but vacancies remains generally low.

With the second quarter's all-time high of 1,371, the average rent is up 8.3 percent over the average rent a year earlier. The average rent was 1,254 during the second quarter of 2015.

While an increase in the average rent of 8.3 percent is substantial, it nevertheless shows a declining trend on rent growth. Rent growth peaked at an all-time high of 13.2 percent during the second quarter last year. Since then, the rent growth rate has fallen in each quarter. In other words, rents are growing, but the pace at which they are growing is slowing.
The boom in apartment rents is still going. Just not as strong as was the case in the previous two years. 

Adjusting for Inflation 

When looking at rents over time, it's always important to consider rents compared to the Consumer Price Index. While the graph (above) of nominal rents shows unabated growth since 2000, we see a different trend when adjusting for inflation. 

In inflation-adjusted terms, the average rent declined from 2001 to 2010. Only after 2010 did the average rent reach its former peak reached in 2001. Since 2010 though, the average rent has repeatedly been reaching new highs, even after adjusting for inflation. 

during 2001, the high was $1,108 in 2015 dollars. In recent quarter, that rate has been repeatedly topped, with 2016's second quarter rent coming in at 1,358 in 2015 dollars:

Year-over-year growth in inflation-adjusted rent is similar to that seen in the nominal rents. Over the past year, rent growth has been large, but has been gradually getting smaller. During the second quarter of this year, the inflation-adjusted average rent grew 7.1 percent, which is down from the second-quarter 2015 rate of 13.2 percent:

For now continued population growth and a generally solid economy continues to fuel demand for housing, and especially rentals. (See my recent article on the homeownership rate.) Neither the national economy nor the local economy are especially robust when compared to previous expansions, but as long as the Colorado economy is performing at least as well as the country overall, it looks like there will be ongoing demand for a place to live in Colorado.

Colorado homeownership rate falls to lowest point since 1994

Americans have long regarded owning a home to be largely synonymous with the so-called "American dream." High homeownership rates are not necessarily synonymous with a high-income prosperous society. Switzerland and Germany, for example, have homeownership rates well below that usually found in the US.

Nevertheless, the US government has long made increasing homeownership an important policy goal, and this has led to a number of large and costly programs and institutions including Fannie Mae and Freddie Mac, FHA, and a plethora of federal regulations surrounding mortgage lending and banking.

Things haven't quite gone as planned.

The most recent quarterly data from the Us Census Bureau shows that the homeownership rate in the United States has fallen to a 51-year low.  as of the second quarter of 2016.

As of the second quarter of 2016, the homeownership rate in the United States was, according to the Bureau, 62.9 percent. That's exactly equal to the rate recorded during the third quarter of 1965 — 51 years ago:

The homeownership rate has been declining since 2004 when it peaked at 69.2 percent. The rate has gone into virtual free-fall over the past two years, however, as home prices have continued to rise and incomes have not kept up.

In Colorado, the trend has been somewhat similar in recent years, although the homeownership rate here is only at a 21-year low.

The Census Bureau only publishes annual data on Colorado-specific homeownership rates, but using annual data, we find that 2015's homeownership rate is the lowest recorded since 1994.

In 2015, the homeownership rate in Colorado was 63. 6 percent, and it hasn't been that low since it was 62.9 percent in 1994:

Colorado's economy was in a recession for much of the 1980s, so we find that the homeownership rate hit a multi-year low in 1989 (58.6 percent) and gradually increased until hitting in 2003 what was likely the highest level ever achieved since white men started building houses in Colorado. Since 2003, though, when the rate was 71.3 percent, the rate has fallen nearly nonstop.

This is likely due to several factors, although the big ones are likely rising housing costs and stagnant household incomes.

In this post, I looked at household incomes in Colorado and found that incomes have remained largely flat over the past decade.

Meanwhile, as most everyone on the Front Range knows, housing prices have moved upward, with the Case-Shiller home price index increasing around 10 percent, year over year, in most months in recent years.

In other words, household incomes do not appear to be keeping up with home prices, and it stands to reason that is pushing down the homeownership rate. That's not the only reason that homeownership is declining, of course. There could be other factors such as demographic shifts, including more young people choosing to marry later and have children later, which can lead to less demand for a for-purchase home.

Affordability does look to be a real issue, however, and if potential buyers must turn to renting a home (although that is an expensive alternative) this pushes down the homeownership rate.

One should use caution in using homeownership as a proxy measure of economic prosperity, although in the past the homeownership rate has often tracked with general economic conditions, as was the case in the 1980s.

Whatever the cause, the latest data does suggest that both the national and local economies are moving more toward a rental-housing focused real estate economy, it this does not look like it will reverse itself unless real incomes begin to gain more steam or more home construction begins to ramp up.

Tuesday, August 2, 2016

10 Things You Didn't Know About Colorado's Early Constitution

This week marks the 140th anniversary of Colorado statehood. That means the constitution of Colorado took effect 140 years ago this week, on August 1, 1876.

The state constitution has been amended many times since it was first adopted, but a look at the original constitution provides some interesting insights into the historical and political context of the time during which Colorado became a state.

Here are a few of them:

1. The government of Colorado was tri-lingual at first. The constitution states:
The General Assembly shall provide for the publication of the laws passed at each session thereof; and, until the year 1900 they shall be caused to publish in Spanish and German, a sufficient number of copies of said laws to supply that portion of the inhabitants of the State who speak those languages, and who may be unable to read and to understand the English language. 
This provision is likely due to the influence of Casimiro Barela, a Mexican-born Coloradan from Trinidad who served in the Colorado Senate for 37 years after being a territorial representative and participating in the state's constitutional convention. Barela was known for being a spokesman for the Hispanic population of Mexico and for being mindful of the state's ethnic and linguistic diversity.

Spanish, of course, was commonly spoken throughout southern Colorado where the Arkansas River had marked the international border with Mexico until 1848. Traders and merchants in Southern Colorado at the time, such as the Bent family, tended to be bilingual in English and Spanish.

Moreover, in the late 19th century, the German language was commonly spoken throughout the United States and may have been the most-spoken language behind English. The language went into decline during World War One as American nationalists began to persecute German-Americans and forced the closure of some of the nation's numerous German-language schools.

2. Judges on the Supreme Court were elected and served fixed terms. Supreme Court judges today are appointed and subject only to removal through retention elections. At first, however, the Supreme Court was an elected body of three judges. Judges served nine-year terms. An amendment was adopted in 1966 mandating that the governor appoint justices instead.

3. The Governor of Colorado served a two-year term. As with many states in the United States, the governor of Colorado used to serve a shorter two-year term. By the late 20th century, nearly all states had converted to four-year terms. An amendment was passed in 1956 in Colorado extending the term to four years.

4. The Constitution suggested that the General Assembly adopt laws allowing women's suffrage. The Constitution mandated universal suffrage for males over 21 years of age, but stipulated that the General Assembly at its first session "enact laws to extend the right of suffrage to women of legal age." Colorado would eventually extend suffrage to women in a state referendum in 1893. More than 25 years before the United States adopted women's suffrage at the national level.

5. Colorado practiced "declarant alien voting." During the 19th century, numerous states and territories granted the vote to immigrants who stated they intended to become US citizens. The Colorado text reads:

 [The voter] shall be a citizen of the United States, or not being a citizen of the United States, he shall have declared his intention, according to law, to become such citizen, not less than four months before he offers to vote.

Obtaining US citizenship at the time was far easier than it is today. Western states were most likely to extend voting rights to alien voters since frontier states were more interested in attracting new residents, and offering easy voting rights and citizenship was one way to attract new migrants.

6. The Colorado Bill of Rights is extensive and detailed. Article II of the constitution contains 28 sections, all of which are devoted to outlining the rights of Colorado citizens in a manner similar to the US Bill of Rights. The list of much longer and more detailed than the national list.

7. The constitution guaranteed private gun ownership, but frowned upon concealed weapons. The text reads:
The right of no person to keep and bear arms... shall be called into question; but nothing herein contained shall be construed to justify the practice of carrying concealed weapons.
Carrying a revolver in plain sight was apparently preferable at the time.

8. Slavery is specifically prohibited. Although the 13th amendment to the US constitution had already been passed a decade before, the Colorado constitution specifically states that "there shall never be in this State either slavery or involuntary servitude..."

9. The militia included most adult males. According to the constitution, "the militia of the State shall consist of all able-bodied male residents of the State, between the ages of eighteen and forty-five years." This reflected 19th century ideas of national defense in which semi-independent state militias served as the bulk of the land-based military forces in the US. Indeed, militias functioned as independent entities, and prior to the militia act of 1903, state governments could intervene to prevent the President of the US from calling up troops from the state militias, as had been done in the past by Vermont, Connecticut, and Kentucky.

10. The legislature was smaller at first. The House had 49 members and the Senate had 26 members. The constitution stated, however, that the total number of members in the legislature "shall never exceed 100." Needless to say, each vote counted for much more in 1880 than it does today. In 1880, with 47 members of the house, each House district had only about 4,300 people. Today in Colorado, each House district contains over 77,000 people, on average.

Image by "Beverly and Pack"

Federal Reserve holds rates steady as national economy fails to impress

Last week, the Fed's Federal Open Market Committee announced it would leave the target Federal Funds Rate unchanged.

During 2014 and 2015, the Fed repeatedly hinted that it would raise rates "soon" and that it would return the target rate to more normal levels.

Throughout most of 2015, the Fed repeatedly put off increasing the target rate, and then, feeling pressured to actually take action after many months of claiming it would take action, the Fed raised the target rate from 0.25% to 0.5% in December of 2015.

Since then, though, after months of claiming that the economy was improving, the Fed has refused to raise the target rate any further. The Fed was apparently spooked by what many would consider to be a fragile economy, although FOMC statements continue to contain phrases like "growing," "moderate" "gains" and other language that would lead one to believe that the economy is stable and strong.

The reality, of course, is something different which is why the Fed kept the target rate at 0.25% for seven years, and why is refuses to move above 0.5% percent.

And lest we forget just how low 0.5% is, we should remember that as recently as 2007, the target rate was above 5%.

Meanwhile, Bloomberg asks the obvious question: Has the Fed become even more dovish?" 

The answer is yes, for two reasons. First, there is fear that there is a slowdown coming. But secondly, and more importantly, the Fed is extremely unlikely to raise the target rate right before a presidential election. 

For a longer historical view of the target rate, let's look at rates since 1992: 

Note that the seven-year stretch at 0.25% was unprecedented, and the current rate at 0.5% remains below anything seen over the past three decades.

Monday, August 1, 2016

Historical photos: formal photography of one's deceased relatives

The Victorians were known for taking photos of recently deceased relatives. Especially children. For a view of many of these, simply google "victorian photos of deceased children." The practice did not totally die out with the Victorians, though.

It persisted into the mid-twentieth century, especially among non-Anglo-Saxon and Catholic households with ties to cultures outside the US.

For example, my mother recently passed along to me a photo of her deceased brother Antonio who had died in the early 1940s in Los Angeles. In this case, the photo is quite "tame" by historical standards in that the deceased person is not propped up to look alive, as was the case in many Victorian photos. This is simply a photo of the child in his casket. Note the "Baby Galindo" on the blue ribbon at the center:

In the 1940s, the infant mortality rate was higher for Mexican-American families than it was for non-Hispanic whites, although families of all ethnicities commonly experienced the death of a very young family member. Many families were unfortunate enough to experience the death of a baby or toddler.

On my father's side of the family, for example, my father's brother Peter died as a toddler of pneumonia in 1951. However, by that time, few families continued the practice of photographing dead family members, especially among Anglo-Saxon Protestant types as was the case with his family.

As time went on, of course, infant mortality in the United States became more and more rare, to the point where many people born in the 1960s or later have no memory at all of young relatives dying to childhood diseases. Today, many would consider this practice to be macabre, although back in the 1940s — before the days of ubiquitous photography — a post mortem photograph might be the only photograph one had of one's deceased child.

Que en paz descanse.

Saturday, June 18, 2016

Denver and Colorado Springs are cities where the "American dream" is "possible"

In this analysis from, the analysts conclude that while the "American dream" is no longer possible in many coastal cities, it's still possible in Denver and Colorado Springs. Colorado Springs is considerably more affordable than Denver in this analysis. I'll let you have a look on your own.

The least affordable places, by far, are New York City and San Francisco:

Thursday, June 16, 2016

Homicide rate in Colorado near 50-year low

There's been a lot of talk on homicide in the United States recently, so I thought I'd add in a little factual information about the picture in Colorado.

As I've noted on several topics before, it rarely makes sense to speak of a nationwide statistic when discussing the United States. That may make sense for Finland where nearly the entire population of five million lives within one or two metro areas, but it makes no sense for a country as large and diverse as the United States.

Colorado is the size of several smaller European countries (including Norway and Finland) and it makes more sense to look at the US as a collection of political entities, rather than one. After all, no one lives "in the United States." People don't even live "in Colorado." People tend to live, work, and play within a single metropolitan area, most of the time.

In a future article, I may take a look at homicide rates separated out by metro areas in Colorado. But, for now, let's look at the state overall.

The graph shows the homicide rate in Colorado since 1960, as reported by the FBI:

In 2014, the homicide rate was 2.8 per 100,000. That's up from the 50-year low reached in 2010 (when the rate was 2.5). In fact, the homicide rate in 2010 was the lowest recorded in more than 50 years. The FBI data here does not go back before 1960, but based on national data before 1960, its a good bet that homicide rates in Colorado during the 50s — which was a period of very low homicide rates nationwide — were even lower than today in Colorado.

Since the 1972 peak in Colorado, when the homicide rate was 8.1 per 100,000, the homicide rate has fallen 65 percent. Since 1981, when the rate again went up to an unusually high level of 8.0 per 100,000, the rate has fallen by 64 percent.

Most of the public, however, is unaware that homicide rates have been declining in Colorado and nationwide over the past 20 years. The Pew Research Center has noted this in terms of national statistics.  The Colorado trend is a little different from the national trend, and you will notice the national homicide rate tends to be higher than the Colorado rate:

This data shows trends over time. But how does Colorado compare to other states right now?

In this map, we can see that Colorado is generally a low-homicide state, and similar to numerous other states in the northern US and provinces in central Canada:

Here's another graph that shows where Colorado falls:

The red bars are Canadian provinces, and the blue bars are US states. This is all based on the most recent data from the FBI and the Canadian government.

If you're interested in comparisons to Mexican state-by-state data, I completed an earlier analysis on that here.

(The rates were calculated using homicide totals from FBI sources, which I then adjusted to Colorado resident population for each year.)

National Job Growth Stalls, Fed Keeps Interest Rates Low

There is no doubt that there is a boom going on out there. Unfortunately, for much of the country, it's largely just a boom in asset prices, and not in job growth. That means real incomes are going down for people who don't make a sizable amount of income off assets they own.

In other words, for most people, the cost of living is going up while the job situation is stagnating. Colorado has tended to do better than many areas of the country in recent years, and the national data tends to reflect a more negative reality.

Yesterday, the Fed admitted as much when the FOMC voted to take no action on the target federal funds rate announcing "Against this backdrop [of poor economic data], the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent." (See the official statement, here.)

The move signals a surrender on the Fed's part in regards to earlier claims that it would gradually raise interest rates throughout 2016 back to more "normal rates" which haven't been seen since 2009.
With an economic situation that doesn't look to improve significantly this year, the Fed doesn't have much on which to justify any rate hikes (from the Fed's perspective). So, for the foreseeable future, we're likely to see an ongoing interest rate trend that looks like this:

But who can be surprised? When the new jobs data came out for May, earlier this month, even the usual media sources were forced to admit job growth was a disappointment. The administration has been crowing about how the unemployment rate has gone down, but unemployment rates can go down without any real job growth, and the Fed summed it up with yesterday's announcement when it said: "Although the unemployment rate has declined, job gains have diminished."

In fact, as I point out here, job growth was at a 28-month low in May 2015, and the April-May job gains were the worst we've seen since 2009, in the midst of the recession.

This comes after months of being told how excellent the job situation is by both the administration at the media. However, the job growth in the current recovery is the worst we've seen in numerous cycles. Moreover, much of the usually-cited jobs data does not take into account the many workers who are involuntarily employed part time, due to employer cutbacks in hours and declines in the need for workers as the economy slows:

The Fed has become especially concerned about job growth in recent months, but while we were being told how swell everything was the part six years or so, it's apparent that the Fed never thought so. Had the economic data actually been good beyond the often-reported headline numbers, then the Fed would have actually raised the target rate. As it is, the Fed was always too afraid to raise rates, since it has recognized all along that the current recovery has been lackluster at best.

The economy we have, though, means ongoing attempts at monetary and fiscal stimulus, and a continuation of ultra-low interest rate policy, currently in its seventh year.

For reference, here's a look back at the terget fed funds rate going back to 1992: