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During the third quarter of 2015, the average multifamily vacancy rate in Colorado Springs dipped to 4.2 percent, which was the lowest vacancy rate recorded since 2001. During the fourth quarter of 2015, the vacancy rose slightly to 5.0, but remained down from the fourth quarter of 2014, which had a vacancy rate of  5.3 percent: Clearly, the overall trend has been downward since 2004. In fact, the vacancy rate even went down in the midst of the 2008-2009 financial crisis. This was unusual because vacancy rates typically increase when unemployment increases. However, in Colorado Springs, the declining vacancy may have reflected a flight from homeownership to rental apartments in the wake of high foreclosure rates.  In order to check for seasonal factors, we can also separate out the quarters to see how 2015's fourth quarter compares to other fourth quarters. As expected, it turns  out that 2015's fourth quarter was the lowest vacancy rate found in any fourth q...

With new apartment vacancy data coming out for Colorado Springs, it may be helpful to take a look at household formation versus new unit construction in the Colorado Springs area. For now, we only have data up through mid 2014, but we can get a sense of the overall trend. (These numbers are from the Colorado Demography Office and are based on population and household data. The total household number is based on occupied housing unit data, and the housing unit data originates with the US Commerce Dept., and includes both single-family and multifamily.) In 2014, new household formation and new housing units were fairly even matched.We can see that both increased by about 1.25 percent. Specifically, housing units increased by 1.2 percent while households increased by 1.3 percent (for Colorado Springs): Not all years are as evenly, matched, though. We can see back in 2010 there was a lot more household growth than there was new unit construction. Back in 2003, there was a lot ...

During December 2015, home price growth in the Denver area, according to the Case-Shiller index , remained at some of the highest levels seen in a decade, with year-over-year growth at 10.2 percent. That's down from November's year-over-year rate of 10.8 percent, but up slightly from December 2014's rate of 10.1 percent. The first graph shows the year-over-year comparisons for the past decade: We can see that growth is topping what it was during the nationwide housing bubble that existed prior to 2008. Clearly, for-sale housing demand remains rather robust in the region (at least as of December). Compared to the 20-city composite index for home prices, Denver continues to see even greater growth. In fact, metro Denve rgrowth has been almost double the 20-city composite growth in recent months: As noted here , as of December 2015, employment growth in Metro Denver has been slowing, but apparently not enough to bring down the sizable growth rates we've bee...

With the arrival of the presidential primaries (and especially the one in South Carolina), i'm reminded that military spending can be a major factor in state level politics. Some states owe very large portions of their state's GDP to military spending, and it's not a coincidence that Southern states are known for their pro-military voting blocs. Many states in that regions have economies intimately tied to their local economies. To see where Colorado fits in this, we can look at a 2011 study conducted by Bloomberg that examines military spending by state. The key factor we'll look at here is the amount of  military spending in each state, compared to the overall GDP. When mapped out, it looks like this: This statistics is not to be confused with total military spending. California, for example, receives much more military spending, overall, than Colorado does, but proportional to their overall economy, military spending in California is smaller in California...

During December 2015, single-family permits in Colorado Springs were tied with January 2015 for the lowest level of permits reported since December 2011. There were 124 single-family permits reported during December 2015, which was the same amount reported during January 2015. The first graph shows single-family permits, by month, over the past fifteen years: During 2015, permits peaked during the summer, as usual, with 311 permits reported during July 2015. For December, though, if we compare to other Decembers, in order to take seasonal factors into account, we find that December 2015 was the least active December in four years: December's numbers are not enough to suggest a downward trend in themselves, although the trend since 2012 has rather clearly been a flat one, with little movement up or down. Nevertheless, sedated permit activity may be reflecting lackluster job growth that has been a factor in the local economy. Multifamily Permits  But what about ...

Along with the Denver area, Northern Colorado — i.e., the Greeley and Ft Collins metro areas — has long been one of the more economically robust parts of the state. This has held true since the end of the 2008-2009 recession, with significant job growth in both metro areas. Historically, Ft Collins has tended to see more growth than Greeley, but thanks to recent growth in oil jobs, Greeley has experienced very large growth levels. During December 2015, payroll jobs grew 3.6 percent over December 2014, with 5,400 jobs added. During November 2015, payroll jobs grew 3.1 percent, or 4,600 jobs, year over year.  I n general, job growth appears to be holding steady in the Fort Collins metro area (which includes Loveland): In fact, job growth in the Ft. Collins area has outpaced the last expansion from 2003 to 2007, when job growth hovered around 2 percent. Meanwhile, in Greeley, job growth reached very high levels, topping out at 9.7 percent during July of 2014. Across Colora...

A look at the unemployment rate in Colorado Springs suggests that things are going swimmingly. In fact, they're back to the old boom levels below five percent. During December 2015, the unemployment rate, was at four percent which was down from 5.1 percent during December of 2014: The last time unemployment rates were generally this low was back during 2007, before the 2008 financial crisis and during the last boom. The problem with the unemployment rate, though, is that it is a function of both labor force size and employment. That is, if people give up looking for work, leave town, settle for a part time job at a low wage, decide to live on student loans, or retire early, all these things can reduce the unemployment rate, even in the absence of any job growth. If we look at payroll job growth, however (from the Establishment survey) we find that job growth has been slowing and has been in a downward trend for the past ten months. During December 2015, payroll employme...

Household formation has long been an issue central to the demand for real estate. If people move out of their parents homes and create a new household, then a new housing unit will be demanded. If two people move out, and get one unit together then one new unit will be created out of two. If both people can afford to get their own apartments, then two new units will be created out of two. Economic prosperity has long been connected to economic prosperity. If incomes are low, or housing costs are high, people will either stay at home or take on additional roommates to afford housing. If wages are high or housing costs are low,  more people will demand more units. This is moderated, of course, by people cohabiting for romantic/family reasons, such as marriage. In that case, two households will reduce to one even when economic times are good.  Nevertheless, on the whole, there is reason to believe that when incomes and economic prosperity increase,  people tend to demand...

The 4th Q 2015 vacancy and rent survey showed that vacancy rose to a five-year high while rents were flat from the 3rd Q of 2015 to the 4th Q. Year-over-year, though rent growth was still substantial. The rent data released by the Apartment Association's survey, however, are just nominal rents, and are not adjusted for inflation. So, I like to take a look at rents in terms of 2015 dollars only, so we can compare more accurately with rents as they were in previous business cycles. We know that nominal rents are currently near the highest levels ever. But where are they once adjusted for inflation? Well, it turns out that even when adjusted for inflation, the average rent in metro Denver is still near all-time highs. In this case, the fourth quarter average rent for metro Denver was $1,292, which is equal to the third quarter and up from the average rent during the fourth quarter of 2014 which was $1174. However, it wasn't that long ago that the average rent was still ...

Although job growth has slowed in Colorado, the year-over-year change is still positive . That is, new jobs are still being created, according to the Establishment survey . The situation is a bit different in Grand Junction and Pueblo, however, where the latest Establishment employment survey shows that in December, total payroll employment actually went down, year over year. Practically speaking, though, jobs were simply flat in both cases. In Grand Junction, for example, payroll employment was flat at 62,000 jobs with no change to speak of from December 2014 to December 2015. We do see a general trend of decline since early 2014: In Grand Junction, payroll employment growth hit 3.2 percent (a gain of nearly 2,000 jobs) back in March of 2014, but it's been declining since, and has been flat over the past four months. In fact, total employment in Grand Junction hasn't much budged from the 62,000 jobs mark for the past six months.  In Pueblo, payroll employment was...

Every year, Gallup releases its "Well Being Index" which measures the following :  Purpose:  liking what you do each day and being motivated to achieve your goals Social:  having supportive relationships and love in your life Financial:  managing your economic life to reduce stress and increase security Community:  liking where you live, feeling safe and having pride in your community Physical:  having good health and enough energy to get things done daily Out of all US states, Colorado comes in fourth, behind first place Hawaii, then Alaska and Montana. Wyoming rounds out the top five for fifth place.  Colorado is in the top ten list, yet again. In fact, according to Gallup, " Hawaii and Colorado are the only two states that have made the list of the 10 highest well-being states each year since 2008." The Western US in general is notable for having high well being scores:  Why does the West do so well? Well, the stereotypes ab...

Employment growth in metro Denver may be tapering off, but as of November, home prices certainly weren't. According to Case-Shiller's report for November , released last week, the Denver home price index was up 10.8 percent, year over year. That's down slightly from September's 10.9 percent YOY increase, which was the largest increase seen in the Denver index since 2001 at the end of the dot-com boom. While the highest YOY increase recorded in the past 20 years was 14 percent in 2001, November's growth rate of 10.8 percent is nevertheless a very large increase. Denver's home price growth is outpacing the nation overall as measured in Case Shiller's 20-city index, which showed a year-over-year increase of 5.8 percent for November. In thsi graph, I've compared Denver to the 20-city index, and you can see Denver's been outpacing the larger index for a while: As Colorado has had stronger job growth than the nation overall, it is not shoc...

According to the Establishment employment survey, total year-over-year payroll employment growth fell to 1.7 percent during December 2015. This was the lowest growth level seen since October 2011, when the growth rate was 1.6 percent. Growth rates in payroll employment have been generally falling over the past 11 months, and the growth rate had been 4.1 percent during February 2015: Growth rates have not fallen off this quickly since 2008, although the growth rate itself remains at relatively robust levels compared to the last economic expansion between 2003 and 2008. In terms of employment totals, there were 1,398,000 payroll jobs in December 2015, compared to 1,374,000 payroll jobs one year earlier. That's an increase of 24,000 jobs over the year. So, we're still looking at increases, but the rate of increase in each month has been falling. Unless this trend reverses itself, of course, we will be facing negative job growth by the end of 2016. (This data is ...