Chart of the Day: Is the multifamily construction boom in Colorado tapering off?

The March totals for multifamily permits in Colorado are now available from the Dept. of Commerce.. In March 2015, there were 1,196 new multifamily units permitted. During the same month of last year, there were 1,608 units permitted, which means multifamily units were down, year over year, by 25 percent. As we can see in the first chart, multifamily construction is up considerably from where it was in 2009, and is now at about mid-90s levels, which is a pretty robust pace.

Although they has been talk of immense amounts of building, total construction may be flattening out. If we look at year over year percentage growth, we see that the change in multifamily units was either negative or at zero for eight of the last 12 months. Over the past five months, it's all been flat or downhill. 

I've reduced the time frame for a better look at the last few years in the third graph. The trend here suggests a plateau in multifam construction. Why this should be the case is not immediately obvious. Rent growth continues to be strong with first quarter rent growth some of the strongest ever recorded. On the other hand, with the market so frothy, developers may be encountering supply-side issues such as continued increases in costs and the availability of labor and material. In any case, the enormous increases in new construction seen from 2011 to 2013 appear to be over. 

Chart of the Day: Colorado bankruptcy filings down 23 percent in April

According to the Colorado District bankruptcy court, bankruptcy filings were down 22.9 percent in Colorado in April, compared to April of last year. April was the 52st month in a row during which bankruptcy filings fell year over year.

Bankruptcy filings have been generally declining since late 2009 following sharp  increases in bankruptcies from 2005 to 2009. The first graph shows trends since 2006.

The downward trend has continued into April of this year, with year over year declines still well in place. The last four months suggest that declines have moderated a little bit, but year-over-year declines are still sizable.

Comparing month to month, we also see that April 2015's total for filings is the second-lowest in nine years. So, at this point, we see no change in the filings trend.

Chart of the Day: Singlefamily unit growth holding steady, but at fairly low levels

March 2015 data for private housing units show that, overall, housing unit production continues to climb in both singlefamily and multifamily industries. At this time, however, there is no danger of new construction reaching anything like the levels seen during the housing bubble of 2003-2007. The first graph shows the last two economic cycles in terms of new units permitted. We can see that, while numbers are up considerably since the trough in 2009, they remain at levels more comparable to the early 1990s. Of course, if we account for population size, new construction is then lower than the early 1990s in practical terms.

What do we see in terms of percentage growth? Singlefamily permit activity has largely flattened out. In January, the YOY change was negative at -4 percent, and over the past five months, growth has been under ten percent. Of course, this is still growth, so we shouldn't speak of singlefamily construction as if it has disappeared, but in a long term view, growth is fairly flat right now, and certainly, if we consider the high rates of home price growth, we can guess that the market could easily bear more home construction. So why is there so little? Uncertainty in the marketplace and among wage earners could be a factor, as might be the fact that the multifamily market is employing many of the resources that might have gone to singlefamily in a different type of market.

And speaking of multifamily units, have a look back at the first graph and note that the gap between singlefamily and multifamily units has disappeared. If you saw this and though, "gee, it looks like there are far more multifamily units — proportionally — being produced than usual," then you would be right. The last graph shows that over the past 25 years, multifamily construction has rarely been much more than 30 percent of all units. But if we look at the market since 2011, we find that this proportion is commonly over 40 percent, with even a few months reaching over 50 percent. This is a change in the general habit of the local market, and reflect nationwide changes in trends in which home ownership is falling and many households are opting for rentals for a variety of reasons.

Colorado is the size of New Zealand, with a GDP comparable to Thailand

Sometimes, it's easy to forget how large many American states are. Colorado, for example, is the size of New Zealand. Here's a helpful map for all states:

Source. 

But that's just comparing by physical size. If we compare by GDP, Colorado is the size of Thailand, which is not tiny. Of course, this is not per capital GDP. Per capital GDP is much higher in Colorado than in Thailand. Indeed, with five million people, Colorado generates a similar GDP to Thailand's population of 64 million people. The map:

We can also compare based on population size, in which case Colorado is similar to the small African country of Eritrea.

Year-End 2014 Foreclosure Report for Metro Counties in Colorado

Foreclosure stats for Colorado's metro counties up through the end of 2014:

Monthly Foreclosure Report Dec 2014 No Logo

'Commie Cowboys' Now Available Online for Free

Having become so fabulously wealthy on royalties, I've decided to make my book Commie Cowboys available online for free. I posted it here, where you can download it in PDF. If you like it, be sure to review it at the book's Amazon page. If you prefer a physical book, you can certainly still buy it on Amazon for a measly $5.99. There's an even cheaper Kindle version, also.

It's a book that details how the so-called "classic" Westerns of the post-WWII period hardly deserve their reputation for being pro-capitalist symbols of freedom. In fact, the old silent Westerns and the more modern "cynical" Westerns like Unforgiven and The Good, The Bad, and the Ugly are vastly superior, from a laissez faire perspective.

 Lew Rockwell and I talk about the book here.

Some New Library Books

The great Professor John Cochran, retired Dean of the business school at Metropolitan State College of Denver, and author of many fine scholarly articles on monetary policy and banking,  has kindly donated much of his personal library to my personal library. Included are numerous economics and history books. I'm most happy about the Henry Hazlitt books. These are just some of them: