ECONOMIC INDICATORS
• Metro Denver’s employment growth slowed slightly at the end of the year. After adding 4,000 jobs in December, 2007 posted a final annual employment growth rate of 1.7%. Natural Resources and Construction & Manufacturing were the only two local sectors to report job losses for the year. Professional & Business Services, Education & Health Services and Leisure & Hospitality led the growth categories – all up 4% or more for the year.
• Statewide job growth through December finished at 2% - well ahead of the nation’s 1.3% employment gain for the year. “Solid, but not outstanding” is the phrase used to describe Colorado’s fourth straight year of job gains, while seeing unemployment dip to the lowest level in six years.
• Metro Denver’s unemployment rate rose from 3.9% in November to 4.4% in December. For the year, Denver unemployment averaged 3.9% - down from 4.4% in 2006 and well ahead of the nation’s 4.6% rate. The 17,000 January job cuts by U.S. employers is the most since 2003.
• Led by prospects in non-durable goods manufacturing, transportation, utilities and financial services, Manpower’s Employment Outlook Survey says 27% of Denver-area employers say they expect to add workers in Q1 2008 – below expectations from prior years, but up from 23% in Q4 2007. Early in 2007, half of Metro Denver companies expected to add workers.
• Colorado business leaders still believe that the state’s economy will fare slightly better than the nation’s as whole. 57% say they expect the national economy to decline in the short term, and about half expect little change in the Colorado economy.
• In a typical seasonal pattern, October retail sales fell 4% from September in Metro Denver – less of a change than the two prior years and boosting YTD spending to a level 9.1% greater than a year ago. The local data lag keeps us from seeing Denver’s holiday performance yet, but many signs point to at least modest momentum.
• After a 0.4% slide in December (worst in five years), early national indicators for January spending are better than expected, led by a surprise gain in auto sales. Sales were flat excluding autos and gas. 2008 projections call for a 3.2% increase in Q1 and Q2, and 3.8% in Q3 and Q4. With January up only 0.3%, we’ve got some catching up to do.
• Consumer Confidence in the Mountain Region fell again to 114.1 in December, but remains well ahead of the national index of 88.6. Our regional index is up 0.7% from year-end 2006.
• No matter what the economists say, 61% of the American public believes the economy is already in recession.
• Inflation in 2007 was the highest in 17 years. Led by higher costs for energy (+17.4%) and food (+4.9%), overall consumer prices rose by 4.1% last year, the most since 1990. Retail sales grew 4.2% (weakest since 2002), so inflation adjusted sales were essentially flat for 2007.
• Remember last month? The Bloomberg Colorado Index was up 17.7% for the year and well ahead of the DOW YTD average of +6.4%. You know what happened. The DOW decreased 4.6% from December to January while the Bloomberg Colorado Index fell 6%. (The Bloomberg Colorado Index is a price weighted index that includes 115 Colorado companies.)
• Venture capital investment in Colorado increased in 2007. Colorado companies attracted 35 deals worth at least $592 million in 2007 – fewer deals, but more money than 2006. 276 mergers and acquisitions worth at least $51 billion also set a state record.
• Metro Denver home sales decreased by 7.6% between November and December. Nationally, December sales were 22% below the prior year and overall, 2007 existing home sales finished the year 13% below 2006.
• Metro Denver saw 49,789 homes sales close in 2007, down 0.9% from 2006. Homes under contract were nearly flat and inventory is up only 0.3%, together suggesting Denver’s relative real estate stability.
• Early January data for Denver counts 4,550 homes placed under contract – up from 4,292 in January 2007 and bucking the national trend.
• Median home prices in Denver decreased to $254,100 in Q3. YTD, median Denver prices are down 0.5%. The NAR claims that mortgage and sales contractions have hurt higher-priced markets more, and median price declines reflect a market shift towards less expensive homes.
• Nationally, median home prices in December were 6% lower than the prior December. Annualized, national median home prices are off 1.4%.
• Average SFH prices in Metro Denver finished 2007 two percent lower than 2006 and average condominium prices dropped by 4.5%. Denver still outperformed 13 of the other top 20 markets in the nation. Overall, local economists say that the relative stability of our housing market will make for a “milder” 2008 correction.
• National home foreclosures totaled 2.2 million in 2007 – more than one in every 100 households, a 75% increase over 2006.
• Metro Denver foreclosures increased 37% from November to December, and the 2007 total of 27,356 was 44% higher than the 2006 total. Adams County was hit hard with a 5.2% foreclosure rate for 2007, but Denver had the metro area’s largest percentage increase.
• Detroit was the worst of the worst, where one of every 20 homes saw some stage of foreclosure or delinquency. Colorado had the nation’s 5th-highest foreclosure rate, dropping from number one in 2006. Nevada was worst for 2007.
• Total residential building permits nearly tripled between November and
December, but more than three-fourths of those are duplexes and apartments. Only 296 single family detached permits were issued. Through December 2007, permits are still 18% below a year ago. Overall, Denver-area new housing starts and sales fell by about a third in 2007 from 2006. The industry is calling this the “worst in 20 years.”
• On the bright side, National Association of Realtors Chief Economist Lawrence Yun says that the Denver market is “past its bottom and is now in the early stages of recovery.” He also expects Denver housing appreciation to be in the 4% or 5% range, but that “irrational buyer pessimism” may be holding back the market.
• Real estate sales in Garfield County hit a record $1.22 billion in 2007, a 17% increase over 2006.
• The vacancy rate in Denver’s rental market inched up in Q3 to 6.1% and average rental rates rose slightly to $860 with the largest increases evident in Denver County. The overall vacancy rate is still the lowest since 2001.
• Investors snapped up a record $2 billion in Denver-area apartments last year, breaking the 2006 record. Problems in capital markets could mean a 2008 slowdown.
• Metro Denver’s office market vacancy rate remains unchanged at 13%. The average lease rate of $20.32 is also stable. 1.38 million sf of office space (58 buildings) was completed in 2007 and 66 buildings (another 3.36 million sf) are currently under construction.
• The industrial market follows the same flat year-end trend. Vacancy rates are unchanged at 5.9% and average lease rates are steady at $5.04 per square foot. 29 buildings (1.67 million sf) of industrial space was completed in 2007 (70% of that in Adams County alone) and another 21 buildings (1.8 million sf) are currently under construction.
• Hit hardest by current credit issues, Denver’s retail real estate market is exhibiting some softness. Vacancy rates moved up slightly to 7.7% and lease rates fell to $16.60. On the positive side, 41 retail buildings (1.6 million sf) were completed in 2007 and another 81 buildings (6.3 million sf) are currently under construction. Major projects include Prairie Center, Riverpoint at Sheridan and Church Ranch Crossing.
• Overall, Denver’s commercial real estate market finished 2007 with about $4 billion in sales – almost a 25% drop from the 2006 record of $5.3 billion, but still the second-strongest year in Denver history. Spillover from financing woes and housing market troubles put the damper on activity in the second half of the year.
