Vol. 30, No. 4
May 2006
Economy reflects good and bad times…at the same time
News reports are sending mixed messages about the state of the economy in Colorado. On one hand, unemployment rates are dropping to lows not seen since 2001 – the stateʼs rate was 4.6% in February – and job growth is outpacing the nation. In fact, employers anxious to hire are finding fewer workers available – a repeat of the job seekerʼs market in the late 1990s and early 2000s. Also, Coloradoʼs per-capita personal income of $37,946 in 2005 – an increase of 5.1% compared with 2004 – was the 8th highest in the nation, according to U.S. Bureau of Economic Analysis. The nationʼs per-capital income was $34,586. On the down side, the trend of overdosing on debt has resulted in record foreclosures in Colorado. The Weld County Trustee reports 492 foreclosures in the first 3 months of ʼ06, a 33% increase compared with the 369 foreclosure in the same period last year. The Larimer County Trustee reports 306 foreclosures in 1Q ʼ06, a 27.5% increase compared with the 240 foreclosures in 1Q ʼ05. And more bad news may be on the way as millions of Americans who have adjustable rate mortgages face higher interest rates and payments – as much as 50% higher, according to the Wall Street Journal. Economists say that since foreclosures are a lagging indicator of the economy, they will get worse before they get better.
Northern Colorado has its fill of residential lots, study shows
Listed below is the inventory of available lots in Northern Colorado according to the research firm Metro Study. “Developed lots” are lots that have improvements such as utilities and streets already installed; “paper lots” are lots that are platted but have not had improvements installed. Data is for the 12 months ending 3Q ʼ05.
Area Fort Collins Wellington Loveland Greeley Johnstown/Milliken Windsor Developed lots 1,669 413 1,620 2,478 1,381 1,261 Paper lots 13,108 1,709 6,820 3,082 12,239 9,271 Annual deeds 1,005 213 978 715 532 206 Estimated months of inventory (dev. lots) 17.7 22.1 16.1 30.2 26.8 39.1
Home prices by the zip code Guarantee your mortgage Economic indicators
Real estate by the numbers
• 26.6% – The amount Weld County grew between 2000 and 2005, making it the 9th most-populous county in Colorado with 228,943 residents, according to the U.S. Census Bureau. Larimer County grew 8.1% to 271,927 residents and is the 7th most-populous county in the state. $270,833 – The price paid per unit for an apartment complex at 4550 Cherry Creek in Glendale, making it the highest-priced complex sold in metro Denver in 2005, according to the Denver Business Journal. $845 – The value per acre of Coloradoʼs farmland in 2005 – an increase of 9%, according to the U.S. Department of Agricultureʼs National Agricultural Statistics Service. The national average value per acre was $1,510 – an increase of 11%. 550 feet – The length of the “landscraper” Denverʼs Zeppelin Development Inc. is planning for its Taxi project in downtown Denver. The building, with both business and living space, will be 55 stories long and 4 stories tall. 8.9 million – The number of households in America with a net worth of $1 million or more, excluding their principal residence, in 2005, according to British market-research firm TNS Financial Services. 27,309 – The number of homes on the market in the metro Denver area in March, coming close to the record 28,000 homes on the market in June 2004. Experts expect that record will be broken more than once this year.
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Believe it or not: 25-story “refrigerator” provides winter fun in the desert
Who needs the Swiss Alps or the Rocky Mountains when you can build a 25-story refrigerator in your own backyard – even if it is the desert? Ski Dubai in the United Arab Emirates has 16-foot-thick insulation; real “snow”; the worldʼs first indoor black diamond run; a trail dropping 200 feet over a quarter-mile; and a lodge, lifts and evergreens. The cost to ski there is $35 for equipment and 2 hours of skiing.
Median-home prices by zip code
Take a look at how area median-home prices compare with prices with Boulder and Denver by zip code. This compares the median price (½ of the prices are higher and ½ are lower).
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Source: IRES and The Rocky Mountain News
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www.thegroupinc.com nears 45,000 visits in March; revised site went live in April
The Group, Inc.ʼs Web site, www.thegroupinc.com, had 42,697 unique visitors in March, making it one of the most-visited real estate Web sites in Northern Colorado. And now you can get even more information by visiting the site. The Groupʼs revised Web site sports a new look and new tools that make home buying and selling easier. The site features: Access to all homes in the MultipleListings Service (MLS); My HomeSearch! allows you to receive information about listings in your email box; Whatʼs My Home Worth? provides an instant range of valuation for your home just by entering its address; open houses throughout Northern Colorado during the weekend; current market statistics; links to The Group, Inc. Realtorsʼ personal Web pages, resumes and contact information; mortgage calculator; and information about The Group Guaranteed Mortgage, including current rates.
A shift in interest rates presents a time to review your financing
If you have a mortgage loan or a home-equity line of credit that is tied to short-term interest rates and your payments have been rising, now may be a good time to refinance with a fixed-rate loan. The prime rate has increased from 4% in June ʼ04 to 7.75% in March ʼ06. Meanwhile, the average 30-year, fixedrate mortgage in June ʼ04 was 6.42%, and today it is 6.47%.
June 2004 Prime Rate: 30-year fixed: 1-year ARM: 5-year ARM: 4.00% 6.42% 4.25% 5.25% April 2006 7.75% 6.47% 5.65% 6.25% % Increase 93.75% .9923% 32.94% 19.05%
Avoid “bad paper” – go with a mortgage that is “Guaranteed”
At one time, a pre-approval letter from a lender was considered almost as good as cash in hand. Unfortunately, today real estate agents and builders view such letters with a healthy dose of skepticism – after being burned by “bad letters” and having clients upset because their loans didnʼt close. In a recent survey of more than 1,700 real estate professionals, conducted by Campbell Communications for Inside Mortgage Finance Publications, 51% said unreliable pre-approval letters are the most significant issue with mortgage providers. Internet lenders were the worst, with nearly 40% of their pre-approval letters proving invalid. Hereʼs a breakdown of your odds of receiving a vaild pre-approval letter by type of lender:
PERCENTAGE OF VALID PRE-APPROVAL LETTERS
*A mortgage partner is a lender who partners with a builder or real estate company. The Groupʼs mortgage partner is The Group Guaranteed Mortgage, powered by Countrywide Home Loans. Call me if you would like information on The Group Guaranteed Mortgage; last month, 100% of its loans were closed and funded on time.
Source: Campbell Communications
A monthly snapshot of Northern Colorado’s economic health
Likely Direction in Next Six Months Forecast
More pressure for rates to rise than to fall, but not much movement in either direction. Sales still strong but an oversupply in many market segments makes it tough on some sellers. Supply of new homes exceeds demand; builders will slow their pace the rest of the year. Prices will continue to rise and will average 4% overall increase this year; however, some segments will be flat. Net jobs will continue to increase (more “hirings” than “firings”).
Mortgage Rates
April 13, 2006 April 14, 2005 April 15, 2004 6.49% 5.91% 5.89% Fort Collins Area 676 730 704 Fort Collins 151 185 245 Fort Collins Area $268,697 $262,394 $247,321 Greeley Area 748 846 775 Greeley 96 199 226 Greeley Area $220,626 $208,024 $192,135 Weld County 107,245 104,318 101,713 Weld County 4.7% 5.2% 5.9% Greeley Area 8.8% 11.1% Loveland Area 2% 1.9% 5% Loveland Area 370 428 408 Loveland 89 105 104 Loveland Area $268,592 $249,069 $237,708 Colorado 2.47m 2.42m 2.38m Colorado 4.6% 5.2% 5.7% Loveland Area 8.6% 12.5% Fort Collins Area 4.62% 5.36% 11.87% Fall ‘04 Greeley Area 8.1% 4.5% 11.8% Loveland Area 3.37% 1.85% 5.7% Windsor Area 149 119 119 Windsor 92 109 88 Windsor Area $315,929 $333,728 $278,090
Existing Home Sales
YTD March ‘06 YTD March ‘05 YTD March ‘04
Housing Starts
YTD March ‘06 YTD March ‘05 YTD March ‘04
Average Single-Family Sales Price
YTD March ‘06 YTD March ‘05 YTD March ‘04
Employment
Feb. ‘06* Jan. ‘06 Feb. ‘05
Larimer County 160,728 154,821 154,157 Larimer County 4.3% 4.8% 4.9% Fort Collins Area 8.9% 11.0% Fall ‘05 Greeley Area 7.05% 5.79% 20.84%
*Not seasonally adjusted.
Unemployment
Feb. ‘06* Jan. ‘06 Feb. ‘05
*Not seasonally adjusted.
Since 4% is considered full employment, we can drop only a little more. Will continue gradual decline but it will take a couple of years to absorb the excess rental inventory.
Apartment Vacancy Rates
3Q 2005 3Q 2004
Commercial Vacancy Rates
Industrial Retail Office Fort Collins Area 4.74% 4.94% 13.41%
Rates will rise somewhat due to a dramatic increase in supply – especially in retail.
Fort Collins Greeley Loveland Windsor YTD March ‘06 $20.87m $11.85m $8.15m $1.56m YTD March ‘05 $19.28m $11.16m $7.62m $1.42m YTD March ‘04 $17.99m $10.81m $7.31m $1.06m *Represents 3 months of taxes collected, including those received in January for December receipts.
Sales and Use Tax*
Improving faster in Loveland and Greeley than in Fort Collins.
Sources: Freddie Mac; cities of Fort Collins, Loveland, Greeley and Evans ; town of Windsor; Realtec Commercial Real Estate Services; Gordon E. Von Stroh; State of Colorado; IRES.