Metro Denver home prices and the available inventory hit record levels in the month of June. The metro Denver market had 26,533 homes for sale, which was a 23.2 percent increase over June of 2002. Despite the greater availability, low mortgage rates drove housing prices to record levels, with the median price for a single-family home at $230,164. This was 2.3 percent higher than 2002. (Denver Post, June 25, 2003).
In the first half of 2003, the Denver area commercial real estate market increased sales by 23% over last year. According to analysts in the field, the numbers are not indicative of a market turnaround. Instead, investors are purchasing particular targets to assure a steady cash stream from high quality tenants. The types of properties that investors currently desire are single-tenant buildings with long-term leases from credit-worthy tenants, followed by buildings with grocery-anchored retail business, and then buildings with retail of all kinds. Office-warehouse space is next in priority followed by industrial properties. Investors are less interested in multi-tenant office buildings and those combining office and industrial attributes, which have significant vacancies in today?s environment. (Rocky Mountain News, June 21, 2003).
The nation?s unemployment rate reached a nine-year high in May of 6.1%, but the rate of job losses slowed. (Rocky Mountain News, June 7, 2003). In the meantime, Colorado?s jobless rate fell from 5.9% in April to 5.8% in May. Labor department officials report this is an indication that the employment situation may be stabilizing. (Rocky Mountain News, June 21, 2003). Reinforcing that outlook, the number of workers nationwide filing new claims for jobless benefits dropped for three weeks in a row at the end of June. (Boulder Daily Camera, June 27, 2003).
| Residential Median Home Pricing | ||
|---|---|---|
| Area | Q 1/2003 | Q2/2003 |
| Boulder | $399,900 | $410,000 |
| Lafayette | $295,000 | $277,400 |
| Louisville | $302,500 | $275,000 |
| Longmont | $220,000 | $224,000 |
| Suburban Plains | $365,000 | $325,000 |
| Mountains | $330,000 | $360,000 |
The Colorado economy remains very sluggish. In Denver, the short-term hiring outlook was termed ?horrible? with just 3% of employers predicting they will add staff during the next three months. 27% plan layoffs, 33% expect no change, and 37% simply don?t know what they will do. (Denver Post, June 18, 2003). Although the business sector appears to have stabilized in terms of layoffs, the state is now cutting staff in order to meet budget shortfalls. Over 1,000 state jobs were eliminated over the past year, with over 500 more cuts scheduled over the next few months. (Boulder Daily Camera, July 1, 2003).
The rush to build appears to be slowing, as building permits for homes, condos and apartments fell 14.81% in the first four months of 2003 versus last year. Apartment permitting fell by 28.8%, condos fell by 29.59%, and single-family home activity fell by 7.27% in Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, Elbert, and Jefferson counties. (Rocky Mountain News, June 7, 2003).
In mid-June, mortgage rates inched below the 5% mark, spurring on the record flood of refinances in 2003. The rates rose again by the end of the month. (Denver Post, June 19, 2003). Correspondingly, mortgage delinquencies nationwide were lower in the first quarter of 2003 because homeowners were able to refinance their loans at lower interest rates. (Rocky Mountain News, June 21, 2003). That appeared not to be the case in the metro Denver area, as foreclosures for the second quarter increased by 6.2% over 2002. Analysts say that is because borrowers may have cashed the equity out of their homes or moved into expensive houses, and then lost their jobs or were forced to accept pay cuts. (Denver Post, July 1, 2003).
The Commerce department reported at the end of June that consumer spending is inching up with 0.1% increases for each of the last two months. This may be a harbinger of better times ahead, as Americans are feeling more confident about the economy. (Boulder Daily Camera, June 28, 2003).
