This newsletter is a compilation of news and information regarding the rental markets in Boulder and Broomfield counties and the economic status of and outlook for the area. It is issued during the first week of the month. The sources for the data include local and regional news media, association publications and seminars, and information gathered from contacts in the property management and real estate fields. We make every effort to cite all of our sources. Should we miss one please let us know so that we can correct the omission.

Company News

Check out our website at www.persmgt.com. This is the tool we use to market the properties we have for rent and describe the services we offer. We continue to improve it to better serve our clients.

National News

The economic market ended the first half of the year at a moderately advanced position, as investors reacted calmly to the interest rate hike of 0.25 percentage point. (The Denver Post, July 1, 2004).

Nationwide, the sales of existing homes hit an all time high in June, triggered by the rise in interest and mortgage rates. (The Denver Post, July 27, 2004).

On the jobs front, U.S. employers added less than half the forecasted amount of new positions over the past two months, indicating a weak recovery. The unemployment rate remained unchanged for the third month in a row. (The Rocky Mountain News, July 3, 2004).

In further bad news, the wages of U.S. workers are not keeping pace with consumer prices. Wages increased 2.2% over the last year, while prices increased 3.1%. (The Rocky Mountain News, July 3, 2004).

And finally, as a result of poor earnings and outlook reports, weak job growth, and rising oil prices, the markets settled lower than they have in three months. (The Denver Post, Aug. 1, 2004).

Regional News

The majority of Colorado public company stock prices and bond fund proces ended down in the second quarter. The gloomy results were due to investor belief in higherr interest rates. (The Denver Post, July 1, 2004).

The Front Range manufacturing index rose in June for the fifth consecutive month, indicating strong manufacturing growth in the region. (The Denver Post, July 2, 2004).

Colorado added 5,800 new jobs in June, the fourth month in a row of non-farm job growth. June was also an 18 month high in employment. (The Denver Post, July 20, 2004).

The median price of a single family home in the metro area reached $244,800, up 2.9% from a year ago. Sales of existing homes climbed in July, due to a slight decline in mortgage rates. (The Denver Post, July 28, 2004).

Metro area apartment vacancy rates are dropping, as builders are constructing fewer new properties. For the quarter, average rents increased, but landlords continue to offer free rent incentives to entice renters to their units. (The Denver Post, July 28, 2004).

Broomfield County

The University of Colorado Business Research Division issued its latest reports on the local economy. Employment in Broomfield County fell 1.5 percent from the fourth quarter of 2003, but was 1.8% higher than a year ago. Unemployment remained unchanged from the previous quarter. Total residential building permits rose five percent from the previous quarter. (The Boulder County Business Report, July 9-22, 2004).

Boulder County

According to the University of Colorado Business Research Division, unemployment fell in Boulder County in the first quarter of 2004 to its lowest level since 2001. Employment was 1.9% higher than for the same period in 2003. Further residential building permits in the first quarter were at their highest level since 2001. 9The Boulder County Business Report, July 9-22, 2004).

Check your utility bills carefully! A few months back, Xcel Energy installed a new computer system. This caused no end of problems for us.

During this conversion Xcel Energy:

• reassigned all account numbers.
• reassigned all landlord account numbers.
• randomly combined individucal properties under single accounts.
• issues statements where the detail does not add up to the statement balance due.

This caused a great deal of confusion and is still costing us hours working to get things straight. During one call to Xcel we were sent to their "triage team" for help!

They are still working to get this corrected.

The residential rental market continues to raise eyebrows. According to the Denver Post (August 1, 2004) the regional vacancy rates were between 4-5% from 1995 to 1qtr 2001. In early 2003 it a high of 11.6% and is now around 11.2%. In this same article we see a Denver Metro vacancy rate of about 9.7% over all. The Boulder/Broomfield markets had a 9.5% apartment vacancy rate according to the Apartment Association of Metro Denver (Denber Post, July 28, 2004). This same article shows we are also seeing a coninuting increase in home sales. This will continue to reduce the total number of rentals on the market and help improve the rental market.

As you can see from the chart we are in the midst of our busy rental season. Although many of the student rentals were leased last Spring for this Fall, there are still a number of student rentals on the market. We saw a spike last month and we are still about double the number of rentals compared to this time last year. The good news is the trend for advertised rentals shows a decline. We will hold judgement on whether the market is really improving until Labor Day. This is the traditional end of the busy season and the vacancy rate at that time will be telling.

Many of our clients and owners ask about the new housing at the CU Williams Village campus. If you drive into Boulder on Hiway 36 you will see a huge sign offering 2 months free rent. Is this indicative of the local student market? We believe they are struggling as students decline "dorm living." We asked a number of our student tenants about these apartments and many stated they were "...just new dorms. Who wants to live there again?" Although our student vacancy rate is 10% that is only 3 units out of 30. One must look at the data closely.

No major changes or trends to report this month. However, we are getting feedback that the number of citations for trash and weeks is on the up-swing. Remember , the City is not required to issue a warning. They can, and do, issue citations for first offenses.