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.

Federal Economic News

The Federal Reserve Board announced at the beginning of December that the national economy is gaining momentum, strengthened by the homebuilding, shipping and manufacturing sectors. (The Denver Post, Dec. 2, 2004).

The dollar continued at all-time lows against the euro and the Japanese yen. Despite a small correction in early December, the dollar continued its doldrums against the foreign currencies. (The Denver Post, Dec. 9, 2004).

The Federal Reserve Board raised interest rates for the fifth time since June on Dec. 14 and signaled the liklihood of more raises in 2005. (The Denver Post, Dec. 15, 2004)

The White House predicted a 3.5 percent growth rate for the U.S. economy in 2005. (The Rocky Mountain News, Dec. 18, 2004).

The index of leading economic indicators rose in November for the first time in six months, pushed upward by rising stock prices.

The stock market closed out the year with the major indexes at three year highs, driven up by positive consumer confidence reports and falling oil prices. (The Denver Post, Dec. 29, 2004).

Regional Economic News

Two economic reports issued at the beginning of December provided mixed signals on the recovery of the Colorado economy. A report on purchasing showed a contraction representing a decrease in new orders. A broader report that covered service providers as well as manufacturers related an increase. (The Denver Post, Dec. 3, 2004).

The University of Colorado issued a report that predicted growth in every non-farm business sector next year. The economic experts predicted that there will be 43,100 new jobs across the state next year. The largest gains are expected in the professional and business services area, which includes engineers to executives. They also estimated that the unemployment rate will fall from 5.3 percent to 4.8 percent. (The Denver Post, Dec. 7, 2004).

The Manpower Employment Outlook Survey was released on Dec. 14 in which employers stated that 25 percent of the companies interviewed for the survey expected to hire more employees during the first quarter of 2005. Seventy percent interviewed expected to maintain their existing staff levels. (The Denver Post, Dec. 16, 2004).

Economists also predicted that home appreciation will rise 5 percent in 2005. (The Denver Post, Dec. 7, 2004).

The state unemployment rate dipped to 5 percent in November, a percentage point lower than the previous year. (The Denver Post, Dec. 22, 2004).

The number of unsold homes now is close to a three year record level. The average wait time for a home sale is now 100 days. More expensive properties will take longer to sell. (The Denver Post, Dec. 26, 2004)

Denver recorded an all time high in home resales in 2004, and an increase of 12.6 percent over 2003. Denver is also close to it all-time high in foreclosures. (The Denver Post, Dec. 29, 2004).

Well, here we are in the midst of the slow season. There is some good news and some not so good news to pass along.

Fist the not so good news. We are still seeing the same factors we have been dealing with for some time. Slow job growth (Level 3, one of our largest local empolyers, is laying off 600), a sharp increase in foreclosures (up 30% from this time last year), and others are working to keep lots of properties on the market. This high number of properties are working to keep rents down. If you look at the chart you will see that we have a slightly lower number of rentals advertized this month (~800) as compared to last year at this time (~962). This is a welcome trend but it is still above the level of January of '03 when we had about 530 available.

Now for the good news. We are seeing a dramatic increase in the number of prospective tenants calling about our vacancies. This was slow the first week of January but starting about the 10th the phones started ringing off the hook. We are even getting a positive reaction to raising the rents slightly starting in the peak season (Jul-Aug).

So, with the economy still improving (slowly!) we should also see the same trends filtering down. We are also forecasting that the Fastracks referendum will improve the rental market. This referendum, passed last November, will give a big push to improving the local mass transit picture in the Denver Metro Area. Once they get started this will mean jobs and jobs mean renters. This will be a slow start but every little bit helps.

City of Boulder interest rates paid on security deposits for this 2005 will be 1.85% simple interest. Please remember you must pay the interest that was in effect when you received the deposit--not when you pay it out!

What is a competitive rent for your property? There is no one answer for everyone. We will be working with each of our clients to determine how their property should be priced in this market. Please contact us if you have specific questions or want more information.

We are actively working to grow the business and to add new properties to our management inventory. If you know someone that would be interested in our services please send them our way. We pay referral fees to anyone referring us business!

That wraps things up for this month. Again, if you do not want to receive these messages please call or email us and we will take you off this mailing list.