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.

National Economic News

The Federal Reserve Bank raised short term interest rates for the 8th time in a year, to 3 percent, in an ongoing quest to control inflation. (The Denver Post, May 4, 2005).

The U.S. factory orders logged an increase in March according to the Commerce Department. This was in spite of a large drop in demand for big-ticket items, believed to be linked to increasing energy prices. (The Denver Post, May 5, 2005).

The U.S. service economy continued its expansion for the 25th straight month in April, but at a slower rate than recorded in March. (The Denver Post, May 5, 2005).

The Labor Department announced that nationwide payrolls increased by 274,000 new jobs in April, which was nearly 100,000 more than predicted. Meanwhile, the unemployment rate held steady at 5.2 percent. (The Rocky Mountain News, May 7, 2005).

According to a report in the London Financial Times, real wages in the U.S. are falling at their fastest rate in 14 years. The culprit is inflation, which rose 3.1 percent in the year that ended in March, while salaries grew only 2.4 percent. (The Denver Post, May 11, 2005).

The Commerce Department reported that the U.S. trade deficit fell sharply in March, to its lowest level in six months, as U.S. exports climbed to an all-time high. Imports declined, driven in part by a slowdown in clothing shipments from China. (The Denver Post, May 12, 2005).

Stock prices continued to take direction from oil prices, rising and falling as the oil price moved in the opposite direction. (The Rocky Mountain News, May 14, 2005).

The Labor Department reported that wholesale prices rose 0.6 percent in April, while industrial production faltered and housing construction began to rebounded. The mixed signals on the economy were summed up as an "OK economy that is moving forward," according to Mark Zandi, the chief economist at Economy.com. (The Denver Post, May 18, 2005).

Prices and sales of previously owned homes hit records last month, according to the National Association of Realtors. The median price of $206,000 was up 6.7 percent from the previous month and 15.1 percent from the prior year. (The Denver Post, May 25, 2005).

The U.S. economy grew by 3.5 percent in the first quarter of 2005, higher than estimated. Investors interpreted the report as meaning the risk form inflation was lessening and the economy was still expanding. (The Denver Post, May 27, 2005).

Regional Economic News

Colorado was among five states that collectively account for nearly half the nation's foreclosures in March according to a study by Realty-Trac. Forty five percent of the foreclosures in March were in Colorado, Georgia, Florida, Texas and Utah. (The Denver Post, May 6, 2005).

The Colorado Department of Labor and Employment reported that the state had 41,700 more jobs than it did a year ago, as of April, for a rise of 1.9 percent. Construction, retail trade, and business and professional services led in the gains. (The Rocky Mountain News, May 21, 2005).

Denver's office vacancy rate is at 16.2 percent now, as compared to 16.6 percent in the fourth quarter of 2004. The drop is attributed to expanding payrolls, and is pushing investors to look more closely at commercial property prospects. (The Denver Post, May 6, 2005).

Welcome to the peak season 2005! Things are definitely looking up. As you can see in the chart, we saw an increase in advertised rentals of about 11% from last month. How does this compare to previous years? This June we have about 828 ads. We had 1411 in 2004, 1498 in 2003 and 467 in 2002. This is very encouraging. Please note this does not include many of the student rentals.

Not only are we seeing fewer rentals on the market but we are seeing increasing demand. Many areas in Boulder and Broomfield counties are acutally getting increased rents! This is not the case everywhere but the general trend is excellent.

This section will deal primarily with the Student Rental Segment. Please see the Rental Market Section for overall market information.

The student market continues to confuse and confound owners and landlords. In normal years the majority of student rentals are pre-leased for Fall. This year, however, we are seeing a very high vacancy rate and many students state they are just starting to look. We attribute a lot of this to the continuing controversies at CU and their insistence in raising tuition. Add that to both the Daily Camera and Colorado Daily newspapers telling them to wait for prices to come down and we see a depressed market. We still have a number of vacancies as do all my competitors whith which I have spoken recently. One source stated the vacancy rate at the new CU Bear Creek Apartments was about 40%. Price continues to be the driving factor. Rents are still dropping as owners try to attract renters. This does not seem to be having a strong effect on the typical non-student rentals. We will have to wait to see how this segment resolves after the classes begin on August 22nd.

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.