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 U.S. economy posted its strongest quarter in more than a year, in spite of the Gulf Coast hurricanes. The Commerce Department announced that the gross domestic product (GDP) increased at a rate of 4.3 percent from July through September. (The Denver Post, December 1, 2005).

Nationwide hiring increased in November, again in spite of the gulf coast hurricanes. Employers expanded payrolls by 215,000 jobs and the unemployment rate held stead at 5 percent. (The Rocky Mountain News, December 3, 2005).

The U.S. Labor Department announced that the productivity of American workers increased at an annual rate of 4.7 percent in the third quarter, which was the best showing in two years. Productivity is the largest factor determining future living standards. (The Denver Post, December 7, 2005).

On December 13, the Federal Reserve Board raised interest rates for the 13th time in a row. (The Denver Post, December 14, 2005).

The Commerce Department reported that the U.S. trade deficit rose to an all-time high of $68.9 billion in October, based upon a flood of oil imports and Chinese goods. (December 15, 2005).

Consumer prices fell in November at theri steepest rate in 56 years, due to sharp declines in oil and gasoline prices. (The Denver Post, December 16, 2005)

The U.S. stocks closed 2005 with the Dow Jones suffering its first yearly loss since 2002. The S&P 500 and the Nasdaq eked out small gains for the year. (The Denver Post, January 1, 2006).

Regional Economic News

Colorado home prices appreciated 5.6 percent in the year ending September 30. This is 45th among the states and Washington, D.C. Economists said the slower growth rate is a result of the economic slowdown of 2001 and could benefit the state in the long run by allowing Colorado housing to become more competitive. (The Denver Post, December 2, 2005).

According to the 2006 Colorado Business Economic Outlook, released by the CU Boulder Leeds School of Business, the state is on track to add 49,000 non-farm jobs in 2005, which is a 2.2 percent growth rate and will outpace the U.S. wide rate of 1.7 percent. The report predicts that the growth will carry into 2006 and predicts a 2.3 percent growth for next year. (The Denver Post, December 6, 2005)

The state unemployment rate held steady in November at 5 percent, even with the national rate. (The Denver Post, December 17, 2005).

Colorado stocks as a group beat U.S. equity indices in 2005, rising 17 percent. Denver-based Titanium Metals Corp. was the state's best performer, rising 424.1 percent. (The Denver Post, January 1, 2006).

Slow season is upon us again. You can see from the chart that the total rentals advertised is very low. In talking with our peers there is no real consensus as to how the market will trend this Spring and Summer. There are a lot of factors that will affect the market. These include:

• the number of actual rentals available. The most significant variable will be the interest rates. These are still artificially low as the real estate market struggles to off-set increases in the prime rate. This will also be affected by the number of people working to sell their properties and take them off the rental inventory. - the number potential renters coming into the area. All it takes is jobs and the indicators are hopeful. - we may also see some effects from the student market. Last year we saw an increasing number of students pass up the higher prices rentals on the Hill to move out into the suburbs and save significantly on rents.

We are all hopeful that the market will improve for this next season.

The City of Boulder just released the new interest rate that must be paid on security deposits for properties within the City limits. This rate is now 3.01% simple interest for all 2006.

Water rates for City properties are going up in 2007. This might be a good time to look at water saving fixtures if you are considering any remodeling in your units.

Two years ago the City instituted the "6-day Review" for trash contracts. This requires rental properties on The Hill to have the trash check & emptied every day during the week in May and the week in August while the students are moving in or out. The original ordinance was to be reviewed after two years. The City is now preparing to look at the ordinance. The Boulder County Rental Housing Association is working with them to (hopefully) keep this reasonable.

The next meeting of Boulder County Rental Housing Association will be held on February 9th. The City of Boulder Environmental Enforcement department will be there to answer questions. I encourage all owners to attend--even if you are not members. You can call Sheila Horton at 303.494.9048 to sign up.

Fall pre-leasing for student properties is upon us. We will be at the CU Off Campus Housing Fair again in February with all our student properties. We are already seeing some students starting their search for Fall 2006 rentals. This is very encouraging. Time will tell on this segment.

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.