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.

Personalized Management Services News

Since the last newsletter there were some staff changes in our company. Kathy Foster-Patton left the company. Sean Caulfield has taken over the management of those properties.

National Economy According to the Denver Post (June 21, 2006) inflation, led by energy costs, is more than offsetting wage increases. People at the high end of wages still see an improvement while the middle and lower levels are seeing a distinct lowering of purchasing power.

In May, the housing starts were up almost 5% for the month (Denver Post 6/21/2006). However, analysts see this as a result of the dryer than normal Spring and that the overall market is still slowing. New building permits fell for the 4th straight month. Several analysts made a point this was a slowdown and not a "bust."

New home sales were down 10% for the first four months of this year compared to 2005 while purchases of pre-owned homes slowed 3.1% during the same period (Denver Post 6/20/06).

The National Association of Home Builders sales index for new homes fell to 42 in June, down from 46 in May (Daily Camera 6/20/2006). A number below 50 indicates more than half see sales as being poor. Many builders associated this with increasing mortgage rates, increasing costs of construction (i.e., lower profits), and investors pulling back from the market.

By July 4, 2006 the construction industry showed spending fell 0.4% in May following a 0.2% drop in April (Daily Camera 7/4/2006). This is the largest drop in almost 2 years. Analysts predict construction will continue a gradual decline under pressure from higher mortgage rates, a slowing housing market and sharp increases in energy.

The national unemployment rate was down 0.1% to 4.6% (Daily Camera 6/17/2006)

Regional Economy

Colorado's economic output is still rising (Denver Post 6/7/2006). Our 2005 numbers showed an increase of 4.2% up from 3.9% in 2004. This still shows the 6-12 month delay behind the rest of the country. This same report revised the 2003 numbers downward to 1.4% growth rather than the 2.1% initially reported.

Colorado stills ranks very high in the number of foreclosures. As of last month the state ranked 7th for initiations of foreclosures for 1Qtr 2006. The state ranked first during March and April (Denver Post 6/20/2006)

Prices of existing homes in the Boulder/Denver area fell for the first time in 16 years (Denver Post 6/2/2006). Prices in Denver fell 0.35% during 1qtr while Boulder's fell 0.12% during the same period. There remain a large number of homes on the market. According to the Office of Federal Housing Enterprise Oversight, shows an annual appreciation of 3.24% for Denver and 2.53% for Boulder. Eastern counties are still under stiff downward pressure due to foreclosure rates and new home sales.

Colorado ranked 5th in growth of personal income during 1st quarter (Daily Camera 6/23/2006). Personal income grew 1.8% in the state when compared to 4th quarter 2005.

A survey by The Daily Camera (6/17/2006) shows no Boulder area employers expecting to cut staff. Almost 47% expect to add staff over the summer while the remainder expect to maintain current levels. This compares to 2005 when only 30% expected to add jobs and 7% expected to cut jobs during the same period. Across Colorado, 6% of employers expect staff reductions, 39% expect additions and 53% expect to maintain staffing levels.

The Colorado unemployment rate rose slightly to 4.5% in May (Daily Camera 6/17/2006). Most see the likely cause to be the seasonal shutdown of the ski areas. The overall rate was slightly higher that in April but still down from the 5.2% this time in 2005. Local county unemployment rates were...

• Boulder 3.7% (up from 2.6% in April but down from 4.4% in May 2005)
• Broomfield 4.3% (no change from April and down from 4.8% in May 2005)

Five sectors posted job losses while 11 showed job increases. Colorado has added 47,000 jobs since May 2005 with most increases in the professional, business, construction, trade, transportation and utility sectors (Daily Camera 6/17/2006)

According to the Daily Camera (Business Plus, 5/29/2006) there is about 23 million square feet of office space available in the Denver metro area. Average leasing rates are about $17.86/sqft triple net. Boulder has about 10% of that space and leasing rates are about 4% higher than in other areas. While this sounds high, there are still lower rates available as compared to other metro area availability.

The peak season is in full swing with the number of advertised rentals up almost 50% from last month. It is still very much a renter's market and prospective tenants still looking for lower rents and/or other incentives.

While many geographic areas have stabilized, there are still areas, such as Longmont, that are still seeing downward trends. Several of these are under pressure from continued layoffs (i.e., Sun Microsystems, Maxtor, etc.)

Costs of rentals are also under pressure. Now that one company owns the Daily Camera, Colorado Daily, Broomfield Enterprise, and others, advertising rates at up significantly. Up until recently, a weekend only ad in the Camera would run about $99 for the website and Saturday and Sunday in the paper. This same ad must now appear in all publications and will run over $200.

City Rental License staff turnover Michelle Allen has resigned as the manager of this department. Evidently she is training a replacement but we can all expect more turmoil during this busy season. Those of you that are not Personalized Management Services clients should pay particular attention to your rental license expirations.

The student rentals are still very much a challenge. As we saw last year, there are still a large number of student properties on the market. As a result, a number of the students are not seeing the need to rent early. We will see rents on these vacant properties come down as the CU school year approaches.

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.