Colorado's Housing Market

Against all odds, the Colorado housing market has made its mark as a place that has gone against convention. When housing markets were booming elsewhere Colorado was slow, and when sales were sluggish for an odd variety of reasons Colorado boomed. That was until the nation's financial crisis, which pulled the state into the housing bust.

However, there are strong indications that many of Colorado's markets are beginning to move back to being unconventional, and that the bottom in much of the state may not be too far off. There are more than a few silver-linings in Colorado real estate. The number of homes selling is on a steady rise amid the fallout of the foreclosure epidemic.

The inventory of homes for sale remains relatively slim, accounting for a six month supply in Denver. Foreclosures make up the majority of sales with lower priced homes. As the mile high city dances to its own beat in the housing bust against the rest of the nation, home values are declining, but not at the rapid double-digit rates elsewhere. Despite a market that was caught in the worst foreclosure epidemic in history, home values are only slipping by single digits and are forecast to drop an average of 9.7% in 2009.

Foreclosures make up the majority of Denver's sales volume as homeowners are unable to make higher mortgage payments due to adjustable rate mortgages. Outside Denver, in the suburb of Aurora sales had a run-up only to slow before bargain-hunters came in to buy up properties at some of the lowest prices in nearly a decade.

Aurora has been hit hard by foreclosures and was one of the first communities in the country to get federal funds to maintain vacant homes. Foreclosures are projected to increase throughout 2009 as more homeowners default on their mortgages, adding to an excessive inventory of homes on the market. Housing Predictor forecasts Aurora will see home prices deflate 10.6% in 2009.

Boulder is also seeing an increase in home-buyers' activity, but hasn't yet experienced an increase in sales, despite the federal government's first time buyer's $8,000 tax credit. Home values have topped double digit losses in Boulder, which has a long way to fall before its housing market re-inflates. Boulder is forecast by Housing Predictor to see average homes deflate 14.8% in 2009.

Grand Junction had been an exception in falling Colorado real estate values for the longest time, at least partially boosted by its natural gas fields. But with the value of natural gas off its' high, drilling and exploration has been cut back triggering job layoffs. The economic fallout has forced businesses in Grand Junction into failure and increased foreclosures. Grand Junction is forecast to see housing values drop an average of 8.8% in 2009.

Near the native Alpines that help make this state a scenic wonderland, Colorado Springs is holding its own in the housing slump, despite an increase in foreclosed properties. Home prices have fallen modestly as the Colorado Springs area fairs much better than most of the state. Housing deflation is forecast to continue through the year hitting a lesser 7.4% in 2009.

During the boom many newcomers moved to Fort Collins to escape big city blues only to see the community grow. With fha remodel financing harder to get for a mortgage, Fort Collins housing sales slowed, sending the market's home values lower and they're forecast to remain that way over 2009 deflating 7.9%.

Hawaii's Housing Market: Single family housing spending up but multi family housing and remodeling still declining

The housing market improved abruptly in July with another large gain in August. However, most of the reported 4.2% August gain was due to a sharp downward revision of July remodeling spending. This is implausible and may well be revised away shortly as several similar huge month to move changes in this market have been.

We interpret the status this way: Single family is clearly expanding but the initial burst will slow when the temporary fiscal pump priming expires in the fall. There is also a risk of a pause or a cutback a year or two ahead if Congress of the Federal Reserve Board balks at continuing to fund aggressive subprime lending by the federal housing finance agencies.

The multi family market will be slipping lower well into 2010 for all of the reasons that plague other commercial real estate market — high and rising vacancies, low and falling rents and reluctance by lenders to fund projects. The remodeling market, as well as remodeling loans, will also be slipping lower well into 2010 until home sales have been rising for more than a year and the unemployment rate is dropping. Unfortunately, the measure mechanism at the Census is unable to capture this trend.

Residential construction spending, construction mortgages and primarily single family, is forecast to jump 14% from the end of 2009 to the end of 2010. This will be driven by a substantial improvement in buyer confidence from again rising employment and income.

Arizona leading in Green States

Arizona has been quietly engaged in the new green economy for almost a decade when a handful of people joined together to ignite innovation and ingenuity in the design and construction of green buildings. And finally, it's really paying off for the entire state.

In just eight years, the Arizona chapter of the U.S. Green Building Council has grown to more than 1,200 members who represent every facet of the built environment, from architects to landscapers. They know that what we build matters.

In the United States alone, buildings account for 72% of our electricity consumption and 38% of all carbon-dioxide emissions. Working together, Arizona's advocates for a green economy are advancing practical and effective solutions to offset adverse environmental impacts.

When the Arizona chapter was organized, Arizona had just one building certified under the Leadership in Energy and Environmental Design, or LEED, rating system that is used to assess green-building practices. Today, there are 52 LEED-certified projects and 355 LEED-registered projects that are advancing toward this certification. The impact for Arizona's green economy is tremendous.

Our cities are helping drive this change. In 2005, Scottsdale was the first city in the nation to adopt a policy to construct its buildings to achieve a LEED Gold Certification level.

In 2006, Phoenix adopted the policy that new city-owned buildings must meet the requirements of LEED-certified ratings, and that same year, Tucson committed itself to constructing city-owned buildings to LEED Silver standards.

Recently, Tempe made history by constructing the new Tempe Transportation Center, which is one of the most energy-efficient buildings in the nation. The project stars a three-story, 40,000-square-foot office and retail complex, which is also a bus and light-rail hub. It's designed to be 52 percent more energy-efficient than traditionally constructed buildings and has the first vegetated desert green roof on a commercial building in our state.

Like the Transportation Center roof, decisions to adopt green practices usually start at the top. As more businesses factor in the savings in water and energy costs that these buildings deliver, corporations and entrepreneurs alike are realizing it makes good financial sense to adopt a green approach.

This November will be a milestone for our state as it plays host to the prestigious 2009 Greenbuild International Conference & Expo. It is expected to bring 30,000 professionals to Phoenix in the fields of construction loans, energy, community planning, product development, sustainability and other related fields to hear top international speakers and see the latest technology.

Being chosen to host Greenbuild '09 confirms that Arizona is recognized for its leadership in green building. All this action indicates that we are at a tipping point where sustainable practices and building green are becoming mainstream.

Green-Collar Jobs in 2010

Blue-collar and white-collar are familiar jobs—from plumbers and builders to lawyers and stock traders. Now, the buzz is building for green-collar jobs, the millions of job opportunities created by the green economy. But just what are these green jobs? There are many existing jobs that will be re-purposed and expanded in the new green economy, and others that are entirely new occupations.



A recent report from the Center for American Progress and the Political Economy Research Institute proposed a $100 billion investment in green infrastructure spread out over two years. The study found that an investment like this will result in over 2 million new jobs in six areas: retrofitting buildings to improve energy efficiency, expanding mass transit and freight rail, constructing “smart” electrical grid transmission systems, wind power, solar power, and next-generation biofuels.

New York City is scheduled to have 1700 hybrid-electric buses on its roads by 2010. As gas prices rise and demand for mass transit increases, there will be a greater demand for new bus drivers, civil engineers, rail track layers, locomotive engineers, rail conductors, welders, and dispatchers trained in the new technology of mass transit and freight rail.

San Diego's Housing Market vs. The Rest of the Country

A blog I read this morning on www.kbps.org discusses the dichotomy in the San Diego housing market, and while there seem to be a few positive signs, most experts seem to agree that the downturn has been unprecedented and is perhaps just the beginning. Check out what KBPS has to say about how San Diego compares to the rest of the country in their blog below.

The most recent good news comes from a report that shows home values grew on a monthly basis for the first time in three years. Prior to May, home prices had been in steady decline since July 2006.

The bad news is it only grew by 0.4 percent, and the housing market usually has some sort of upswing in the spring or summer.

“I think we’re skipping along the bottom of the market right now,” said Gary H. London, a strategic consultant and real estate economist. “We’re seeing an uptick in housing prices and home sales. I’m not sure whether or not that’s a false indicator, but I think it’s safe to say we’re bumping along the bottom right now. I’m not exactly sure if we’ve entered the bottom or we’re already there -- but we’re definitely near the bottom.”

London said during the boom-and-bust real estate cycle in the 1990s, the San Diego market peaked in 1989 and didn’t start to recover until 1996.

“To me this feels like 1992. The worst is over, or at least almost over, but even as things improve it’s going to be a long slog,” he said.

Another positive sign is that median home price has increased for three consecutive months, finally topping out at $314,250. That’s the highest it’s been since October, and up more than $30,000 from the low in January 2009. Perhaps the biggest reason for the increase is that there are just fewer, starter homes on the market to drive the price down. In fact, the county's median price rose $19,250 from May to June -- 6.5% -- the biggest one-month percentage gain recorded by MDA DataQuick since it began keeping records in 1988.

“This is my fourth time on this merry-go-round and I’ve never seen it this bad,” said Mark Goldman, a finance lecturer at SDSU and mortgage broker with Cobalt Financial.

“I think we’re getting near the bottom,” he said. “Entry-level pricing is a very hot market and as the cost-to-own per month is approaching what it costs to rent, then I think we’ll be near the bottom of where the value is going to be.”

Goldman said the market may see a 35-40% correction before getting back on track. Despite having increased in San Diego for three months in a row, the median price had been in free-fall the previous 30 months. In 2008, the median home price was $359,000, a loss of more than 25% from 2007.

“Right now there is a dichotomy in the market,” said Shane Pliskin, lead sales associate with Prudential California Realty. “If you look at the market below $500,000 and especially below $400,000, things are flying off the shelves. It’s not uncommon to get 10 to 15 and upwards of 25 offers per home. The inventory is depleted, it’s the lowest the inventory has been in years.

Pliskin said his office has a personal record of 33 offers on one property. In North County, he read about one property that fielded 80 offers. There’s less than six months inventory for entry-level homes, compared to 15 months or more of inventory for pricier homes. Aside from a huge $23 million sale in La Jolla, Pliskin said, no one is buying at the higher end.

“Above $600,000, and especially above $800,000, they’re dead and they’re not going to move because there are no loan products at that level. Banks are pulling back on (real-estate owned) assets,” he said.

Pliskin also said that Fannie Mae alone has 600,000 assets nationwide they’re sitting on and not putting on the market. Countrywide Financial, he said, has the largest private “shadow” inventory due to the company’s absorption of many of the liar loans left after the sub-prime crash.

“I believe banks aren’t reporting the depth of their inventory out there,” he said.

Banks, Pliskin said, are in serious trouble and trying to shore up their bottom line before the end of the fiscal year, which typically ends in June, July or August.

Starting Aug. 15, he said, banks are going to open up their offers and by end of the third quarter 2009 there will be a huge influx of real estate owned products.

That will mean, instead of the typical pattern of low sales in January and a peak in May or June, there will be a “W-effect” in 2010, Pliskin said, with sales up in the beginning, middle and end of the year with slight valleys between.

“Most first-time home buyers are benefiting from the $8,000 credit and there are some huge investors coming in and taking advantage of a very healthy rental market,” he said.

One of Pliskin’s clients in Northern California is buying as many $100,000 level homes as possible, with the reasoning being there will always be a market for $900/$1,400 rentals from people who can’t afford homes or are new to the area.

“There’s more cash in the market than ever before because of the ability to buy and turn them around,” Pliskin said. “He puts a coat of paint on it and then he can rent it.”