Strong Economic Growth - Time to Invest in your Home Again!
Economic expansion is reflected in highly positive consumer confidence
Consumer confidence in Metro Denver is at a five-year high and the region continues to add new jobs at a steady pace, according to data compiled by the Metro Denver Economic Development Corporation (Metro Denver EDC) in its Monthly Economic Summary for June 2013.
Consumer confidence in the Mountain Region, which includes Colorado, rose to 89.1, the highest point since March 2008. The index showed significant improvement on a monthly basis, rising by 23.6 percent and increased by more than one-half (51.8 percent) compared with May 2012.
"Consumers are more optimistic about future job prospects and the state of the economy," explained Patty Silverstein, president of Development Research Partners and chief economist for the Metro Denver EDC. "Consumer confidence jumped by almost 90 percent between April and May, which paints a positive picture for what's happening economically on many fronts in the Metro Denver region."
Metro Denver's employment picture advanced greatly between March and April, as the area added more than 17,000 jobs and the unemployment rate dropped to the lowest point since December 2008.
These great strides in adding new jobs were also reflected in several positive business rankings for Metro Denver. For example, Forbes ranked Denver as the ninth-best city for jobs, CardHub.com ranked Denver as the best U.S. city for small business employees, and NerdWallet named Denver the third-best city for recent college graduates and recognized the Denver-Aurora-Broomfield MSA as the seventh-best area for working women.
Gains were especially noticeable in the stock market, where indexes reached record-high levels. The residential real estate market also continued its trend upward as home sales rose and inventory levels declined. Favorable housing conditions have led to an above average increase in median home prices for Metro Denver when compared with the entire nation.
Employment, unemployment, and residential home sales were a few of the 16 Metro Denver indicators that moved in a positive annual direction in this report, the same number as last month. Fifteen of the indicators moved in a positive monthly direction, compared to 14 indicators in the previous report.
The Monthly Economic Summary provides a snapshot of metro area economic activity, as well as its relationship to national and regional economic trends.
Labor and Employment
Metro Denver employment rose by 37,200 jobs, or 2.7 percent, over-the-year in April. Compared with March, employment increased by 17,100 jobs (1.2 percent), the largest monthly increase in jobs since April 2011. The only sector to report a monthly decline was the financial sector, showing a loss of 200 jobs (-0.2 percent). Natural resources and construction employment had the highest increase of 3.3 percent during the same period, and professional and business services, the largest supersector in Metro Denver, showed the highest number of jobs added over-the-month (7,300 jobs). While the information supersector added 400 jobs between March and April, it reported an over-the-year loss (100 jobs or 0.2 percent) as it has each month since August 2011. Natural resources and construction increased the most compared with April 2012 by 6.3 percent (4,700 jobs), and professional and business services employment was 4.9 percent higher or 12,400 jobs.
Employment in Colorado in April was also 2.7 percent higher over-the-year and gained 0.6 percent between March and April. The state's gains were higher than the U.S. employment increase, which was 1.6 percent compared with the year-ago level and 0.7 percent compared with March 2013.
Metro Denver's unemployment rate declined 0.5 percentage points between March and April to 6.5 percent, the largest drop since September 2012. The rate was also 1.2 percentage points below last year's level. Each county in Metro Denver reported a rate lower than both the month-ago and year-ago levels. The largest monthly decline was in Adams County, where unemployment declined by 0.7 percentage points to 7.9 percent. The smallest decrease was in Douglas County with a 0.2 percentage point decline. Yearly declines showed a much improved unemployment situation throughout Metro Denver. The smallest decline was in the City and County of Broomfield (-0.6 percentage points), and the largest was in Adams County, which reported a decrease of 1.4 percentage points. The Colorado unemployment rate of 7.1 percent was 0.5 percentage points below the March 2013 rate and 1.1 percentage points below the year-ago rate.
Unemployment claims in Metro Denver increased 15 percent between March and April and 4.9 percent over-the-year. Year-to-date claims filed in April were 2.3 percent above the same period in 2012. Claims throughout the state were also higher in April, jumping 43.5 percent over-the-month and 6.6 percent compared with April 2012 levels. Colorado claims year-to-date were 5.2 percent higher than the first four months of 2012.
Consumer confidence rose again in May, as the U.S. index rose to its highest point since February 2008. According to economists at the Conference Board, the second- consecutive increase of the index indicates that consumer confidence is on the mend after several episodes of uncertainty regarding federal policy decisions. The index gained 10.4 percent compared with the April number and was 18.3 percent higher than last year's level.
Stock indexes continued to rise during May. After hitting record levels earlier in the year, each of the four stock indexes increased during the month. The highest monthly increase of the four indexes was the NASDAQ, which was 3.5 percent higher in May compared with April. Compared with May 2012, three of the four indexes were more than 20 percent higher in May 2013, and the fourth index, Bloomberg Colorado, was 8.1 percent above the year ago number. Year-to-date returns were higher in 2013 compared to 2012 for each index.
Occupancy at Metro Denver hotels improved in April, as the rate increased 5 percentage points over-the-month and 4.3 percentage points compared with April 2012. The average hotel room rate also improved in April, rising12.9 percent over the previous month and 5.5 percent above last year's rate. Year-to-date average rates show hotels are performing relatively well in 2013, as the occupancy rate is 3.3 percent higher than the 2012 average, and the room rate is 3.1 percent higher.
Residential Real Estate
The National Association of Realtor's metro area median prices data for first quarter show the Denver-Aurora MSA median existing single-family home price ($261,200) rose 15.4 percent over-the-year and 2.5 percent compared with fourth quarter 2012 data. First quarter data was unavailable for the Boulder MSA. Nationally, the median price ($176,600) was 11.3 percent above the year-ago level but declined 1.3 percent on a quarterly basis. The Denver-Aurora MSA ranked 30th for price gains over-the-year, compared with the top ranking area, Akron, OH, where prices rose 32.7 percent.
Metro Denver foreclosure filings were 56.7 percent lower over-the-year in March, with foreclosures in each of the seven counties declining by more than 50 percent. The largest decrease was in the City and County of Broomfield where foreclosures were 70 percent lower. The smallest decline was in the City and County of Denver (51.5 percent). First quarter foreclosure filings were also down in each county compared with the same period in 2012. Metro Denver foreclosures were 44.1 percent lower during the quarter. Six of the seven counties reported a quarterly number that was at least 40 percent lower than the first quarter 2012 number. The City and County of Broomfield showed a lower, yet still significant, decline of 22.6 percent.
Residential building permits were lower in April, declining 38.5 percent compared to permits pulled in March. The biggest decline was in multifamily units, which dropped 68.4 percent over-the-month. Single-family attached units increased 65.7 percent during the period and single-family detached units dropped 26.2 percent. Compared with April 2012, total permits were down 36.9 percent in Metro Denver. Multifamily permits were the only category to decline over-the-year by 77.8 percent. Single-family detached permits were 14.5 percent higher and single-family attached units were 98.2 percent higher.
*A full report is available to Metro Denver EDC investors.