. According to the 2007 Hotwire Travel Value Index, Denver is the sixth best leisure market in the United States for visitor value.
. Total personal income in Colorado increased 6.5% in 2006, ranking 15th among all 50 states.
. For affordable housing, Metro Denver ranks 63rd out of 95 national markets. The three most expensive housing markets are San Francisco, Los Angeles, and San Diego. However, Denver's second-lowest property tax rate helps temper overall home ownership costs.
. Metro Denver's employment increased by 9,100 from January to February, the largest monthly gain since June 2006 pushing our annual gain to 1.9% compared to 1.6% nationally. Two-thirds of the February gains came from the government sector.
. A new Bureau of Economic Analysis report ranks Colorado eighth in per capita income for 2006, down from seventh the year before. A key factor was the increases in newcomers with children that helped hold back per capita income growth.
. The number of diners participating in Denver Restaurant Week 2007 more than doubled from 2006. A total of 149 participating restaurants served 119,200 diners.
. Redeveloped Southglenn Mall The Streets at Southglenn has signed four more stores and a movie theater: Whole Foods, Dick's Sporting Goods, Barnes & Noble and Best Buy have committed to a collective 228,000 square feet at the new center, scheduled to open in the summer of 2008.
. National Jewish Medical and Research Center is adding four floors of research space and two floors of patient clinics in a plan to boost its research activities by $60 million.
. Colorado State University plans to develop a wind farm in northern Colorado that would be the largest university-owned facility in the world, generating enough electricity to power its entire campus AND generate $30 million in excess power sales over the next 25 years.
. Dick's Sporting Goods Park, new home of the MLS Colorado Rapids, opened on April 7th to a sold-out crowd. The new state-of-the-art Commerce City stadium complex with 24 lighted practice fields has helped triple season ticket sales. The Kroenke Sports-owned facility is also scheduled for several concerts each summer as well as surrounding land development.
National Real Estate Economic Market Report
1. The Economy
Federal Reserve Chairman Ben Bernanke recently (June 5) issued a report to the 2007 International Monetary Conference regarding the housing market and subprime lending.
. Housing prices are soft, i.e. low due to a sluggish market.
. There has been a decrease in the construction of new homes.
. We are seeing a tightening of lending standards in response to defaults on subprime loans. These are loans developed to help higher risk borrowers obtain a mortgage, but they often involve higher interest rates. The trend in the last few years was to offer high risk borrowers a low teaser rate for a period of time that would then convert to a higher interest rate. Once the rates increased, many people were unable to afford the increased payment and defaulted.
. The Federal Reserve is encouraging lending institutions to work with borrowers to prevent defaults.
. Solid growth in incomes and relatively low mortgage rates should ultimately support the demand for housing
2. Trends from NAR Economist Lawrence Yun
. 4.5 million jobs were created over the past 24 months, priming many new job holders for buying their first home in the near future.
. Vacation home purchases by baby boomers is a growing trend; the number of vacation homes purchased in 2006 actually rose in 2006.
. House flipping has decreased significantly - down 29 percent in 2006 after the height of the boom in 2005. Investor purchases will continue to represent one fifth of all home sales.
. 20 percent of homebuyers in 2006 were minority.
3. Trends - Niche marketing
. Green/Eco-broker
. Hispanic - Real Estate magazine feature in July
. Gay, Lesbian, Bisexual, Transgender training
4. Luxury market remains strong, e.g. the Hamptons have received a lot of media interest this spring.
5. Condos as dorm housing and/or second homes to take advantage of cultural events in a city
6. Did you know? That new federal tax laws allow homeowners earning under $110,000 adjusted gross income who close on mortgage loans in 2007 to deduct the cost of their mortgage insurance premiums for an average savings of about $300. PMI - private mortgage insurance is typically assessed on buyers who do not make at least a 20 percent down payment.
Bernanke - Extended summary
He noted that housing prices have continued to be quite soft so far in 2007, although for the most part outright price declines have been concentrated in markets that showed especially large increases in earlier years.
The construction of new homes has decreased and there is currently a seven-month supply of new homes available.
The increasing numbers of defaults on subprime mortgages has caused many lenders to tighten lending standards and the concern is that many people who could actually qualify for traditional mortgages may not be applying, and thus, not entering the market.
The good news is that the Federal Reserve and other federal supervisory agencies are encouraging banks to work with borrowers who may be having trouble meeting their mortgage obligations, including identifying and contacting borrowers before they enter delinquency or foreclosure. Studies suggest that counseling can be effective in helping borrowers make better financial decisions.
In addition, the Federal Reserve is looking into ways to prevent improper subprime lending in the future and is collecting data and soliciting feedback on proposed guidelines concerning underwriting standards and disclosures for subprime mortgages.
However, fundamental factors including solid growth in incomes and relatively low mortgage rates should ultimately support the demand for housing, and at this point, the troubles in the subprime sector seem unlikely to seriously spill over to the broader economy or the financial system.
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