Colorado Housing Market Forecast – November, 2018

energylogic colorado housing market forecast november 2018

November’s Colorado Housing Market Forecast includes economic indicators, as well as single-family, and multi-family permits for metro Denver, Colorado Springs, and Northern Colorado markets. 

November 9, 2018

Denver-Aurora-Lakewood, CO – Economic Data

 

Denver-Aurora-Lakewood, CO Economic Indicators

Denver single-family permits are trending down, totaling 1,024 in August and 858 in September. However, despite underperforming the forecast, the decline appears to be seasonal, with the permit totals little changed from one year ago (1,007 in 08-2017 and 902 in 09-2017). On the other hand, multi-family permits have plummeted in the second half of 2018, and with 180 permits approved in August and 1,440 in September, the six-month average fell to a rate of just 466 per month. Denver multi-family units were being approved at a rate of over 1,000 permits per month at this time last year.

Sounding like a broken record at this point, the median sales price for Denver housing continues to outpace wage growth. Redfin reported that half of Denver homes sold in September went for more than $396k, up 6.2% from a year ago. My biggest concern moving forward is buyer exhaustion, as rising interest rates continue to stretch buyers’ budgets, with Zillow reporting that the typical new mortgage payment increased by 15.4% in the last year. (1) A former Chair of the Federal Reserve once joked that the Fed’s job is “to take away the punch bowl just as the party gets going.”(2) It’s debated whether tariffs are deflationary (due to a slowdown in economic activity) or inflationary (due to higher prices for both producers and consumers), but on balance this month’s robust jobs report with 250k jobs added and wage growth of 3.1% makes it likely that the Fed will continue tightening in the near future, with the central bank slated to increase the benchmark federal funds rate for a fourth time this year in December.(3)

Moreover, we can expect that interest rates will continue to see upwards pressure with the Fed accelerating its pace of balance sheet normalization. In short, to stabilize financial markets the Fed bought up troubled assets such as U.S. Treasuries and mortgage-backed securities (MBS) in the wake of the financial crisis, and consequently, the Fed’s balance sheet ballooned from under $1T in 2007 to over $4.5T in 2014. In the last year, the Fed has begun to allow maturing assets to roll off the balance sheet instead of reinvesting the proceeds.(4) The pace of this process will accelerate each quarter. As such, a large buyer of Treasuries and MBS has left the market while, simultaneously, the increased 2018 Federal budget deficit must be funded via greater sales of Treasuries. Higher supply and reduced demand for Treasuries will pressure the price of those bonds, causing rates to continue increasing into 2019.

Poor housing affordability may be starting to suppress sales in the Denver housing market, with the number of homes listed for sale at its highest level since fall 2015. Available inventory would provide for 1.9 months of supply at the current sales pace, which is the highest measure since early 2016. However, with 1.9 months of supply, this is still solidly a home sellers’ market and Denver remains one of the tightest major housing markets in the nation. It will be important to continue monitoring supply and pricing trends in the coming months to determine just how much higher interest rates and home prices are affecting the market.

Still, there are reasons to remain optimistic. Denver employment growth has stayed strong, with the metro area adding 39k jobs in the last year versus just 20k new housing units permitted. Denver unemployment, while creeping upwards, remains very low, and national measures of consumer confidence are at their highest levels in 15 years or more. There’s clearly still strong local demand for housing, but the question is whether buyers can stomach ever-higher prices — and whether, if prices do fall with rising interest rates, builders can rein in construction costs to keep building at lower price points. Economic expansions don’t die of old age, but this one is getting long in the tooth. It remains to be seen whether the party will continue once the Fed “takes away the punch” by ending this extraordinary period of the accommodative monetary policy. Looking forward, our forecast model suggests we’ll see single-family permit totals of 1,076 in October, 998 in November, 1,019 in December, and 1,029 in January 2019. With Denver rental vacancy below 4%, we should expect a rebound in multi-family permits. The forecast is for 943 MF permits per month for the six-month period ending January 2019.

(1) https://www.zillow.com/research/mortgage-payments-21610/
(2) https://www.nytimes.com/2007/12/23/business/23view.html
(3) https://www.cnbc.com/2018/11/02/us-created-250000-jobs-in-oct-vs-190000-jobs-expected.html
(4) https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm

Denver-Aurora-Lakewood, CO Single-Family Permits Forecast

 

Denver-Aurora-Lakewood CO Single-Family Permits Forecast

Denver-Aurora-Lakewood, CO Multi-Family Permits Forecast

 

Denver-Aurora-Lakewood CO Multi-Family Permits Forecast

Colorado Springs, CO – Economic Data

 

Colorado Springs, CO Economic Indicators

Colorado Springs, CO Single-Family Permits Forecast

 

Colorado Springs CO Single-Family Permits Forecast

Colorado Springs, CO Single-Family Permits Forecast

 

Colorado Springs CO Multi-Family Permits Forecast

Fort Collins, CO – Economic Data

 

Fort Collins CO Economic Indicators

Fort Collins, CO Single-Family Permits Forecast

 

Fort Collins CO Single-Family Permits Forecast

Fort Collins, CO Multi-Family Permits Forecast

 

Fort Collins CO Multi-Family Permits Forecast

Greeley, CO – Economic Data

 

Greeley CO Economic Indicators

Greeley, CO Single-Family Permits Forecast

 

Greeley CO Single-Family Permits Forecast

Greeley, CO Multi-Family Permits Forecast

 

Greeley CO Multi-Family Permits Forecast

Economic Data Definitions

SFD_units This is the number of single-family housing permits approved in the metropolitan statistical area (MSA) each month, reported by the Census Bureau.
2to4_units This is the number of housing permits for units in buildings with two to four total units approved in the MSA each month, reported by the Census Bureau.
MF_units This is the number of housing permits for units in buildings with five or more total units approved in the MSA each month, reported by the Census Bureau.
total_employment This is total employment in the MSA, reported each month by the Bureau of Labor Statistics.
total_employment_yoy This is the change in total employment in the MSA from one year ago.
unemployment_rate This is the U-3 unemployment rate for each MSA reported by the Bureau of Labor Statistics.
construction_employment This is total construction sector employment in the MSA, reported each month by the Bureau of Labor Statistics. This varies by availability in each location, some MSAs report residential building construction employment while some report only construction employment as a whole.
case_shiller This is the S&P CoreLogic Case-Shiller Home Price Index for the MSA. This is a repeat-sales index, tracking price changes for individual homes that have sold multiple times. Jan. 2000 = 100.
FHFA_HPI This is the Federal Housing Finance Agency’s House Price Index for the MSA. This is a repeat-sales index like Case-Shiller, but with coverage for more MSAs.
NAHB_HMI This is the NAHB/Wells Fargo Housing Market Index (HMI) for the Census Region. The HMI is a survey of NAHB members measuring sentiment about the residential construction industry. The HMI is a diffusion index with values between 0-100; sentiment is negative at values below 50, neutral at 50, and positive over 50.
UM_CSENT This is the University of Michigan’s Index of Consumer Sentiment. Survey data is used to estimate consumer optimism or pessimism. This is a national statistic. Mar. 1997 = 100.
construction_price_index This is the Construction Price Index as reported by the Census Bureau, which gives an account of the costs to builders when building new homes. This is a national statistic. 2005 = 100.
RVR This is the rental vacancy rate for the MSA as reported by the Census Bureau’s Housing Vacancies and Homeownership survey. These data are released quarterly and we use linear interpolation to estimate monthly figures.
hcai This is the Housing Credit Availability Index published by the Urban Institute.  A lower HCAI indicates that lenders are unwilling to tolerate defaults and are imposing tighter lending standards, while a higher HCAI indicates that lenders are willing to tolerate defaults and are taking more risks.

 

 

How can you help NGBS Green?

EnergyLogic is a National Green Building Standard (NGBS) Green advocate. We believe it is affordable and among the most rigorous green building rating systems available, and we believe that developers should have a choice of green certification programs.

The City of Denver is currently collecting comments on their Green Roofs Building Policy Proposal. In short, they have proposed that as an alternative to the mandate for a green roof, new and existing buildings are allowed to install a cool roof and elect for LEED Gold or Enterprise Green Communities certification.

The Denver Department of Public Health and Environment (DDPHE) is leading a formal stakeholder engagement and public input process to review and possibly modify Denver’s Green Roof Ordinance. Based on the ICC/ASHRAE – 700 National Green Building Standard (NGBS), EnergyLogic has respectfully requested that NGBS Green Certification be recognized as a named alternative to LEED Gold or Enterprise Green Communities as one of the allowable green certification compliance options for new or existing building to comply with the Denver Green Roof requirements.

Will you join us in supporting NGBS?

Please consider sending comments requesting that NGBS Green is included as a certification option for their policy.

Click here for a sample letter on Denver Green Roof Proposed Policy that you are free to use or edit to help make your submission easier.

Comments are due by noon on June 3rd and can be sent to Katrina Managan via email:

Click here to email Katrina Managan

 

EnergyLogic would like to thank you so much for your consideration to join forces and support NGBS!

 

If you have any questions, please reach out to Michelle Foster:

Michelle Foster | Vice President, Innovation Services

400 Prince George’s Blvd. | Upper Marlboro, MD 20774

P: 301.430.6205 | C: 240.997.8027

HomeInnovation.com | Follow us on Twitter @HomeResearchLab @NGBSGreen

Find a better place to call home: ngbs.com

2018 Top Workplace Award

EnergyLogic has been awarded a 2018 Top Workplaces honor by The Denver Post! The list is based solely on employee feedback gathered through a third-party survey administered by research partner, Energage, a leading provider of technology-based employee engagement tools. The anonymous survey measures several aspects of workplace culture, including alignment, execution, and connection, just to name a few.

Being named a Top Workplace is a big deal – only 150 companies make the list. We have some special judges to thank…hmm, hmm – our very own EnergyLogic Logicians!

“It’s one thing for owners to think that our company is a good place to work, and a whole other level of awesome to know that the people who work here think so, too!” said Steve Byers, CEO of EnergyLogic.

“Top Workplaces is more than just recognition,” said Doug Claffey, CEO of Energage. “Our research shows organizations that earn the award attract better talent, experience lower turnover, and are better equipped to deliver bottom-line results. Their leaders prioritize and carefully craft a healthy workplace culture that supports employee engagement.”

Click on the logo below to view our Top Workplaces Profile!

 

 

 

 

 

Work Completed by EnergyLogic in 2017

We want to begin by thanking each and every one of you for giving us the opportunity to serve your needs, whether it be through consulting, code and program compliance, HERS Index services, or quality assurance needs. We take pride in our partners and relationships, as we couldn’t be successful without each and every one of you to help achieve increasing the comfort, safety, durability, and quality of residential homes.

We are not only proud of our EnergyLogic ‘Logicians’ for the tremendous job they continue to do, but we are also proud to have worked with our industry partners through some challenges which affected many professionals across our industry in 2017. Those issues, such as Flak Jacket and labor shortage aside, we should be proud of what we’ve all been able to accomplish. EnergyLogic is thankful for every opportunity that our partners and their teams have provided by allowing us to strengthen our partnerships, and to tip our glasses toward welcoming another successful year in 2018.

As we’re working our way through the first quarter of 2018, it’s always good to take a few moments to reflect on our collective accomplishments from the year prior. 2017 was a busy year up and down the Front Range of Colorado. As shown in the graphic chart above, EnergyLogic has focused on performance for our partners by completing 4,000+ rough inspections and near 3,900 final inspections. As we reflect upon each of the metrics supported in this graph, we can’t help but get excited about what’s to come in 2018.

Like most of our partners, we continue to grow and innovate to better meet the challenges of our industry. Through the journey that has brought us here, and the journey ahead, we’d like to share a few highlights:

  • We’re beginning our 12th year at EnergyLogic. Much has changed in both our industry and our company, as we have learned that being flexible and adaptable to change is an important focus, and is what has helped to make us successful.
  • A lot of our time in 2017 was spent evaluating our systems and processes, refining our service offerings, and implementing efficiency improvements. This journey brought us to the launch of our new Vision and Mission:
    • Vision: A world in which every person lives in a home that promotes happiness and security.
    • Mission: To meet our partners where they are and engage them in the journey of building the best possible homes.
  • We continue to nurture our strong cultural foundation through the elements of our core values: A – All for one and one for all; B – Build a better mousetrap; C – Chase perfection; D – Do the right thing; and, E – Energy. Each of our core values individually, and collectively, support the passion of what we do, and help us to focus on ways we can work together to become better at what we do.
  • 2017 brought significant growth through our HVAC design service, specifically, our HVAC design, testing and inspection package. Many of our partners have discovered value in pairing these services together to verify and ensure that the system performs in the field, reducing potential warranty and comfort complaints. We also saw increased growth of our third-party quality assurance services. We are actively expanding this offering in 2018.

As we take each new step throughout 2018, we carry forward our insights from 2017 which will help us to better serve our partners and to realize our newly launched vision and mission.  Thank you for your continued confidence in EnergyLogic.

Please reach out to me, or to any Logician if you have thoughts on how we can improve.

Happy 2018!

– Robby Schwarz and the EnergyLogic Team

If you have any questions, please email Robby Schwarz or Rusty Buick

Robby Schwarz (faked)

Who to Contact:

Robby Schwarz
Principal, Director of Builder Relations

Email Robby
720-838-0677

Sustainability, Support, and Success – Helping Academic Minds Reach Their Goals

The US Department of Energy Solar Decathlon is a competition between 13 collegiate teams competing in 10 different categories to determine who has built the most sustainable home.

The contest itself evaluates the homes in the following categories:
– Cost-Effective Design
– Innovation Balanced with Market Potential
– Water & Energy Efficiency
– Energy Production and Time-of-Use Energy
– Communications Strategies.

Logicians Volunteer Their Time to Support Each Team’s Vision

EnergyLogic’s plans analyst, Peter Oberhammer, was tasked with creating SketchUp models of all of the homes. “The importance of the SketchUps is that they produce the shell area calculation which is essentially the square footage of all the exterior walls, envelope floor, and ceilings.  Not all of the plans had flat ceilings, so vaults and clerestories had to be accounted for in the shell area calculations as well,” says Peter.

On October 2nd and 3rd, three of EnergyLogic’s energy raters volunteered their time to perform blower door tests on each home. These tests were part of the scoring matrics in the competition. To get these numbers, raters Neal Girard, Matthew Anthony, and Zach DeWolfe divided the blower door results by the square feet of the shell area to get a CFM/Sq Ft Shell Area result.

October 10, 2017, 61st and Pena Station Denver, Colorado, the University of Maryland team’s house called “reACT” emphasizes water reuse and home gardening with Native Americans in mind as the school has ties with the St. Croix Chippewa band of the Ojibwe tribe located in Wisconsin. Interior: (Dennis Schroeder/US Department of Energy Solar Decathlon)

Each rater was drawn to a different team’s story. Neal Girard was “so excited that [he] got the opportunity to work closely with most of the teams at this year’s Solar Decathlon.” Neal appreciated the University of Maryland’s “illusion of space with their horseshoe-shaped house surrounding their greenhouse.”

Rater Matthew Anthony had this to say about working with the teams:

“I enjoyed working with the Alabama and Missouri teams – this was the first year that infiltration was a point category, so there were several learning opportunities for most of the teams. For example, with the Alabama team we were able to identify substantial leakage coming from the safe room that was using a new and developmental material. With the Missouri team, we eliminated the ducts from the blower door to illustrate the impacts of ducts outside the building envelope. As always, it was a pleasure to see a lot of the concepts we learn about in concept being applied to real homes – what a great group of folks all around!”

October 3, 2017, the Swiss École Polytechnique Fédérale de Lausanne, School of Engineering and Architecture Fribourg, Geneva University of Art and Design and University of Fribourg team presents their “NeighborHub” house, designed to be multi-purpose, at 61st and Pena Station, Denver, Colorado. Exterior: (Dennis Schroeder/US Department of Energy Solar Decathlon)

Zach DeWolfe, who worked closely with the winning team, stated, “My most memorable time spent at the Solar Decathlon was with the Swiss team. I got to work with them on converting their plans from the metric system and went over some areas to address air leakage prior to testing the home. It ended up being one of the tightest homes I’ve tested as a rater.”

The Swiss team took the first place prize, winning $300,000, while Maryland came in second and UC Berkeley/U of Denver came in third.

Click here to view all 13 team’s standings in the 2017 Solar Decathlon!