Fred Crowley, Senior Economist at UCCS has released his November 2009 Quarterly Updates and Estimates document. According to his research, the Business Conditions Index has risen by almost 19% since its low point in February of this year and now stands at 81.3. It is expected to stay in the high 70s to mid 80s through the 1st quarter of 2010.
The main reason for this good news is that 9 out of 10 factors that go into this computation are predicted to improve in the early part of next year. The only laggard was sales tax revenue, which won’t be a surprise to anyone who lives here and keeps up on the news. Employment and income are expected to improve enough to notice by the middle of 2010. Housing prices have stabilized and are beginning to rise slightly, and foreclosures should taper off after a record-setting pace in 2009.
In the multfamily sector, Colorado Springs continues to have the highest vacancy rate in the state, in spite of the number of troops assigned to Fort Carson. Many of these soldiers aren’t in town because they’ve been deployed again. Since we’re so far overbuilt, the requests for building permits for apartments has basically ground to a halt, and Dr. Crowley doesn’t foresee the need for any new units in the next six months. Over the course of 2010 the vacancy rate should begin to drop, partly because of the influx of returning troops, and partly because the improving economy will allow some people to seek their own housing instead of living at home or with roommates.
The annualized vacancy rate was 9.65% for all of 2008. Rents have risen 6.5% since March of 2004, but since inflation went up 13.8% for the same time period, landlords are bringing in 6.9% less income in today’s dollars. Rents are not expected to increase until the vacancy rate drops to about 8% and normal inflation returns as the economy recovers.
Here is where you can read the entire report.