Patty Silverstein at REBarCamp Denver
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Patty Silverstein at REBarCamp Denver

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Patty Silverstein's economic update for Real Estate BarCamp Denver 2010

Patty Silverstein's economic update for Real Estate BarCamp Denver 2010

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  • 1. Picking Up The Pieces Metro Denver 2010 Economic Update June 2010
  • 2. Real Gross Domestic Product Growth Source: U.S. Bureau of Economic Analysis.
  • 3.
    • Consumption (70%)
    • Household spending on goods and services.
        • Investment (16%)
        • Residential real estate + business spending on software, equipment, & real estate.
            • Government Spending (19%)
            • Goods and services, debt service, transfer payments/social programs.
            • International Trade (-5%)
            • Global demand for US goods, US import activity.
    “ Pieces” of the Economy… Each Affected by Recession
  • 4. Consumer Activity
    • Income
    • Wealth
    • Prices
    • Borrowing Costs
    • Consumer Confidence
    • Retail Activity
    • Housing Sales
    • Savings Rate
  • 5. Population by County 2009 Population = 2.83 million
  • 6. Metro Denver Annual Change in Population Source: Colorado Division of Local Government
  • 7. Consumer Confidence Index Source: The Conference Board.
  • 8. Unemployment Rates (not seasonally adjusted) Metro Denver Total Labor Force = 1.5 million Sources: U.S. Bureau of Labor Statistics; CO Dept. of Labor & Employment.
  • 9. Colorado Personal Income Growth Rate Sources: U.S. Bureau of Economic Analysis.
  • 10. Dow Jones Industrial Average Source: Yahoo! Finance. 2007: 18% of U.S. families have stocks; 53% have retirement accounts
  • 11. Metro Denver Real Retail Trade Sales Growth Rates Source: Colorado Department of Revenue.
  • 12. Metro Denver Existing Home Sales Source: Metrolist, Inc.
  • 13. Residential Mortgage Loans in Foreclosure or Delinquent Sources: Mortgage Bankers Association, National Delinquency Survey
  • 14. Metro Denver Foreclosures Sources: CB Richard Ellis; County Public Trustees.
  • 15. Median Home Price (in thousands) Source: National Association of REALTORS.
  • 16. Metro Denver Building Permits Source: Home Builders Association of Metropolitan Denver.
  • 17. Business Activity
    • Sales Expectations
    • Profit Expectations
    • Interest Rates
    • Other Borrowing Costs
    • Human Resources
    • Software, Equipment Purchases
    • Commercial Real Estate
  • 18. Nonfarm Job Growth Rates Sources: U.S. Bureau of Labor Statistics; CO Dept. of Labor & Employment.
  • 19. Metro Denver Net New Jobs Source: CO Dept. of Labor & Employment.
  • 20. Key Metro Denver Industry Clusters   Employment 2009 Job Growth Concentration Rank (50 metros) Aerospace 19,900 -1.2% 2 Aviation 15,700 -1.5% 10 Bioscience Pharmaceuticals & Biotechnology 5,600 4.5% 18 Medical Devices & Instruments 9,500 1.6% 6 Broadcasting & Telecommunications 41,400 1.7% 4 Energy Fossil Fuels 15,800 0.4% 8 Cleantech 16,300 4.6% 7 Financial Services Banking & Finance 44,000 -0.3% 4 Investments 23,300 0.3% 7 Insurance 26,700 -5.9% 23 IT/Software 42,300 -0.2% 9
  • 21. Metro Denver Office Vacancy Rates (with sublet) Existing Square Feet = 163.0 million Completed 2009 = 1.6 MSF; Under Construction = 1.2 MSF Source: CoStar Realty Information, Inc.
  • 22. Metro Denver Industrial Vacancy Rates (with sublet) Source: CoStar Realty Information, Inc. Existing Square Feet =214.7 million Completed 2009 = 0.2 MSF; Under Construction = 0 MSF
  • 23. Metro Denver Retail Vacancy Rates (with sublet) Existing Square Feet = 155.3 million Completed 2009 = 2.1 MSF; Under Construction = 0.4 MSF Source: CoStar Realty Information, Inc.
  • 24. Government Activity
    • National Security
    • Overall Economic Health
    • Tax Collections
    • Political Leadership
    • Fiscal Policy
    • Monetary Policy/ Interest Rates
    • Regulatory Reforms
  • 25. Economic Stimulus Highlights
    • $787 billion American Recovery & Reinvestment Act (ARRA, February 2009)
      • Tax Relief (37%), State & Local Fiscal Relief (18%), Infrastructure & Science (14%), Protecting the Vulnerable (10%), Health Care (7%), Education & Training (7%), Energy (6%), Other (1%)
    • $700 billion Emergency Economic Stabilization Act (EESA, October 2008)
        • Created TARP, which led to the Financial Stability Plan, which includes CPP, CBLI, CAP, TALF, AGP, TIP, SSFI, etc.
    • Federal Reserve maintains 0 – 0.25% target federal funds rate
    • Other monetary policy actions
  • 26. U.S. Historic and Projected Budget Deficits by Fiscal Year ($bil) Source: Congressional Budget Office.
  • 27. Colorado Budget Concerns
    • A state and local “budget tsunami” – lower revenues and higher obligations.
    • More than $2 billion shortfall addressed for FY 2009-2010. Further cuts possible.
    • Projected shortfall for FY 2010-2011 budget more than $1 billion. Proposed reductions:
      • K-12, higher education funding
      • Modifications of tax exemptions and credits
      • Changes in capital construction, public safety and corrections, Medicaid, and other areas
  • 28. International Activity
    • Relative Quality, Price of Goods
    • Value of the Dollar
    • Financial Markets
    • Trade Policies
    • Exports: Sales of U.S. Goods and Services
    • Imports: Purchases of Foreign Goods and Services
  • 29. Year-Over-Year Growth in Exports Source: U.S. Department of Commerce, International Trade Administration. Key Colorado Trading Partners: Canada, Mexico, China, Japan, Germany Key Products: Computers and electronics, chemicals, processed foods, machinery
  • 30.
    • Commercial Real Estate.
    • Funding a major challenge for maturing loans, new development. Demand for space will be slow to rebound.
        • Fiscal Health.
        • Tax revenues down sharply and are likely to lag economic recovery.
            • Inflation.
            • Monetary easing, other stimulus policies could fan inflation in coming years. Potential to dampen recovery.
            • Engine of Growth?
            • Not consumers. What will support and sustain recovery?
    Some “Pieces” Still Out of Place…
  • 31.
    • Consumer Confidence Rebounding.
    • Confidence still fragile, but improved wealth prospects (homes, stocks) helping.
        • Residential Real Estate Improving.
        • Home prices more solid, foreclosures down, sales activity picking up.
            • Employment Stabilizing.
            • Pace of job losses slowing, but unemployment will still rise.
            • Stimulus Dollars Flowing
            • Federal dollars helping to thwart state budget cuts while offering some job opportunities.
    … But Other “Pieces” Starting to Fit
  • 32. Development Research Partners 10184 West Belleview Avenue, Suite 100 Littleton, Colorado 80127 (303) 991-0070 www.DevelopmentResearch.net Patricia Silverstein, President [email_address]