Colorado, Boulder economy and real estate should remain steady in 2008 despite national woes

The future of the national economy and housing market may appear grim, but the picture a local economist and real estate expert are painting for the Boulder area and Colorado in 2008 isn’t quite as gray.

Colorado’s economy will experience modest growth in 2008 and should outpace the nation’s, said economist Richard Wobbekind of the University of Colorado at Boulder’s Leeds School of Business.

“The Colorado economy seems to be going along at a pretty good clip and doesn’t seem that shaken by national events, so we think the impacts on Colorado’s economy will be more incremental if there is a national downturn,” he said at the 43rd annual Business Economic Outlook Forum in December.

The seizing of credit markets and the resetting of adjustable rate mortgages to higher rates are leading to much of the economic uncertainty in Colorado, Wobbekind said.

“It turns out that part of our foreclosure problem in Colorado is that we have a lot of people in ARMs and these are resetting as we speak,” Wobbekind said. “So, how many of these are resetting, and how many are resetting at a rate that is going to make it very uncomfortable for Colorado homeowners to continue to make payments …? Nobody knows at this point.”

Foundation in wealth

Ken Hotard, senior vice president of public affairs for the Boulder Area Realtor Association, said Boulder has avoided much of the real estate struggles affecting other parts of the state and nation, thanks to modest job growth, which creates a demand for housing and sustains prices, and the fact that Boulder’s is a wealth-based real estate market instead of income-based.

And since Boulder specifically – and Colorado generally – didn’t see the rapid and unjustifiable run-up in home prices from 2002 to 2006, no “bubble” was created that would require a market correction like those that have occurred elsewhere, he said.

While the number of home sales in the Boulder area market was down in 2007, the median sale price increased 1 percent. The drop in home volume indicates that Boulder wasn’t untouched by the state and national downturns, but it didn’t repeat the significant negative market changes in the late 1980s, Hotard noted.

“We should all be counting our blessings that we live and own a home in this community,” he said. “Boulder continues to outperform expectations in a vary stable market.”

Local vs. national markets

It’s unlikely the forecasts about a national recession and a spiraling housing market in 2008 will have a measurable impact in Boulder, and what impact it will have is more psychological, Hotard said. It is up to Realtors to educate their customers about how the local real estate market doesn’t necessarily reflect what the media is reporting as “nationwide” troubles.

Other than some homebuyers and investors putting their purchases on hold until they see what the 2008 elections will bring and how they are governed by newly elected officials, Hotard said he expects this year to look much like 2007, with modest job gains and a “steady as she goes” real estate market, barring any unforeseen circumstances.

“I don’t see the big event that’s going to turn the market around on the horizon,” he said. “If I was in a position to do so, I would be investing as much I could in the Boulder real estate market; it’s going no place but up.”

More jobs on the horizon

Wobbekind predicted that Colorado will add 43,300 jobs this year, and an employment growth rate of 1.9 percent compared with a national rate of 1.1 percent. Colorado’s unemployment rate for 2008 is expected to hover around 4.2 percent, compared with a national rate of 4.9 percent.

The professional and business-services sector will lead the state in job growth, adding 15,500 jobs, many of which are high-paying jobs including engineers, computer systems designers and scientific research and development groups, he said.

“However, in terms of relative growth, far and away the fastest growing sector in the state is natural resources and mining,” Wobbekind said. “The strength in this sector is a big part of the reason for the growth in professional and business services because we’re seeing the need for design people, accountants and all sorts of support businesses that are serving this sector.”

Colorado’s education and health-care services, leisure and hospitality sectors also should remain strong in 2008. However, for the eighth consecutive year the manufacturing sector will probably lose ground, shedding 4,000 jobs, Wobbekind said.

Manufacturing sector will struggle

The state remains heavy in manufacturing, and the tech sector has been struggling with off shoring, he said.

“This year is particularly bad because the Intel facility is closing in Colorado Springs, and that’s going to be a big hit for Colorado,” Wobbekind noted.

Colorado's population is expected to grow at a rate of 2.1 percent in 2008. With a net migration of 62,500 people to the state, Colorado's population will hit 5 million for the first time.

High-tech tools offer more control, less effort

Most cell phone carriers can’t remember what life was like before portable communicators were within arm’s reach. Perhaps someday we won’t be able to imagine feeling safe in or away from home without some of today’s newest high-tech gadgets recently featured in Realtor magazine. For now, some homeowners may consider these widgets as necessities they never knew they needed:

• Alarm.com’s Security System’s smart sensors send information about a flood in the basement, a power outage, motion when no one is home, an open garage door or near-freezing pipes via e-mail, text or voice message. Price: about $199 with installation, plus $24.95 - $49.95 monthly fee, depending on features selected.

• If the sight of sprinklers running when it’s pouring outside raises the hair on your neck, a weather-sensitive sprinkler system will help you avoid wasting water, as well. Cyber-Rain’s system shuts the sprinkler system down on rainy days, decreases watering on humid and cold days and increases it on hot, dry days. The result is lower water bills, increased water conservation and an attractive lawn. One controller costs $295 and covers up to 1,000 square feet.

• Turn off up to five lights in a home with just one touch of the finger – and nearly $750. AuroRa, from Lutron Electronics Co. Inc., allows homeowners to do just that, as well as turn the lights back on with the same effort.

• Homeowners can keep a robotic eye on their home while they’re gone with Spygee, an 18-inch, battery-operated robot controlled by the homeowner via Web site, available from Meccano. This robot snaps photos and records video viewable on the Web site, and it also has a surveillance mode that sends an alarm and e-mails a photo if anything that shouldn’t comes into its line of sight. Cost: about $300.

• Remote-controlled shades? Yep! With the click of a button, homeowners can raise or lower one or a group of shades from up to 100 feet away through a combination of radio and infrared frequencies. The cost of the PowerRise system from Hunter Douglas depends on the shade and system.

For a more complete list of the newest high-tech tools for the home, their cost and how to purchase them, visit http://www.realtor.org/rmomag.NSF/pages/hightechhomesjan08?OpenDocument.

Out with the old: kitchen design should have stations and storage

Remodeling magazine recently offered a few kitchen design “dont's”
for the remodeler and those building a new home
(courtesy of the Topeka Capital Journal):

• Don’t design around the kitchen triangle. The “working triangle” philosophy of refrigerator/sink/range was a ploy in the 1950s to sell cabinetry. Today’s kitchens work better with stations.

• Don’t base your design on the desires of the main user. Even if one person is disinterested in the new design of the kitchen, get him or her involved to make sure the kitchen fits the needs of any potential user living in the house.

• Don’t skimp on storage: while the big appliances may be the kitchen’s showpieces, you still need room for all your kitchen equipment, especially the unsightly ones.

• Don’t hang on to old appliances, pots or gadgets that take up valuable space but aren’t used often. Focus on your new space and how you’ll use it, and get rid of whatever excess you don’t need.

Sellers be aware: buyers start New Year with new home search

All the talk about the “summer buying season” has most home sellers postponing putting their homes on the market until spring or summer.

However, IRES and RE/MAX of Boulder, Inc.’s data of available-homes showings indicates that while sellers may be willing to wait, buyers aren’t. In 2007, showings started fairly strong at the beginning of the year and peaked in the spring before leveling out during the summer and dropping off in the last quarter, with just a few spikes here and there.

What this says is that buyers are returning to the market faster – hoping to start the New Year with a new home – than sellers. It also indicates that those putting their homes on the market earlier in the year have a better chance, albeit slight, of getting their homes sold in a timely manner because they have less competition.

RE/MAX has tracked this phenomenon since the market turned in 2001 and it appears a trend is taking shape: the time to get a home in front of buyers is in the first couple of months, when buyers are of the fresh-start mindset. As the year goes on and the real estate market gets negative headlines, buyers become more hesitant to enter the market although more homes are available.

However, selling a home in the dead of winter has its drawbacks, although most home seekers are savvy enough to know that a picture of a home in all its springtime glory doesn’t tell the whole story. Remember that a photo of a home with a snow-covered yard and trees is attractive, as well, and a home can show just as well in the winter as in the summer with the right attention. Here are a few do’s and don’ts from RE/MAX of Boulder as well as Suite101.com about preparing a home for winter showings:

• Shovel the walk and minimize the use of ice melt: potential buyers and agents will track it through house, ruining the clean look and damaging the flooring.
• Keep the house clean.
• Clean and de-clutter outside: don’t leave your children’s sleds or the shovel you just used to clear the walk outside.
• Open as many curtains and blinds as possible and have lots of lights on throughout the house.
• Keep the house warm and comfortable, even turning up the thermostat if you usually err on the side of conservation.
• Have a professional come to service and inspect your furnace. Documentation showing that your furnace is regularly maintained helps potential buyers feel at ease when they inspect the property. Having a folder with service records and other household maintenance information will show people that you have cared and loved your home.
• Insulate and seal up your home before the snow flies, if possible.
• Ensure that the weather stripping around the windows and doors is free of cracks and properly seals when they are closed.
• Clean the downspouts and gutters to prevent the buildup of snow and ice and potential leaks.
• Ensure that the roof is in good condition. Fix problem areas immediately.
• Keep entrances and exits clear of melt water and, therefore, of potential slipping hazards.
• Keep coats and winter gear out of sight.
• Insulate pipes against freezing temperatures: it takes a long time to remove signs of moisture damage.
• If the home is equipped with a wood-burning fireplace, clean the chimney and make sure that the wood stove is functioning properly and that debris from the wood is cleaned up.