The Pikes Peak region saw both ups and downs during the fourth quarter of 2014 as the economy continued to climb slowly from recession-era lows, according to a report by the Southern Colorado Economic Forum.
The report’s primary component, the Business Condition Index, indicated that the “local economy performed well during the fourth quarter, which mirrors the national trends.”
The BCI is compiled of 10 indicators designed to gauge the economy’s performance. In December, it scored 116.95 compared to 111.92 the same time the previous year, and seven of those categories improved, with the strongest gains seen in vehicle registration and consumer sentiment.
“Despite the stronger dollar, which hurts U.S. exports, and uncertainties in other developed economies, the U.S. consumer is driving much of the stability and modest growth in the U.S.,” according to the report.
But not all was positive, as declines were reported in categories including enplanements at the Colorado Springs Airport and real wages for the region’s workforce.
In the fourth quarter of 2014, the GDP (gross domestic product) growth rate was 2.6 percent, down from a second-quarter growth rate of 4.6 percent but still above those of previous years.
Unemployment rates also continued to drop across the region, state and nation. The report characterizes this as “good news and will also assist in the aforementioned, current scenario where consumers are heavily contributing to the stable economy.” The local unemployment rate settled at 5.1 percent at the end of 2014.
Single-family housing: The region saw a significant boost in single-family building permits in October, but lower rates followed through the end of 2014.
“In these two latter months of the quarter, permits have been lower than the same months compared to a year ago,” according to the report. “The Pikes Peak region has not seen the tremendous boom in building that has happened in other areas of Colorado simply because the local economy is not quite as strong.”
The report demonstrated that the Pikes Peak region has for the past five years maintained a gradual upward trend, with peaks in 2012 and 2013 caused by reconstruction following natural disasters.
There were 411 more homes (3.8 percent) sold last year than in 2013, and the report suggests that modest home construction helped to drive those sale values up 7.3 percent.
Perhaps in response to higher prices, more buyers purchased medium-priced homes (the median was $225,000) while sales declined for homes listed more than $500,000, according to the Pikes Peak Association of Realtors. The average home price in December was $255,652, up from $238,273 a year prior.
The report also stated that “housing will likely be impacted by the recent announcements regarding new company locations here,” including word that Sierra Completions plans to create 2,100 new jobs in the region.
There were a total of 1,825 foreclosure proceedings last year — flat compared to 1,861 in 2013.
Multi-family housing: The multi-family housing market continued to remain particularly strong through the end of the year, according to the report.
The entire quarter saw an average of 878 dwellings gained per month, according to the report, showing a “shift in consumer preference towards multi-family housing and away from single home housing.”
This trend could also have affected trends in single-family housing. Much of the multi-family housing demand is being driven by local retirees, the report said.
“The market for rental of multi-family housing continues to be quite strong,” according to the report.
The average multi-family vacancy rate during Q4 2014 was 5.3 percent, up from 4.3 percent in Q3. There was also an increase in average monthly rents to $856 at year’s end, compared to $800 in 2013.
“Current trends are creating pressure for additional multi-family units to be built,” according to the report. “This trend of higher demand for apartments is not unique to Colorado Springs. Many municipalities across the country are seeing consistent growth in the demand for new and existing apartment units.”
Commercial real estate: The Forum reported little on commercial real estate, aside from the market’s continuously declining vacancy rates. Vacancy rates for commercial properties in the region declined through the fourth quarter of 2014, except for one exception.
“This is true for all categories except for office space,” according to the report. “The office market has remained stagnant throughout the past year partially because of the over-supply of office space in this region and partially because of the persistent unemployment.”
However, the report indicated that there has been a recent increase in demand for office space and that vacancy rates are expected to decline.
Colorado Springs Airport: The Colorado Springs Airport continued to lose business in December, which was marked by a 0.2 percent drop in enplanements from 2013 and a 23 percent drop from 2012.
Seasonally adjusted, there were 52,190 enplanements in December, compared to 53,306 in December 2013 and 67,521 in 2012.
“This significant decline is the result of decreasing demand for local flights alongside the decision of airlines to reduce or cancel service to Colorado Springs,” according to the report.
Enplanements at the facility are at their lowest in the 16 years the Forum has covered its activity.
In the report, however, the Forum again showed hopefulness that the advent of Sierra Completions’ manufacturing facility will bring prosperity to the property.
Employment: The seasonally adjusted unemployment rate for December was 5.2 percent (4 percent statewide), the report stated.
The number continues to trend downward following its peak of 10.6 percent (9.1 percent statewide) in 2010. Similar to what is being seen nationally, the local labor force decreased by 5,199 (or -1.8 percent) last year.
“The increasing number of Baby Boomers who are retiring seems to be pushing participation rates downward among other reasons such as the mismatch between existing skill sets and employer needs,” according to the report.
To offset that loss slightly, local employment increased by 1,291 (0.5 percent) in December over December 2013. The total number of unemployed decreased by 6,490 (-30.4 percent) year over year that same month.
“While encouraging, the employment statistics for El Paso County continue to lag behind the 290,544 employed persons in September 2007,” according to the report.
These levels are calculated using Bureau of Labor Statistics data and civilian labor force values, the Forum stated.
The Forum reported that the majority of increases have been seen in the health and social services sectors, while the largest drops have been experienced in manufacturing and finance/insurance.
Colorado Springs sales taxes: Harkening to the report’s positive outlook on consumerism — locally, statewide and nationally — 2 percent sales tax collections for December were at $10.3 million, representing a 2.4 percent increase over the previous month.
The Forum reported that the largest increases within each category were in hotel/motel accommodations, representing 15 percent; clothing stores, 8 percent; auto dealers, 4 percent; and restaurants, 3 percent.
A year-to-date comparison indicates sales tax collections are 7.4 percent higher than in 2013, according to the report. The largest percentage increases were in: commercial machines, with a 43 percent increase; grocery stores, which saw a 12.5-percent increase; hotel/motel accommodations, an 11 percent increase; and building materials, 7 percent.
New car registrations: The Economic Forum reported that new vehicle registrations for 2014 were around 7 percent higher than those in 2013.
“This is again a reflection of the improved economy and higher consumer sentiment,” according to the report. “Given that 2014 cumulative new vehicle registrations were consistently higher every month over the 2013 cumulative registrations, it is likely that this trend will continue.”