The Colorado Springs economy continued its slow, yet sustainable, return to pre-recessionary levels during the second quarter of 2015, according to the most recent quarterly report published by the Southern Colorado Economic Forum.
“It has been pretty gradual and steady, but generally trends have been pretty positive,” said Tatiana Bailey, director of the Economic Forum and a UCCS faculty member. “What we’ve seen and continue to see is finally that the U.S. and local economies are seeing pretty sustainable, robust recovery.”
The year started slowly for national economic growth but quickened in the spring and continued to swell through the second quarter with gross domestic product growth at 2.3 percent.
“Most experts and the Forum believe that we will likely continue to see an uptick for the remaining quarters in GDP reaching into the 3 percent range and likely round out the year at an annual percentage increase of approximately 2.5 percent,” according to the report.
Consumer sentiment increased from 81.8 last July to 93.1 in July 2015, which bodes well for home buying and other types of spending that could boost the economy.
“That’s a really positive number, and it’s increasing,” Bailey said. “It means people are out there spending money, and that’s a really good thing — they’re buying clothes, buying cars, buying homes. It’s all about how people are feeling and how they’re going to act as consumers.”
Meanwhile in El Paso County, unemployment continued to decrease month-to-month through the second quarter.
“Another positive locally is that the unemployment rate continues to fall,” Bailey said. “We have a lot of job openings … and that’s good, because it means companies here are confident enough to hire.”
However, despite month-to-month increases in Q2, year-to-year employment levels fell by 3,708 from June 2014 to June 2015, representing a 1.3 percent drop attributed primarily to a significant decrease in labor force. During the past year, the local labor force has dropped 2 percent, or 6,230 workers, although the report cites this to be “an endemic national problem,” and one that will take much longer to address as Baby Boomers continue to retire.
“The flip side is that we have too many people who left the labor force and still haven’t returned,” she said. “Yes, we have some Baby Boomers … and an aging population, but the bigger issue is that wages are too low and it’s not worth it to some people.”
The number of single-family building permits declined significantly in January and began to pick up through the spring, ending the second quarter slightly higher than last year. There were no multi-family building permits pulled until May this year.
Bailey said the slow and steady construction of new homes in Colorado Springs might actually become a positive for the local economy — attracting buyers priced out of the Denver market, driving up demand and prices.
“I would much rather have steady, gradual growth than the kind of bubble we’re seeing in Denver,” she said. “I think that’s a good thing.”
“People are out there spending money, and that’s a really good thing – they’re buying clothes, buying cars, buying homes.”
– Tatiana Bailey
By the end of June, 1,045 more homes had sold than by the same time in 2014, which amounted to a 19.9 percent improvement, the report said.
“Overall, the residential real estate market is quite strong both for new and existing homes,” said the report. “Indicative of this stronger market is the increase in median home prices. In July 2015, the median home price in the Pikes Peak region was $243,000 whereas it was significantly less at $230,000 in July 2014. Economic experts across the country are very optimistic about home sales for the remainder of 2015 and into 2016.”
The number of active real estate listings during the second quarter of 2015 was lower than during the same time in 2014, down 25 percent year to year. The report attributes a low supply of listings in the region as the cause of increasing prices and shorter time on the market (71 days compared to 82 days).
Foreclosures continue to decrease nationwide and in the Pikes Peak region. There were 702 foreclosure proceedings reported by the end of June, which is 29.5 percent lower than the 995 seen by the same time in 2014 (seasonally adjusted).
“There is a historical, inverse relationship between foreclosures and detached single family building permits,” according to the report. “The good news is that foreclosures and permits continue to be much closer in volume, which indicates that much of the needed adjustment in the housing market has occurred and the economy in general has improved.”
The local commercial real estate market also continues to improve, with most vacancy rates dropping consistently each quarter since early 2013, according to the report. The Forum reports that, overall, the vacancy rates are indicative of an improved economy — both locally and nationally.
The report also touched on a constant for the region: the continual decline in enplanements at Colorado Springs Airport. Seasonally adjusted, enplanements were 9.2 percent lower in June 2015 (47,045) than in June 2014 (51,831), which it attributes to reduced or canceled service to Colorado Springs, as well as a decline in demand for local flights.
The last topic in the report was sales-and-use tax revenue in Colorado Springs. The 2 percent sales-and-use tax collection for June 2015 accumulated around $12 million, a 1.4 percent drop from June 2014 numbers but up cumulatively for the year by 4.6 percent.
Numbers improved in July — not included in the quarterly report. July city sales-and-use tax figures were released last week, reporting revenues of just short of $14.1 million. That’s an increase of 2.45 percent for the month, and up 4.29 percent year-to-date.