Denver Mortgage Activity, Housing Market to Continue Cooling
Denver mortgage and housing activity will keep cooling through at least 2008 as Colorado’s softening real estate market continues to slow, according to various reports.
“We expect the Denver housing market to continue to slow in 2007 and 2008, in line with the nation, as the economic slowdown leads to losses in construction, real estate and financial services,” an economic report by Wells Fargo reads.
The report noted that some sectors, such, as manufacturing and information services will “contract amid a slowdown in spending.”
The report cited the state’s low unemployment rate as a positive, despite the rising Colorado mortgage problems.
Colorado’s unemployment rate dipped to 3.5 percent in April, according to the Department of Labor.
Ed Kashmarek, the report’s author, said he did not expect either the nation’s or Colorado mortgage problems to trigger a recession. He said the Rocky Mountain State’s average personal income surged by 5.7 percent last year and that the rally on Wall Street should “help people feel wealthier, at least on paper.”
Those two factors will probably keep consumer spending strong.
However, he said economic growth could come to a halt if “the explosion in the subprime (bad credit mortgage) market” starts to hurt area real estate values more broadly.
Other economists have recently voiced similar concerns.
U.S. Bank regional economist Tucker Hart Adams has been calling for a 75 percent chance that a recession will start this year or in early 2008, driven by a real estate market contraction that’s causing overstretched consumers to curtail spending.
“The slowdown in consumer spending we have seen during the last four months will continue,” Adams said. She pointed out that the nation’s GDP was a lackluster 1.3 percent during 2007’s first quarter.
Adams said some areas of Colorado, including parts of the Western Slope, where the energy industry continues to boom, will sustain robust growth.
Other areas, including the Front Range, will likely see “the economy continue to stumble,” she said. Tucker and Kashmarek each said they were concerned about an apparent slowdown in growth of the state’s labor force.
Kashmarek said there was no clear reason for the slowdown; Adams said that it is possible that some people have given up looking for work after failing to find a job they want.
“It is strange,” Adams said. “It is not a healthy sign.”
SOURCE: Denver Post