There are a lot of opinions about the future of the Denver economy. Many are rather positive and some are much more negative. Who do you believe?
No one has a crystal ball. Most of the predictions for 2008 turned out partly wrong because no one could predict the gas price hikes to $4 a gallon or the crisis in the lending and banking industry because of foreclosures.
I attended a luncheon for realtors yesterday where Patricia Silverstein of Development Research Partners, Inc. shared some of her company's predictions for 2009 based upon their extensive research. Because of their extensive research and years of experience in watching and analyzing the trends, I tend to put quite a bit of faith in what they say.
I'll share a little of what Patricia had to say. She told us that Colorado is outperforming the U.S. in many areas. Unemployment is lower, the median home price is higher, retail sales are more stable, home prices are more stable, total personal income is growing faster and per capita income is higher.
Development Research predicts home sales in metro Denver will increase slightly in 2009, but new home sales will decrease even more. Foreclosures will continue to decrease as they did in 2008 and the median home price will increase slightly. Although building permits for single-family homes have decreased considerably every year since 2005, they will level off in 2009, while multi-family home building permits which increased slightly in 2008 will decrease slghtly in 2009 according to Patricia. Multi-family home and single-family home building permits they predict will be almost equal in 2009.
Some more predictions Patricia shared are that retail sales will be flat in metro Denver in 2009. In metro Denver our population change shows that our level of natural increase (births minus deaths) is continuing to increase slightly every year since the mid 90's, but our new migration population has decreased in 2002-2008 and will continue to decrease in 2009 and 2010. The apartment vacancy rate in metro Denver is predicted to rise slightly.
Patricia pointed out the challenges that local and state governments face. Tax revenues from retail sales, fuel sales and auto sales have declined. She reminded us that property taxes this year are based on last year's appraisals. However next years property taxes will be base on this year's appraisals which will be much lower. Therefore, governments can look for a great decrease in property tax revenues next year. Debt financing is much more difficult to obtain and that creates another challenge for governments.
All of this information and more that Patricia shared are indeed a mixed bag. We should not look at our future as very bleak, instead we should make adjustments in our budgets with an outlook for options that help us to re-grow wealth. Her favorite statement of the day seemed to be, "Spend responsibly."