The release of the 59th Annual Colorado Business and Economic Outlook shows that Colorado is better positioned than many states to meet future economic challenges. Benefiting from a diversified economy, employment growth continues and employment is expanding in several sectors.
At the same time, however, depending on your point of view, a downturn in real estate awaits.
“These are very interesting times: high interest rates, real estate issues,” said Richard Wobekind, senior economist and associate dean of finance at the University of Colorado’s Leeds School of Business.
Colorado has benefited from having the second-highest educational attainment of any state.
“The correlation between education and income level and education and employment is very high,” Wobekind said. This will add tens of thousands of jobs by 2024, the 160-page report says.
“Nationally, there are about 1.5 jobs available for every unemployed person. In Colorado, that number is closer to two,” Wobekind said.
However, there are concerns when it comes to real estate.
“The national and Colorado economic parts are probably only about four or five nine-inning games right now,” said commercial real estate’s Wobekind. “There’s a lot to consider in the coming months.” said. The office vacancy rate in the Denver-Boulder metropolitan area is currently hovering around 16% to 17%, and is likely to rise further.
“Therefore, we expect vacancy rates to rise to 25-30% over the next few years,” said Marcel Arsenault, CEO of real estate investment firm Real Capital Solutions, who attended the conference. And the office is already full.” Leeds School of Business report released.
Mr. Arsenault says he is rather pessimistic about the economy and points to future problems for investors: an oversupply of apartments.
In metropolitan areas, he said, “you probably need an average of 80,000 to 10,000 units a year. And we’ve been producing about 15,000 units in recent years.”
His company sold apartments in recent years.
“I won’t build apartments unless you put a gun to my head,” he said.
That’s bad for investors, but it might be good for renters. “If you’re a renter, we have great news: About a year from now, your apartment will have two, maybe three, months of rent free.”
High interest rates are hurting homeownership, making people less willing to negotiate new mortgages and fewer people willing to sell their homes or condos.
“No one wants to sell their house and get their 3% mortgage forgiven. Or 3%. So there’s not a lot of supply of housing on the market. We think that will change as interest rates come down,” he said. I believe it will be in 2024 or 2025.
Wobekind believes there will be some correction in real estate prices, but nothing like the 2008 recession. “We’re not seeing a collapse in residential property prices, especially because so many people are refinancing at very low interest rates and they’re not losing jobs like they did in 2008 and 2009.” ”