Labor market, a ordability collide

Realtor summit notes large number of job openings in Colorado

BY TAMARA CHUANG THE COLORADO SUN

Housing and jobs are so connected that it was di cult to avoid the intersection of the two at an economic summit held last week for the Colorado Realtors Association.

Jobs in Colorado? So, so many job openings. Two for every unemployed person in the state. Available houses for sale? So, so few houses are available at a ordable prices, whatever those may be. at disconnect tempered the positive outlook that some had about the better years ahead and what the real estate industry can expect in 2023 and 2024.

“A ordability, or lack thereof, will remain our biggest hurdle. And people won’t come here and the jobs won’t move here, the companies won’t be here if we don’t o er some kind of a ordable housing,” said Kelly Moye, a Realtor at Compass Real Estate. “So, we’re trying to gure out how we do that. e regular market, with the way it works with supply and demand, just pushes prices up or down. at’s the way it goes. But is there anything that we can do as a city, as a state to help create a situa- tion where everybody can live here?” e data-heavy conference pointed to a possible reason for Colorado’s limited supply of workers: Not enough places for everyone to live.

A look at the data e majority of households in America are homeowners, with ownership rates at about 65%, according to the U.S. census. Colorado’s not far o from the national numbers, with homeownership rates inching up in recent years to 65.9% in 2021. A recent low was 62.4% in 2016 while the high of 71.3% was in 2003.

A trend happening nationwide and in Colorado for several years has been that fewer houses are being built each year. e National Association of Realtors’ data guru Nadia Evangelou calls it a housing market slump with the number of new housing starts o by 1.5 million a year. She expects that atness to continue in 2023 as the industry deals with ongoing material bottlenecks.

But another thing limiting potential homeowners from buying a house is interest rates. When they shot up last year, homebuyers had to spend a lot more to buy a lot less.

In other words, at 3% (where mortgage rates were in January 2022), the monthly mortgage payment on a midpriced home was $1,410, according to the National Association of Realtors.

SEE LABOR, P23

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At 6%, the payment jumped to $2,010.

At 8%, it would be $2,460. e 30-year xed mortgage rate was 6.45% on ursday, after hitting a high of 7.2% in October, according to Mortgage News Daily.

Most renters can’t a ord a starter home, which NAR de nes as houses priced at 25% less than the median sales price. at puts the median price of a starter home at $321,600 in the U.S.

Evangelou, NAR’s senior economist and director of real estate research, broke it down into a chart. Keep in mind, these are national gures: e number of renters who can afford one drops to 6%, as seen in this updated chart below:

National stats on how many renters can buy a median-priced starter home right now put the number at 36%. e data comes from the National Association of Realtors.

To a ord a starter home, with a 10% down payment at a 6.1% interest rate, a buyer’s income must be $86,360 if they don’t want to spend more than one-third of their income on housing. Only 36% of renters met that income level.

In Colorado, it looks worse for renters hoping to become homeowners. NAR pulled up the similar numbers for the Denver metro area and that translated to only 14% of local renters being able to a ord to buy a “starter home,” currently at a median price of $480,000. As for a mid-priced home?

Housing costs a lot more in the Denver metro area, compared to the U.S. e National Association of Realtors provided Denver data to e Colorado Sun so we edited the chart to re ect local numbers. While Denver incomes are higher too, fewer residents can a ord a median-priced starter home — a mere 14%.

“It’s a double pain because they have to deal with rent prices as well as saving up for the down payment,” Evangelou said. “We’ve talked about low a ordability and low availability of homes, but when we put these two factors together, we can see what is the real impact and what challenges buyers face out there.” e number may be rising though. Leprino said he was surprised there were even that many available. “I would’ve guessed that number was below 10% last summer,” he said.

And if renters can a ord Denver’s starter home, there aren’t many available, according to data from REColorado. Currently, about 32% of the 1,015 condo or single-family home for-sale listings in Denver were below $480,000. Only 89 are for single-family homes, and only 21 are listed at less than $400,000, said Matt Leprino, a Denver-area Realtor with Remingo, who tracks the data.

On a hopeful note, the real estate industry is counting on interest rates to drop. at may not come until next year, but in ation eased a bit in December, and the Federal Reserve raised interest rates a quarter of a point in January, compared to threequarters of a point for several months last year.

“In 2022, home sales activity dropped about 15% per month,” Evangelou said. “In 2023, we expect home sales to continue to drop but slower, like around 7% drop. And 2024 is when the housing market will rebound and we expect to have about 10% more home sales than 2023.”

Where are the workers? Not “on the couch” e pandemic put hundreds of thousands of Coloradans out of work. e state’s labor department estimates the loss at 374,500 jobs during March and April 2020. But since then, Colorado added them all back and more — approximately 466,400 jobs have been added since spring 2020 for a 124% recovery rate, according to the most recent state jobs report.

Had the pandemic not happened and Colorado’s job growth continued as forecasted years earlier, the state would have added 124,000 more jobs by now, said Patty Silverstein, president of Development Research Partners in Littleton.

But the job growth momentum we had before the pandemic is gone, Silverstein said.

“I will suggest to you that we are not going back to that pace, given the demographics, given changes in what we’re seeing in the employment base,” Silverstein said during her economic overview at the event. “I don’t think that 124,000 — our perfect pace of growth — is even going to be possible.”

However, employers say they’re still struggling to stay fully sta ed. And that shows up in a data point that ranks Colorado as the second highest state for how many available people are in the labor force. Out of all Coloradans 16 years and older, 69% are working or looking for work (the rest are retired or not looking for work). at’s 3.2 million people, which is twice as large as Nebraska’s workforce. Nebraska had the nation’s highest labor force participation rate at 69.8%, according to the Bureau of Labor Statistics.

“It’s incredibly, incredibly tight out there. And I know many of you are thinking, ‘Well, we just need to get those people to get back out and work.’ Maybe,” Silverstein said. “ ere are some of those folks across the country but they’re not here in Colorado. … People are not hanging out on the couch here in Colorado. ey are out working or actively looking for a job.” e BLS, through its job openings report, estimated that Colorado had 231,000 job openings in November. At the same time, there were roughly 113,447 unemployed Coloradans. at’s two job openings for every person looking for work.

And according to Aspen Tech Labs, an Aspen-based company that tracks job openings, three of the top four industries with job openings were among the lower-wage occupations of health care, food service and retail. Whether renters have vacated the state for cheaper housing is a little more di cult to research beyond anecdotal evidence.

Silverstein doesn’t blame the higher cost of living for chasing away lowerincome earners. It’s more so about our demographics. With a shrinking number of younger workers entering the workforce, the average age of a worker continues to get older. When the Baby Boomers retire — and all Baby Boomers will be over 65 by 2030 — that will leave a big hole in Colorado’s labor force. Even the real estate industry must gure out how to maintain productivity, she said.

“ ere’s a company coming out of Buena Vista making homes in a matter of weeks. ey’re assembling them, a factory line. We need to get creative rather than putting in however many people it takes to build a home on site, they’re doing it much quicker, much faster and at a more affordable cost by doing it in a factory,” she said, referring to Fading West modular home factory. “We need to gure out how we can use automation moving forward to do some of that and provide productivity.” is story is from e Colorado Sun, a journalist-owned news outlet based in Denver and covering the state. For more, and to support e Colorado Sun, visit coloradosun.com. e Colorado Sun is a partner in the Colorado News Conservancy, owner of Colorado Community Media. on the statutory 90-day period provided for appeals, please visit FEMA’s website at https://www.floodmaps.fema.gov/fhm/BFE_Status/bfe_main.asp , or call the FEMA Mapping and Insurance eXchange (FMIX) toll free at 1-877FEMA MAP (1-877-336-2627).

Here’s a year-old chart showing how Colorado’s population has changed and is forecast to change through 2050. ose 65 and over are the fastest growing segment of our population.

Legal Notice No. 24957

First Publication: February 23, 2023

Last Publication: March 2, 2023

Publisher: Elbert County News Notice to Creditors Public Notice NOTICE TO CREDITORS

All persons having claims against the above named estate are required to present them to the personal representative or to District Court of Elbert County, Colorado on or before June 9, 2023, or the claims may be forever barred. Pamela Maus Knight