The biggest question facing Federal Reserve Board Chairman Ben Bernanke is this: Is housing correcting or crashing?
Nationally, home sales are down as much as 25 percent compared with a year ago, economist Carl Tannenbaum told an audience at the National Association of Industrial and Office Professionals’ annual forecast breakfast Tuesday.
But that doesn’t mean the housing market is crashing. The current level of home sales would have been a record three years ago, so it’s a mistake to use that as a benchmark for 2006 and 2007, said Tannenbaum, chief economist for LaSalle Bank.
And while home prices have declined 4 percent over the past year, they rose 60 percent between 2001 and 2005.
“The housing market is correcting in a very orderly way, and it should be done very soon,” Tannenbaum said.
The correction in residential real estate does not seem to have done much damage to most household balance sheets, and Tannenbaum expects consumption to continue at a good pace this year.
Colorado is outperforming the nation in terms of employment growth, said Patty Silverstein of Littleton-based Development Research Partners. Colorado’s employment grew 2.2 percent in 2006, compared with national growth of 1.4 percent.
Still, Silverstein is predicting softer economic conditions and slower growth for 2007.
The metro Denver office market is a bright spot, however, with 1.7 million square feet of new space completed in 2006, Silverstein said.
Vacancy rates have dropped to their lowest levels in five years, said Dan Beer, director of agency leasing for Cushman & Wakefield. The metrowide vacancy has dropped to 13.2 percent, and just 8.4 percent downtown, according to a report released Tuesday by the real estate brokerage firm.
That’s pushing rental rates up by as much as 30 percent.
“The office market is on fire,” Beer said.
Staff writer Margaret Jackson can be reached at 303-954-1473 or mjackson@denverpost.com.
