CREJ - page 23

March 2-March 15, 2016 —

COLORADO REAL ESTATE JOURNAL

— Page 23

Finance

t the time of writing

this article, the state of

Colorado is still fresh

off the Broncos’ Super Bowl vic-

tory over the Carolina Panthers.

The Super Bowl is not only the

culmination of the football sea-

son but also a time when adver-

tisers pay up to $5 million for

30 seconds of airtime. One com-

mercial in particular stood out,

not for its splash of humor, but

because it was like watching his-

tory repeat itself – in a bad way.

Quicken Loans has a new prod-

uct called “Rocket Mortgage”

that aims to make the home loan

process as seamless as buying a

plane ticket or shoppingonAma-

zon. For many viewers, the com-

mercial stirred up bad memories

of the subprime crisis that led

our country into the worst reces-

sion since the Great Depression,

and, within minutes, Quicken

Loans was the target for scath-

ing attacks from legions of Twit-

ter accounts, social commenta-

tors and bloggers. After a little

damage con-

trol, Quick-

Loans

e x p l a i n e d

that Rocket

Mortgage is

not a careless

e x p e d i t i o n

of the loan

appl i cat ion

process but

rather a way

to speed up

the initiation

between the

bo r rowe r ’ s

financial insti-

tution and the lender. While the

explanation helped, perception

is everything in today’s increas-

ingly transparent world, and

the initial reaction to this com-

mercial is a shining example of

the general neuroticism that our

society and, more specifically,

the global capital markets, is

subject to on a daily basis.

Market predictions are any-

thing but predictable in this post-

recession era

of expansion.

popular

notion

that there are

still a few

good years

left

before

we are in a

recessionary

environment

s o m e t i m e

around 2018.

The

mes-

sage from the

2016 National

M o r t g a g e

Bankers Association conference

in Orlando was cautiously opti-

mistic. Lender allocations, for

the most part, are higher than

they were in 2015 as the pace of

sale and refinance activity shows

no signs of slowing. The playing

field, however, is anything but

level.

The most volatile lender cat-

hile themedia, many

politicians and some

economists predict

a recession amid declining oil

prices, a stock market correction

and global volatility, two well-

respected economists see a more

optimistic view of the country’s

and Colorado’s economic future.

Patricia Silverstein, chief econ-

omist for the Metro Denver Eco-

nomic Development Corp., and

Burt White, chief investment offi-

cer for LPL Financial, one of the

nation’s leading investment and

advisory firms, covered a wide

range of monetary, growth and

political projections during Vec-

tra Bank Colorado's 23rd annual

Economic Forecast last month.

Despite concerns, the economic

forecast was positive.

Silverstein said Colorado

would again be in the top 10

of fastest-growing states in the

country in 2016. Unemployment

in the state is back to prerecession

levels at 3.8 percent. The unem-

ployment rate is expected to fall

to 3.5 percent by the end of 2016.

In addition, Silverstein said that

most of the state’s top nine indus-

try clusters experienced growth,

the largest being health care. The

beverage market, which includes

beverages beyond the state’s

healthy beer industry, was a new

growth industry, with Colorado

ranked second in the U.S. behind

California. Another historically

strong Colorado industry, aero-

space, grew 4.5 times the national

average.

Colorado continues to main-

tain its position as a state with

one of the highest median home

prices, now at $350,000. Accord-

ing to Metrostudy Colorado,

while there was an uptick in

vacancy rates in the rental mar-

ket last quarter, Denver added

9,000 completed apartment units

to the metro area in the last year.

Apartment buildings in the sub-

urbs are filling up as well.

And while road congestion is

a factor in quality of living for

new residents, Denver’s new

FasTracks and commuter rail

Denver

International

Airport are

expected to

help

ease

traffic

and

i m p r o v e

mobility in

and around

the city.

One point of

concern cen-

tered on how

to attract and

keep qualified

emp l o y e e s

in the state

given the high cost of housing.

Silverstein said that with high

and fast-growing salaries, low

unemployment and a challeng-

ing housing market, businesses

need to get creative about attract-

ing and retaining talent and may

need to beef up benefits.

At a recent Metrostudy Colo-

rado talk, builders reported that

while labor is tight right now,

word is out across the country

that the Denver and Colorado

construction market needs labor,

and they expect workers to be

circulating back in.

Oil, and the widespread belief

that falling prices will catapult

Colorado and the U.S. economy

into recession, were largely dis-

pelled by White, who pointed

out that the current price of oil

(about $30 a barrel) is relatively

normal.

White said that higher-priced

oil ($90 to $100 per barrel) is

the anomaly. He added that the

25-year-average price for oil is

actually $33 a barrel.

White said that the long-

rumored and much feared end

of oil, or “peak oil,” (the point in

time when the maximum extrac-

tion rate is breeched) is complete

nonsense.

He went so far as to say that

the concept of peak oil is a farce.

He added that our surplus of oil,

along with the new technolo-

gies that make oil production so

much more efficient, means we

will not run out of oil in five to

10 years, but more like in 50 to

100 years. He believes oil will

become obsolete before it runs

out.

White said a decline in oil is

often a benefit for the overall

economy. Low energy costs

lead to huge savings for aver-

age Americans. In fact, we have

saved roughly $150 billion

because of lower energy costs to

consumers, on average $300 for

each household.

White also added that lower

energy costs usually offset reces-

sionary threats. Spikes in oil pric-

es cause recessions, not drops.

We have never had a recession

where just before, had oil prices

dropped.

White did say that the country

is not in a recession. He added

that while the manufacturing

part of our economy already is in

a recession, it’s only 7 percent of

our economy. He forecasted a 20

to 30 percent chance that reces-

sion will return. If we do fall into

a recession, White feels it will be

a minor one.

What we are going through is

normal and, in any given year,

the market will drop 14 percent.

Another key factor keeping a

recession in check is the con-

sumer sector, which accounts for

nearly 80 percent of the economy

and is still strong and growing.

White does not foresee a raise

in interest rates by the Federal

Reserve. He pointed out that

the Federal Reserve is the only

central bank that is tightening

its money; all others (China,

Europe, etc.) are still engaged in

monetary easing efforts.

The most important overall

message was for business to stay

focused. Do not let the world

news affect business planning

and how business is run. For

investors it’s keep the routines

in place, retain some perspective,

stick to a plan andbe patient. Stay

positive and don’t get caught

up in the media frenzy around

these issues, but focus on being a

leader in your community and in

your business.

When will the music stop?

Economic experts’ recommendations

in a more volatile economic climate

Jeff Halsey

Vice president, Debt

& Structured Finance,

CBRE Capital Markets,

Denver

John Pike

Senior vice president,

manager, Corporate

Real Estate Group,

Vectra Bank

Colorado, Denver

Brady O’Donnell

Executive vice

president, Debt &

Structured Finance,

CBRE Capital Markets,

Denver

Please see

Finance,

Page 45

For Company Profiles, Contact

Information & Links, Please Visit

www.crej.com

Commercial Real Estate

Lenders

Warning.

You are currently viewing the SEO version of !text.
It has a number of design and functionality limitations.

We recommend viewing the Flash version or the basic HTML version of this publication.

1...,13,14,15,16,17,18,19,20,21,22 24,25,26,27,28,29,30,31,32,33,...80