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1 in 9 jobs tied to real estate

Employment, earnings crucial to local economy

John Rebchook, Rocky Mountain News

Published October 12, 2007 at midnight

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One out of every nine jobs in Colorado is tied to the multibillion-dollar residential and commercial real estate industry, according to a report released Thursday.

"Regionally, real estate-related employment and earnings are a bedrock of the local economy," noted the report prepared for the Colorado Association of Realtors.

The report, done by the University of Colorado at Colorado Springs and the Colorado Policy Studies group, tracked the economic impact of the real estate industry from Grand Junction to Pueblo.

"Approximately 10.8 percent of the region's jobs and earnings and profits are real estate related," the report concluded.

The report was based on 2005 data, the most current information available, said Kit Cowperthwaite, the 2007 president of the 28,000-member Realtor group. It shows:

• More than 65,000 people were directly employed in the real estate industry.

• 242,000 were indirectly employed.

• In 2004, more than $16.5 billion in wages and profits was generated by the industry.

• More than half - $9.1 billion - came from the Denver area.

• More than $5.23 billion in property taxes was collected statewide in 2005.

"The real estate industry is bigger than tourism," Cowperthwaite said. "Real estate is a driving force in our economy. I think it may surprise people that so many industries are related to real estate."

The report, for example, includes data not only on real estate, but on the impact of furniture, electronics, appliances and building materials.

Independent broker Gary Bauer said, at first blush, it may not seem possible the industry generates such huge numbers. But because building a house employs not just a developer or builder, but plumbers, electricians, roofers, landscapers and others, it begins to make sense, he said. And selling a home involves Realtors, title companies and mortgage companies, so it is easy to see how the economic impact multiplies, he added.

However, rising foreclosures and the loss of jobs in the mortgage industry may already have hurt the real estate economic engine, the report notes.

Homeowners borrowing against the equity in their houses were credited with softening the impact of the last recession, but that may not be the case during the next economic downturn because many homeowners no longer have equity to borrow against. Colorado and the Denver area are suffering from record foreclosures that could hit 40,000 statewide this year.

"The foreclosure activity in the state is both a vulnerability and a warning for the future," the report notes.

Cowperthwaite and Bauer, in separate interviews, said parts of the real estate industry already have been hit this year.

"I suspect it has changed somewhat," Cowperthwaite said. "We have seen a drop in residential construction activity since 2005."

Bauer said the mortgage industry has taken a big hit in employment since August, when the subprime market collapsed.

Chicago-based Challenger, Gray & Christmas said 130,000 financial jobs nationwide were cut in the first nine months of this year, with the biggest share resulting from losses in the subprime lending business.

That equates to about 2,600 jobs lost in Colorado, many of them high-paying, Bauer said.

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